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Healthcare

Quickly Resolved: 11 Defendants Plea Guilty to Lab Kickback Scheme

Several defendants pled guilty just two days after being indicted.
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Courtesy: iStock

The feds earned a clean sweep of the 11 people implicated in a $300 million kickback fraud just two months after the original indictment. The defendants include two medical doctors and other healthcare and marketing professionals.

The kickback scheme was complicated and included gifts to spouses, rent assistance, and salary offsets to hide the payments. Three North Texas labs were involved in the scheme, including United Laboratory Services in Fort Worth, Spectrum Diagnostic Laboratory in Arlington, and Reliable Labs in Carrollton. Two South Texas physicians, Drs. Eduardo Canova, Jose Maldonado, and nurse practitioner Keith Wichinski allegedly ordered unnecessary lab tests billed to federal payers, and the labs pled guilty to paying kickbacks to the providers to make sure that the tests were filled with them.

These cases often drag on for years, especially with this many defendants, organizations, and such complex payment schemes. Because these payments are often disguised through layers of marketing companies and consultants fees, it can be difficult to separate the legitimate payments from the fraudulent ones. The massive amount of data federal payers have to sift through to find the unusual billing patterns doesn’t make prosecution easier.

In total, the providers billed $300 million worth of fraudulent tests to federal payers. Maldonado admitted receiving $400,000 in kickbacks for ordering more than $4 million worth of lab tests, and Canova admitted to receiving more than $300,000 on $12 million in lab tests. The lab companies attempted to disguise the payments as business transactions such as medical advisor payments, salary bumps connected to the number of referrals, lease payments, and marketing commissions. The labs used marketing companies as middlemen to make the payments and even made direct payments to the providers’ spouses as part of the scheme.

The labs weren’t afraid to use the payments as leverage, either. When a lab threatened a provider that they would cut off payments without more referrals, the provider responded and was soon averaging 20-30 referrals per day. Other times, the payments were used as a carrot, making advance payments to physicians to ensure they would not send referrals to other labs.

Jeffrey Madison, the owner of Spectrum and United, convinced the founders of Reliable to convert their business model to physician ownership, knowing that kickbacks could be more easily disguised that way. Reliable offered physician ownership only to doctors whose referral patterns were high enough to satisfy the lab.

Six defendants, including Maldonado, Canova, Wichinski, and Reliable Labs owner cofounder Abraham Phillips, pled guilty just two days after being indicted. Reliable Labs owner Biby Kurian pled guilty earlier this month.

“The swift resolution of this case is a testament to both our office and to the investigative agencies that worked diligently to ensure our case was airtight,” said U.S. Attorney Chad Meacham via release. “We cannot allow physicians’ judgment to be clouded by financial considerations.” 

From the U.S. Attorney’s Office release, here are the rest of the pleas:

  • Jeffrey Paul Madison, founder of Unified Laboratory Services and Spectrum Diagnostic Laboratory – conspiracy to pay and receive healthcare kickbacks and a substantive count of paying and receiving healthcare kickbacks (two counts)
• Mark Christopher Boggess, chief operating officer for Spectrum and Unified – misprison (concealment) of a felony 
• Biby Ancy Kurian, co-founder of Reliable Labs, LLC – conspiracy to pay kickbacks 
• Abraham Phillips, co-founder of Reliable Labs, LLC – conspiracy to pay kickbacks
• Dr. Jose Roel Maldonado, family medicine doctor based in Laredo – conspiracy to solicit and receive illegal kickbacks 
• Dr. Eduardo Carlos Canova, internal medicine specialist based in Laredo – conspiracy to solicit and receive illegal kickbacks 
• Keith Allen Wichinski, board-certified nurse practitioner based in San Antonio – conspiracy to solicit or receive kickbacks 
• David Michael Lizcano, owner of DCLH, a marketing firm engaged by Unified, Spectrum, and Reliable – conspiracy to pay and receive healthcare kickbacks and a substantive count of paying and receiving healthcare kickbacks (two counts)
• Laura Ortiz, sister of David Lizcano and employee at his marketing firm – conspiracy to pay and receive healthcare kickbacks
• Juan David Rojas, owner of Rojas & Associates, another marketing firm engaged by Unified, Spectrum, and Reliable – conspiracy to pay and receive healthcare kickbacks
• Sherman Kennerson, investor in Unified (charged via criminal information) – conspiracy to pay kickbacks  

Madison and Lizcano may be sentenced up to 15 years each in federal prison, while Kennerson, Ortiz, Phillips, Kurian, Maldonado, Canova, Wichinski, and Rojas face up to five years. Boggess faces up to three years.

“The expeditious resolution of this matter is a testament to the thorough investigation and valuable collaboration between investigative partners and prosecutors,” said Miranda L. Bennett, Special Agent in Charge for the Office of Inspector General of the U.S. Health and Human Services via release. “We will continue working with our partners to protect federal health care programs and the beneficiaries who depend on these programs for treatment and care.”

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Will Maddox

Will Maddox

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Will is the senior writer for D CEO magazine and the editor of D CEO Healthcare. He's written about healthcare…

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