Three Troy Laboratories and Owners to Pay $6 Million in Cash and Property for Allegedly Improperly Billing Medicare For Urine Drug Tests

On February 7, 2012 the US Attorney’s Office announced its latest recovery under the False Claims Act.  Three different Troy laboratories—Accela Medical LLC, Coventry Diagnostics LLC, and Western Slope Laboratory LLC—along with their owners Thomas McCormick and Charles B. Reinhardt were accused of improperly billing for lab tests.  The defendants have agreed to turn over $6 million in cash and property to the US government to settle these allegations.

According to the complaint, Accela, through Reinhardt, billed Medicare for about $900.00 worth of urine drug tests for almost every patient who was referred to the company.  Additionally, Accela allegedly improperly billed for nearly 20 different tests on the samples.  Coventry and its fully owned subsidiary, Western Slope, performed all of the various testing.  The complaint also asserts that McCormick used Accela as a front company to hide his involvement in the scheme, as McCormick has been previously convicted for healthcare fraud.  Reinhardt purportedly applied for the Medicare provider number so that Accela could over bill the organization.  The two would then split the profits from their fraud scheme.

Medicare discovered the fraud as a result of a data analysis process that is used to detect unusual billing activity.  In this instance, the tests revealed that Accela used a certain billing code more than any other Medicare provider in the country.  Tests like this are a great way for Medicare and Medicaid to detect potentially fraudulent activity by its providers.  As they begin to be used more frequently, it will become harder and harder for companies and individuals to take advantage of systems set in place to provide healthcare to individuals who otherwise might not be able to afford these services.

In addition to catching and stopping a repeat offender, the government recovered about $4.7 million in frozen assets, payment of an additional $400,000 in cash, transfer of a beach home and retirement account worth roughly $500,000 to the government, recovery of $400,000 transferred to Singapore, and recovery of $18,000 transferred to a company manager.

Too many individuals and companies are taking advantage of the Medicare system in order to make some fast cash for their personal benefit.  If you know of anyone participating in fraudulent activity, you can stop them.  Contact the attorneys at Tycko & Zavareei LLP today to learn more.

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