3 hospitals tied to $57M money laundering scandal

Two hospitals in Florida and one in Georgia are among those linked to a $57 million money laundering conspiracy associated with a pass-through billing scheme, according to the Department of Justice.

Kyle Ryan Marcotte, owner of a substance abuse treatment center in the Jacksonville, Fla., area, pleaded guilty July 9 for his role in the money laundering conspiracy. He made several admissions as part of his guilty plea, some of which shed light on allegedly improper billing practices at several rural hospitals.

Mr. Marcotte said he entered into an agreement with the owner of a lab in 2015. Under the agreement, Mr. Marcotte's substance abuse treatment center sent urine samples for the facility's patients to the lab for drug testing in exchange for 40 percent of the insurance reimbursement. To receive higher reimbursement for the testing, Mr. Marcotte said the lab owner struck a deal with the managers of Campbellton-Graceville (Fla.) Hospital and Regional Hospital Williston (Fla.) to have the claims billed to private insurers through the hospitals' in-network contracts with payers, according to the Justice Department.

Mr. Marcotte also admitted he arranged for other substance abuse treatment centers to have their urine drug testing billed through the two Florida hospitals in exchange for 10 percent of the insurance payments. He said the other substance abuse treatment centers received 30 percent of the reimbursements.

When the lab owner subsequently acquired Chestatee Hospital in Dahlonega, Ga., and other rural hospitals, Mr. Marcotte said the pass-through billing scheme continued. In exchange for a percentage of the insurance reimbursement, Mr. Marcotte said he had his facility's urine drug testing billed through Chestatee Hospital and other rural hospitals and continued to broker deals with other substance abuse treatment centers to have their testing billed through the hospitals, according to the Justice Department.

The Justice Department said Mr. Marcotte caused $50 million in payments to be made from his company's bank accounts to at least 88 companies and individuals who supplied urine samples for testing. Mr. Marcotte said the money-laundering scheme involved a total of $57.3 million.  

As part of Mr. Marcotte's plea agreement, he agreed to forfeit $10.2 million. His sentencing has not yet been scheduled.

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