According to what you are saying, this seems terrible. I don't think I'd want to work for this place even if I had the option. However, you say you were already fired and reported from another job for suspicion of diverting in March, and now are in this trouble already? That is a major red flag. I was impaired and diverting for a long time at work. I thought because I could cheat the urine tests, and their was no smoking gun w/ diverting, I could keep slipping through the cracks. Eventually, they lumped some b.s. together and fired/reported me. I requested to drug test and THEY refused. I was guilty, and they knew it, even though they couldn't prove it. I volunteered from Diversion and that has been the only thing that has been able to help me stay clean and sober.
Along with your medical issue, you mention cutting your hair is against your religion. I wonder why you didn't mention this earlier on in the posts, as this is a pretty huge reason to refuse the test. From what I understand, hair tests don't go back "10 years" or whatever, just 90 days. I believe only the 3cm closest to the root is looked at in head hair, as the hair degrades beyond reliability after that point. And yes, body hair is routinely used; usually in men who shave their heads.
This situation sucks, but since you already have a complaint pending from a previous job, DO A HAIR TEST NOW so you have that documented. Use body hair if need be. Even if you get a lawyer and fight it, these two things together are a major red flag, implying guilt. This is terrible road to go down if you can avoid it. If you don't have anything to hide, I think there would be more anguish fighting the board than losing some hair.