On April 20, 2022, the U.S. Department of Justice (DOJ) announced coordinated law enforcement actions targeting various COVID-19 fraud schemes. The law enforcement actions were filed in nine different federal districts throughout the United States and involved criminal charges against 21 individuals and more than $149 million in allegedly fraudulent claims submitted to federal healthcare programs.

This is the first significant law enforcement action since Attorney General Garland appointed Associate Deputy Attorney General Kevin Chambers as the Director for COVID-19 Fraud Enforcement for the DOJ on March 10, 2022. At that time, Chambers signaled DOJ's intent to aggressively pursue COVID-related fraud schemes as a matter of priority.

This week's DOJ announcement includes a broad range of cases, including those involving fake COVID-19 cures and forged vaccination cards, misuse of Provider Relief Funds, and healthcare providers billing for services that were never provided to patients. Many of the cases announced involve COVID-19 and other clinical lab testing.

California Laboratory Owners Indicted for $214 Mil in Allegedly Fraudulent Lab Tests

In a major California case, the owners of Matias Clinical Laboratory, Inc., d/b/a Health Care Providers Laboratory, Inc., Imran Shams and Lourdes Navarro, were charged with a healthcare fraud, kickback, and money laundering scheme that involved the allegedly fraudulent billing of over $214 million for laboratory tests. More than $125 million of those billings involved claims for COVID-19 and respiratory pathogen tests "submitted without regard to medical necessity."

In addition, according to DOJ, "Shams and Navarro fraudulently concealed Shams' role in the lab and his prior health care-related criminal convictions," because Shams has been barred from participating in the Medicare program for decades. The indictment also alleges that Shams and Navarro paid kickbacks to marketers who obtained specimens and test orders, and laundered the proceeds of the scheme through shell companies Navarro controlled, including by making expenditures on real estate, luxury items, and personal goods and services.

DOJ Pursues COVID-Related AKS and Fraud Claims Across the Country

DOJ announced several other federal cases related to COVID-19 and other lab testing:

• A criminal complaint alleging conspiracy to violate the Anti-Kickback Statute was filed in the District of New Jersey against six individuals (Abid Syed, Tariq Din, Tamer Mohamed, Abdul Rauf, Tauqir Khan, and Nisim Davydov) who allegedly owned and controlled Metpath, a clinical laboratory in Parsippany, N.J., which performed COVID-19 diagnostic testing.
  
  Khan, Mohamed, and Davydov allegedly supplied COVID-19 diagnostic tests to Metpath in exchange for kickbacks, which were apparently concealed by shell companies established by Rauf. According to the complaint, the scheme involved more than $250,000 in illegal kickbacks for COVID-19 tests.
• Dr. Ron Elfenbein, M.D., was indicted by a federal grand jury in the District of Maryland on three counts of healthcare fraud for submitting more than $1.5 million of false claims to Medicare and other insurers for COVID-19 testing and related office visits. According to the indictment, Elfenbein owned and operated Drs ERgent Care, LLC, d/b/a First Call Medical Center and Chesapeake ERgent Care, and Drs ERgent Care–operated drive-through COVID-19 testing sites.
  
  In addition to billing for the drive-through testing, Dr. Elfenbein allegedly instructed the employees of Drs ERgent Care to bill for moderately complex office visits, lasting between 30 and 39 minutes for existing patients and between 45 and 59 minutes for new patients, even though Dr. Elfenbein knew the visits only lasted for five minutes or less.
• Elizabeth Mercedes Hernandez, an advanced registered nurse practitioner, was charged by indictment in the Southern District of Florida with alleged healthcare fraud and conspiracy to commit wire fraud.
  
  According to DOJ, Hernandez and others allegedly took advantage of Medicare's relaxed telemedicine rules during the COVID-19 pandemic by securing doctor's orders for medically unnecessary genetic testing and durable medical equipment in exchange for telehealth consultation fees and the opportunity to bill Medicare for visits not performed as presented. The scheme allegedly resulted in the submission of approximately $134 million dollars in false Medicare claims.
• Linda Tufui Toli was charged in the District of Utah with wire fraud for giving counterfeit negative COVID-19 test results to travelers flying to Hawaii, Israel, and other locations requiring negative results to fly. Toli allegedly intercepted traveler calls, canceled their pre-arranged COVID-19 tests, and arranged for travelers to purchase fraudulent test results directly from her.

In addition to these criminal prosecutions, CMS announced that it has taken an additional 28 administrative actions against providers based on allegations of fraud, waste, and abuse related to treatment for COVID-19 and other schemes that took advantage of the public health emergency.

LA City Attorney Secures $26 Mil COVID-19 Fraud Settlement

Separately, on April 21, 2022, the Los Angeles City Attorney announced a $26 million settlement with Sameday Technologies, d/b/a Sameday Health, a Venice, Calif., based COVID-testing chain that operates 55 testing locations across the nation, with 16 in Los Angeles County and five in the city of Los Angeles. The settlement includes $12.4 million in restitution and nearly $14 million in civil penalties to be paid by Sameday Health, its CEO Felix Huettenbach, and Dr. Jeff Toll for providing allegedly falsified COVID-19 test results to consumers.

Sameday allegedly required patients who paid with insurance benefits to complete unnecessary consultations with Dr. Toll that were later billed at $450 per telehealth visit and for which Dr. Toll paid kickbacks to Sameday.

Clinical Labs Advised to Stay Up-to-Date on Still Fluctuating COVID-19 Compliance Obligations

DOJ's recent national takedown and the Los Angeles action signal that COVID-19 lab testing fraud enforcement has become a top priority for federal, state, and local law enforcement agencies. DOJ and other governmental law enforcement agencies will undoubtedly continue to investigate allegations of fraud related to COVID-19 testing and other healthcare services related to the COVID-19 public health emergency and further cases will likely be announced in the future.

Given the amount of attention that law enforcement agencies are dedicating to COVID-related issues, clinical laboratories and other healthcare companies should take steps to ensure they are complying with all federal and state regulations. Regulations and guidance related to laboratory testing and other sectors of the healthcare industry have been in flux during the pandemic, making it even more imperative than ever to pay close attention to the relevant industry changes and seek legal advice where appropriate.