MONTPELIER >> Vermont state regulators granted emergency approval Thursday to an investor group's takeover of a financially troubled chain of drug-testing labs considered crucial in the state's battle against opiate addiction.

But the Green Mountain Care Board conditioned its approval for the takeover of Burlington Labs on the completion of what's expected to be the largest settlement in a Medicaid fraud investigation in state history.

James Crook Jr., former CEO of Vermont-based health software firm IDX Systems Inc. and the lead investor in the acquisition group, expressed appreciation to the board for addressing the group's application in "a timely manner."

"The critical role Burlington Lab plays in the state-wide fight against opiate addiction obviously resonated with the board," he said in a statement.

In its decision, the board pointed to the "gravity of Burlington Labs' financial situation, the commitment of the (investors) to ensure that these services and jobs crucial to our state will not be lost, and the acute need for these services as a tool to help address Vermont's drug epidemic."

The board accepted statements made in an Aug. 19 letter from Elizabeth Wohl, a lawyer for the investor group, that Burlington Labs is about $8.6 million in debt — most of it in default — and faces more debt in the form of a Medicaid overbilling settlement with the attorney general's office expected to come to about another $6.5 million.


The board decision gives the green light to the rescue of a business that Wohl said was likely to close if state approval were not granted within 30 days.

So far this year, Burlington Labs has processed more than 40,000 urine samples from more than 2,300 patients around Vermont, the board found. It has offices in Barre, Bennington, Burlington, Middlebury, Morrisville, Rutland, St. Albans, and Springfield. A location in White River Junction is to open late this year.

As the case was pending before the board, the acquisition got letters of support from Burlington Mayor Miro Weinberger, state Health Commissioner Harry Chen and the heads of several human services nonprofits. The letters pointed to the company's role in keeping addicts in recovery accountable to their treatment programs and to the 137 Vermont jobs it provides, many to former addicts trying to turn their lives around.