Founders of Texas labs plead guilty in $300M fraud scheme

The founders of three medical labs in Texas pleaded guilty in a $300 million healthcare fraud scheme, the Justice Department said April 20.

The medical labs in question are Unified Laboratory Services, Spectrum Diagnostic Laboratory and Reliable Labs, all based in the Dallas area.

Five details:

1. Jeffrey Madison, founder of Unified and Spectrum; Mark Boggess, COO for Unified and Spectrum; Biby Kurian, co-founder of Reliable; and Abraham Phillips, co-founder of Reliable, are among those who admitted to paying kickbacks to medical providers in exchange for ordering medically unnecessary lab tests.

2. The laboratories disguised kickbacks paid to the physicians as business transactions, including medical adviser agreement payments, salary offsets, lease payments and marketing commissions.

3. The physicians Jose Maldonado, MD, a family medicine physician, and Eduardo Canova, MD, an internal medicine specialist, accepted hundreds of thousands of dollars in the scheme for services that weren't rendered. Other payments were made contingent on the number of lab tests referred.

4.  Marketing firm owners Juan Rojas and David Lizcano and marketing firm employee Laura Ortiz, Mr. Lizcano's sister, made direct payments to the provider's spouse in some instances. One of the indicted providers increased referrals from 20 to 30 per day after the lab threatened to end payments without more referrals, according to the Justice Department.

5. Reliable Labs was converted into a physician-owned lab, and ownership opportunities were offered only to physicians who referred a certain number of lab tests, the department said. Some of the physician owners received advanced disbursements to secure future referrals as well.

6. Dr. Maldonado received $400,000 in kickbacks for ordering $4 million worth of lab tests, and Dr. Canova received more than $300,000 in kickbacks for ordering $12 million worth of lab tests, the Justice Department said.

7. Other defendants in the case include Sherman Kennerson, investor in Unified, who pled guilty to conspiracy to pay kickbacks; and Keith Allen Wichinski, MSN, RN, who pled guilty to conspiracy to solicit or receive kickbacks, the department said.

8. Mr. Madison and Mr. Lizcano face up to 15 years each in federal prison, the department said. Mr. Kennerson, Ms. Ortiz, Mr. Phillips, Ms. Kurian, Dr. Maldonado, Dr. Canova, Mr. Wichinski, and Mr. Rojas face up to five years; Mr. Boggess faces up to three years. Each may receive less than the maximum punishment.

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