Headlines that Matter for Companies and Executives in Regulated Industries
DOJ Secures Plea in $50 Million Medicare Fraud and Kickback Scheme
On April 26, the US Department of Justice (DOJ) announced that Manishkumar Patel pleaded guilty to charges related to a $50 million health care fraud and kickback scheme. According to prosecutors, the scheme involved selling fraudulent prescriptions for durable medical equipment and other medical supplies, which were then submitted for payment to Medicare by various suppliers, pharmacies, and laboratories. The offenses charged included conspiracy to commit health care fraud, wire fraud, and violations of the Anti-Kickback Statute, each of which could result in a maximum of five years in prison.
According to prosecutors, Patel acted alongside his co-conspirator (CC-1) to carry out the alleged fraudulent activities, which spanned from 2019 to 2022. Per prosecutors, the pair orchestrated the sale of prescriptions and doctors’ orders obtained through call centers that superficially engaged Medicare beneficiaries. These interactions were followed by minimal telemedicine appointments, often leading to prescriptions being signed by unwitting doctors — a practice known as “doctor chasing.” Patel then sold the fraudulent scripts to Medicare providers, who attempted to claim reimbursements from Medicare, which led to multiple rejections from beneficiaries, threats of fraud reports from doctors, and frequent refusals of payment by Medicare. In his leadership role, Patel engaged in transactions meant to disguise the kickbacks as legitimate marketing services.
Patel admitted his guilt before SDNY US Magistrate Judge Ona T. Wang and is scheduled for sentencing on July 26, by US District Judge Lorna Schofield. Patel was also ordered to pay over $48 million in restitution and forfeit approximately $6.8 million.
A link to the DOJ press release can be found here.
Three Charged in $36 Million COVID-19 Testing Fraud and Money Laundering Scheme
On April 24, the DOJ unsealed an indictment charging three men with participating in an approximately $36 million health care fraud, wire fraud, and money laundering scheme related to COVID-19 testing. The individuals involved, Enrique Perez-Paris, Diego Sanudo Sanchez Chocron, and Gregory Charles “Milo” Caskey were charged for their roles as owners of Innovative Genomics, an independent laboratory. Per the indictment, from November 2019 through June 2023, they conspired to submit false claims for medically unnecessary and non-reimbursable COVID-19 tests to healthcare benefit programs, including Medicare and the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program.
The indictment further alleges that Perez-Paris, Chocron, and Caskey paid illegal kickbacks and bribes to patient recruiters to secure healthcare provider referrals for their laboratory tests. They are also accused of billing the HRSA COVID-19 Uninsured Program for tests on Medicare beneficiaries, and billing for tests not approved by the US Food and Drug Administration (FDA) for emergency-use authorization.
Each defendant is charged with conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, and conspiracy to commit money laundering. They face up to 20 years in prison for each conspiracy count and up to 10 years for each health care fraud count if convicted.
A link to the DOJ press release can be found here.
DOJ Secures $1.37 Million Settlement in Medical Kickback Scheme
On April 26, the DOJ announced the settlement of claims involving Thomas Anthony Carnaggio, his marketing company South Ventures LLC, and three physicians and their respective medical practices in North Carolina. The parties have agreed to pay a total of $1,373,400 to resolve allegations under the False Claims Act related to their involvement in a kickback scheme. Carried out from 2016 to 2021, the scheme involved the payment of kickbacks disguised as office space rentals, phlebotomy payments, and the purchase of used laboratory equipment, which were provided to induce the ordering of unnecessary laboratory tests. These tests resulted in the submission of fraudulent claims to Medicare and TRICARE.
Under the terms of the settlement, Thomas Anthony Carnaggio and South Ventures LLC will pay $400,000, after allegations that they offered kickbacks to doctors and received commissions from a laboratory based on the Medicare and TRICARE referrals they secured. Additionally, Dr. Steven Bauer and Ballantyne Medical Associates PLLC will contribute $205,000, Dr. Larry Berman and his practice will pay $385,000, and Dr. Alireza Nami and Joint and Muscle Medical Care, P.C., will pay $383,400. All parties have also agreed to cooperate with the DOJ’s ongoing investigations of other participants in the kickback schemes, with some receiving credit for their cooperation under the DOJ’s guidelines for handling False Claims Act matters.
A link to the DOJ press release can be found here.
Starboard Group Hit with $7.14 Million Verdict in Whistleblower Retaliation Case
On April 24, a Florida court ordered the management company of Starboard Group, a South Florida-based fast-food restaurant franchising business, to pay $7,140,000 in a whistleblower lawsuit judgment. The case, originally filed under the Florida Private Whistle Blowers Act, centered on accusations of unethical business practices, particularly involving fraudulent claims about the receipt of Paycheck Protection Program (PPP) loans. Per the complaint, claims were submitted to landlords, creditors, vendors, and suppliers, falsely asserting that the company had not received necessary PPP funding when, in fact, it had. The lawsuit was initiated by Sandi Adler, a former vice president of Legal Affairs and Human Resources at Starboard Group, who alleged she was terminated in June 2020 for objecting to the deceptive practices.
A final judgment was issued against Starboard Group in March 2024. Following trial, the jury awarded Adler $7.14 million.
A link to the docket can be found here.
New Jersey Doctor Convicted in $5.4 Million Medicare Fraud Scheme
On April 26, a federal jury convicted Adarsh Gupta, a New Jersey doctor, for his role in a Medicare fraud scheme involving over $5.4 million in fraudulent claims. According to prosecutors, the claims were submitted for orthotic braces that were not medically necessary and were ordered through a telemarketing scheme.
Following trial, the jury found Gupta guilty of signing thousands of prescriptions for over 2,900 Medicare beneficiaries. The beneficiaries were urged by telemarketers to accept the braces, after which Gupta briefly spoke with them over the phone before prescribing multiple types of braces, some blatantly inappropriate such as prescribing a knee brace for an undercover agent, as well as a Medicare beneficiary with no legs.
The trial evidence further revealed that Gupta could not have adequately diagnosed the beneficiaries or assessed the necessity of the braces during these brief phone calls. Despite this, Gupta signed off on prescriptions that falsely claimed the braces were medically necessary and that he had developed a care plan for the patients. The fraudulent prescriptions allowed brace supply companies to bill Medicare more than $5.4 million.
Gupta was convicted of three counts of health care fraud and two counts of making false statements related to health care matters. He is scheduled for sentencing on October 8, and faces up to 10 years in prison for each health care fraud count and up to five years for each false statement count.
A link to the DOJ press release can be found here
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