Lab testing scheme targeting Medicare results in $372M judgment

The United States has obtained more than $370 million in judgments against a Kentucky businessman and his companies for a laboratory testing scheme that targeted the Medicare program, United States Attorney Roger B. Handberg announced this week.

In August 2022, the United States filed a complaint-in-intervention against Rajen Shah and his companies United Diagnostics Lab, Tomoka Medical Lab, Tennessee Valley Regional Laboratory, Luminus Diagnostics, and Golden Rule Management for violations of the False Claims Act. The complaint alleged that Shah caused his laboratories to bill Medicare for expensive molecular tests that were not ordered by a licensed healthcare provider.

The district court granted the United States’ motion for default judgment on September 21, 2023, and awarded judgment in favor of the United States and against the defendants in the amount of:

• $105,634,097.50 for Shah
• $6,159,118 for Tomoka Medical Lab, Inc.
• $23,996,305.50 for Tennessee Valley Regional Laboratories, LLC
• $75,478,674.00 for Luminus Diagnostics, LLC
• $105,634,097.50 for Golden Rule Management, LLC
• $54,587,325.00 for United Diagnostics Lab, LLC

“Providers who seek to boost their own profits by submitting inaccurate billing information to federal health care programs like Medicare undermine the integrity of these programs, which beneficiaries rely on for safe and effective health care services,” stated Acting Special Agent in Charge Julie Rivera of the U.S. Department of Health and Human Services Office of Inspector General, in the announcement. “Our agency, working with our law enforcement partners, will continue to investigate health care fraud schemes, including those involving providers allegedly submitting fraudulent claims in violation of the False Claims Act.”

In 2021, Shah received a jail sentence for a criminal contempt charge stemming from his violation of court orders related to the United States’ fraud investigation. 

Nurse practitioner convicted of $200M health care fraud

A federal jury in Miami has convicted a Florida nurse practitioner for her role in a scheme to defraud Medicare by submitting more than $200 million in false and fraudulent claims for expensive genetic testing and medical equipment that the Medicare beneficiaries did not need.

According to court documents and evidence presented at trial, Elizabeth Hernandez, 45, of Homestead, signed thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings of more than $200 million. As part of the scheme, telemarketing companies would contact Medicare beneficiaries to convince them to request orthotic braces and genetic tests, and then send pre-filled orders for these products to Hernandez, who signed them, attesting that she had examined or treated the patients. However, she had never spoken with many of the patients. In 2020, Hernandez ordered more cancer genetic tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists. She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of “office visits” in a single day. Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel.

The jury convicted Hernandez of one count of conspiracy to commit health care fraud and wire fraud, in addition to four counts of health care fraud and three counts of making false statements relating to health care matters. She is scheduled to be sentenced on Dec. 14. She faces a maximum penalty of 20 years in prison for conspiracy, 10 years in prison on each health care fraud count, and five years in prison on each false statement count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

DOJ charges physician, pharmacists with $170M fraud

The Justice Department announced this week that it has charged two pharmacists and a physician for their roles in a multimillion-dollar health care fraud, kickback, and money laundering scheme.

According to court documents, Shalondria Simpson, 45, of Houston, is a pharmacist who owned and operated two pharmacies in Houston: Advance Pharmacy (Advance) and TruCare Pharmacy (TruCare). Simpson’s twin sister, physician Lashondria Simpson-Camp, 45, of Allen, Texas, allegedly referred prescriptions to Advance and TruCare in exchange for illegal kickbacks and bribes. Shayla Bryant, 38, of Houston, was a pharmacist and Advance and TruCare’s business manager. 

Between 2016 and 2022, Simpson, Simpson-Camp, and Bryant allegedly conspired with others to submit false and fraudulent claims to the Department of Labor’s Office of Workers’ Compensation Program (DOL-OWCP), which administered workers’ compensation benefits on behalf of the Federal Employee’s Compensation Act (FECA), for high reimbursing drugs that were often medically unnecessary and induced by kickbacks and bribes. Further, Simpson, Simpson-Camp, Bryant, and others allegedly conspired to pay and receive these kickbacks. Simpson and Bryan allegedly paid illegal kickbacks and bribes, often through shell entities or in cash, directly to physicians like Simpson-Camp, a clinic owner, a medical assistant, and other marketers. In total, Simpson’s pharmacies allegedly submitted approximately $170 million in fraudulent claims to FECA through DOL-OWCP. 

To conceal the scheme and disguise its proceeds, Simpson also allegedly conspired to launder the proceeds of the criminal activity through financial transactions greater than $10,000. According to the indictment, after learning of the investigation, Simpson attempted to cover her tracks by converting criminal proceeds to cash and transferring funds among over 10 bank accounts and a cryptocurrency wallet. She also allegedly solicited others’ help in liquidating assets and concealing her ownership and control of those assets. 

The indictment charges Simpson, Simpson-Camp, and Bryant with one count of conspiracy to defraud the United States and pay and receive health care kickbacks and one count of conspiracy to commit health care fraud. Simpson is also charged with five counts of paying health care kickbacks, one of which also charges Bryant. The indictment further charges Simpson with conspiracy to launder monetary instruments and five counts of money laundering. If convicted, Simpson, Simpson-Camp, and Bryant each face a maximum penalty of five years in prison for conspiracy to defraud the United States and pay and receive health care kickbacks, and 10 years in prison for conspiracy to commit health care fraud. Simpson and Bryant each face a maximum penalty of 10 years in prison for each count of paying health care kickbacks. Simpson faces a maximum penalty of 20 years in prison for conspiracy to launder money instruments and 10 years for each count of money laundering.