A Lexington toxicology lab, LabTox, LLC, its owner, Ronald Coburn, 76, and its compliance officer, Erica Baker, 31, agreed to civil judgments totaling $10,458,933 in favor of the United States, holding LabTox, Coburn, and Baker liable for submitting false claims for urine drug testing services to the Medicare and Kentucky Medicaid programs. In December 2023, Judge Reeves sentenced Coburn to 46 months in prison, and Baker to 6 months in prison, followed by 6 months of home confinement; both were required to report to Bureau of Prisons’ custody February 16, 2024. Coburn also admitted knowing that urine drug tests ordered by courts for use in judicial proceedings are not medically necessary, and thus not payable by Medicare or Kentucky Medicaid. With Coburn’s knowledge and approval, however, Baker recruited a company called Blue Waters Assessment and Testing Services to refer court-ordered urine drug tests to LabTox. Coburn knew this was not medical testing, but caused LabTox to bill the tests to Medicare and Kentucky Medicaid anyway, resulting in fraudulently-obtained payments of $1,864,429 between June 2019 and March 2021. Submission of these false claims for court-ordered urine drug tests constituted criminal healthcare fraud and also violated the False Claims Act, triggering additional civil penalties. Coburn and LabTox’s agreed civil judgment holds them liable for $5,593,287, because under the False Claims Act, losses to the Medicare and Kentucky Medicaid programs are mandatorily trebled.
Erica Baker’s sentence and False Claims Act judgment resulted from a similar fraud scheme. According to her plea agreement, she participated in a healthcare fraud conspiracy with Coburn between January 2019 and January 2021. Specifically, at Coburn’s direction, Baker solicited urine drug tests from substance abuse recovery programs that did not provide medical treatment—typically faith-based residential programs or homeless shelters. Baker knew that urine drug tests for these programs’ clients were not performed for any medical reason, as would be required before Medicare or Kentucky Medicaid would pay for the tests. As part of the scheme, Baker misled sober home directors, and induced the facilities to send LabTox more tests by putting facility staff on LabTox’s payroll and compensating them based on the number of urine drug tests sent to the lab. Despite knowing that this testing was not for medical purposes, Baker and Coburn agreed to cause LabTox to bill Medicare and Kentucky Medicaid for urine drug tests referred by these non-medical programs, resulting in fraudulently obtained payments of $1,621,882. Submission of these false claims for medically unnecessary urine drug tests constituted criminal healthcare fraud and violations of the False Claims Act, triggering additional civil penalties. Baker and LabTox’s agreed civil judgments hold them liable for $4,865,646, as mandatorily trebled damages.
