This year, the Department of Justice (DOJ) announced results from its 2024 National Health Care Fraud Enforcement Action. Their press release revealed that just 193 defendants are responsible for $2.75 billion in intended losses and $1.6 billion in actual losses. These defendants comprise a variety of healthcare professionals, “including 76 doctors, nurse practitioners, and other licensed medical professionals in 32 federal districts across the United States,” the DOJ stated. Several of the highlighted cases were laboratories, pointing to the industry’s role in and level of risk for fraud.
Telemedicine and Laboratory Fraud Case Connection
The DOJ identified 36 defendants in schemes, primarily involving telemedicine, that entailed the submission of more than $1.1 billion in fraudulent claims to Medicare. “For example, in separate cases involving similar schemes that were perpetrated by different criminal networks in the Southern District of Texas, Northern District of Texas, and District of New Jersey, clinical laboratory owners allegedly paid illegal kickbacks and bribes, including to telemedicine companies, in exchange for the referral of orders for unnecessary genetic testing,” the DOJ noted in its press release.
The purpose of the genetic testing was to identify genetic mutations that indicate a heightened risk of cancer, cardiovascular disease, Parkinson’s disease, and other conditions. However, these tests were not actually used in any of the patients’ treatment. Further schemes encompassed the unsealing of a complaint in the Eastern District of Virginia where a psychiatrist allegedly made fraudulent claims. These claims were made based on patient visits so minimal that some only lasted between 10 to 30 seconds. The DOJ continues to target telemedicine, an area where fraud runs rampant; the DOJ asserts that these investigations have saved taxpayers billions of dollars.
Specific Criminal Cases
Both Harold Albert “Al” Knowles, 56, of Delray Beach, Florida, and Chantal Swart, 49, were charged through indictment in Boca Raton, Florida. The charges leveled against Knowles were conspiracy to commit healthcare fraud, along with conspiracy to defraud the United States while paying and receiving kickbacks. Swart faced charges of conspiracy to “defraud the United States and pay and receive kickbacks and receipt of healthcare kickbacks.” These acts were part of a grand $359 million scheme to defraud Medicare through medically unnecessary genetic tests engineered through kickbacks.
According to the DOJ case summary, “As alleged in the indictment, Knowles was the owner of two Houston-area labs, Bio Choice and Bios Scientific. Knowles entered an agreement with Swart for the referral of Medicare beneficiary DNA samples and signed doctors’ orders for genetic testing that Knowles used to bill Medicare through his labs. Knowles concealed his kickback arrangement with Swart through sham flat fee contracts.”
Knowles understood that Swart and her collaborative marketers deployed call centers and telemedicine doctors to obtain DNA samples and signed doctor’s orders. The DOJ asserts that Knowles also had full knowledge that the providers working with Swart and the marketers deployed to obtain these orders were not the beneficiaries’ treating physicians, nor did the orders involve genetic testing actually administered in the beneficiary treatment plan.
In another case in McKinney, Texas, Keith Gray was charged with one count of conspiracy to defraud the United States through a scheme of healthcare kickbacks. The DOJ outlines that he faced charges of “five counts of paying healthcare kickbacks and three counts of money laundering, in connection with a $335 million scheme to bill Medicare for medically unnecessary cardio genetic testing.” Gray owned and operated two clinical laboratories, Axis Professional Labs, LLC (“Axis”), and Kingdom Health Laboratory, LLC (“Kingdom”).
Gray allegedly participated in a scheme to offer and pay kickbacks to marketers in exchange for Medicare beneficiary referrals to Axis and Kingdom that included the following:
- DNA samples,
- personally identifiable information such as Medicare numbers,
- and signed doctors’ orders authorizing medically unnecessary cardio genetic testing.
What’s more, marketers conspired with other companies to illicitly solicit Medicare beneficiaries using telemarketing and the “doctor chase” tactic. “Doctor chase,” according to the DOJ, is a scheme “to obtain the identity of beneficiaries’ primary care physicians and pressure (the doctors) to approve genetic testing orders for patients who purportedly had already been ‘qualified’ for the testing.’”
Medicare reimbursed these laboratories to the tune of $54 million for fraudulently billed claims. Adding to the criminal activities, Gray laundered these payments by buying expensive luxury vehicles.
Both cases demonstrate the vulnerabilities for laboratory compliance, as well as opportunities for actors to exploit the system. At the same time, these cases reveal the government’s willingness to take action against offending entities.
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