A California woman was sentenced on January 28, 2025, to nine years in prison for her role in fraudulently submitting claims to governmental and private insurance programs during the COVID-19 pandemic. These claims were for expensive respiratory pathogen panel (RPP) tests that were medically unnecessary and never ordered by healthcare providers.
According to court documents, the woman and a co-conspirator, who together owned and controlled a laboratory company, conspired to obtain nasal swab specimens for COVID-19 testing. They also sought testing orders from physicians and other medical professionals. The specimens were collected from, among others, residents and staff at nursing homes, assisted living facilities, rehabilitation facilities, and similar establishments, as well as from students and staff at primary and secondary schools. These individuals were purportedly tested to identify and isolate those infected with COVID-19. However, the company conducted RPP tests on most of these specimens, despite only COVID-19 testing being ordered. There was no medical justification for performing RPP tests on asymptomatic individuals who only needed COVID-19 screenings.
Through their company, the co-conspirators billed approximately $369 million to Medicare, the Health Resources and Services Administration COVID-19 Uninsured Program, and a private health insurance company. They were reimbursed approximately $46.7 million for fraudulent claims.
The woman pleaded guilty on October 5, 2023, to conspiracy to commit healthcare fraud and wire fraud. Her co-conspirator pleaded guilty on January 24, 2023, in the Central District of California to conspiracy to commit healthcare fraud and concealment of his exclusion from Medicare. He was sentenced to ten years in prison on January 30, 2024. In addition, on May 29, 2024, her co-conspirator was sentenced to five years in prison in connection with his 2017 plea in the Eastern District of New York for conspiracy to commit money laundering, conspiracy to pay and receive kickbacks, and defrauding the United States by obstructing the lawful functions of the IRS. Three years of that sentence were ordered to run consecutively to the sentence handed down in the Central District of California.
As part of her sentence, the woman was also ordered to forfeit $11,662,939 from funds seized from three bank accounts. The total amount seized and forfeited from both co-conspirators totals $14,518,485. Additionally, she was ordered to pay $46,735,400 in restitution.
Compliance Perspective
Issue
All laboratory tests performed for residents must be medically necessary to bill Medicare, Medicaid, or private insurance companies. A test or procedure is considered medically necessary if the results are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms. Claims for tests or procedures that are not medically necessary may be deemed violations of the False Claims Act, which could result in fines, criminal charges, and other sanctions.
Discussion Points
- Review your policies and procedures for laboratory testing services, including billing practices and protocols for preventing and reporting false claims violations. Make updates as necessary.
- Train staff to ensure that all ordered tests are medically necessary. If a test or service appears unnecessary, staff should seek clarification from the ordering provider before proceeding. Involve your medical director to review cases where medical necessity is uncertain or if there is concern that a provider is not making appropriate determinations for residents. Ensure that staff understand how to report any concerns or suspected violations, and emphasize the importance of reporting these issues promptly.
- Conduct periodic audits to confirm that laboratory tests meet the medical necessity criteria. Survey professional staff to gauge their understanding of what constitutes medical necessity. Also, periodically assess staff knowledge on how to handle suspected unnecessary services or false claims being submitted.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
