Lab owner barred from CMS programs, fined $510K for kickback scheme

Rakesh Kothuru, 49, the majority owner of Laboratory Services of America, was sentenced to four months of house arrest plus $510,000 in forfeiture, restitution and fines over a kickback scheme, the Justice Department said May 19.

Laboratory Services of America provided urine drug testing, the department said. In January 2015, Mr. Kothuru and Michael Dube, then the owner of American Toxicology Labs, entered into an agreement in which Mr. Dube would refer all his lab's tested urine samples to Mr. Kothuru's lab for confirmation testing in exchange for kickbacks paid to Mr. Dube's personal checking account.

Between March 2015 and September 2016, Laboratory Services of America received more than $750,000 in reimbursements for confirmation testing from Medicare, Virginia Medicaid, Kentucky Medicaid and TennCare, the department said. Those confirmation tests were illegally billed and collected as part of the kickback scheme.

Mr. Kothuru's conviction means he is banned from participating in federal healthcare benefit programs, including Medicare and Medicaid, the department said. He was required to pay $500,000 toward the forfeiture and restitution before his sentencing.

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