The Middle District of Florida convicted two men of a $1.4 billion health care fraud after a 24-day trial. They conspired to fraudulently bill private insurers using a sophisticated pass-through billing system where drug test analyses were reportedly conducted in rural hospitals in Florida, Georgia and Missouri as shells to submit higher fees rather than where the tests were analyzed.
Exploiting distressed hospitals as a front
The two men reportedly preyed on distressed hospitals in rural areas, either buying or running them. The hospitals were underserved communities and struggled to survive. The men would gain control and claim to help protect the hospitals from closing by turning them into lab testing sites.
They filed hundreds of millions of dollars in false claims for reimbursement at a higher cost – rural hospitals can charge higher rates for testing to ensure better that these hospitals can survive and provide needed care to the community. In most cases, the hospitals used as billing did not conduct the lab testing. Instead, the tests were mostly done in other testing labs controlled by accomplices, who also face charges. Once the insurers suspected something was amiss, the men would move on to another struggling hospital, leaving the previous one no better or worse off than before (three of the four clinics closed after they left).
Unnecessary testing and wire transfers
The two men and others also conspired with drug treatment clinics to generate drug tests that were not medically necessary. They obtained the tests using a kickback scheme that paid recruiters and providers (often in halfway houses or treatment facilities) to do the tests. The two men also laundered the proceeds through several large financial transfers, which led to wire fraud charges. The two men committed health care fraud on five occasions and conspired to launder the proceeds.