Federal agents allege ‘healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry’
Here’s yet another example of how federal and state law enforcement agencies intend to further crack down on fraud involving COVID-19 testing, financial relief programs, vaccination cards, and other pandemic-related programs.
The United States Department of Justice (DOJ) announced it has charged the owners of a Calif. clinical laboratory—as well as 19 other defendants—for their roles in fraudulent billing, kickbacks, and money laundering schemes to defraud Medicare of more than $214 million.
Imran Shams and Lourdes Navarro—owners of Matias Clinical Laboratory, Inc., in Baldwin Park, Glendale, Calif.—which was doing business as Health Care Providers Laboratory, Inc. (Matias)—were charged along with the other defendants with participating in fraud that took place in nine federal court districts.
The indictment alleges the pair paid kickbacks to marketers to obtain specimens and test orders. The lab company owners then laundered their profits through shell corporations in the US, transferred the money to foreign countries, and used it to purchase “real estate, luxury items, and goods and services for their personal use,” according to court documents.
“While millions of Americans were suffering and desperately seeking testing and treatment for COVID-19, some saw an opportunity for profit,” said Assistant Attorney General for the Criminal Division Kenneth A. Polite Jr., JD, during a news conference at the Justice Department, The New York Times reported.
“The actions of these criminals are unacceptable, and the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the healthcare industry for profit,” said Luis Quesada of the Federal Bureau of Investigation’s (FBI) Criminal Investigative Division in a press release.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada (above) of the FBI’s Criminal Investigative Division in a DOJ press release. “These healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry, particularly during a vulnerable and worrisome time for many individuals.” Clinical laboratories throughout the US should be aware of increased scrutiny to Medicare billing by the DOJ. (Photo copyright: El Paso Times.)
According to the DOJ’s Summary of Criminal Charges, “Matias” Clinical Laboratory also “performed and billed Medicare for urinalysis, routine blood work, and other tests, despite the fact that Shams had been excluded from all participation in Medicare for several decades.” The indictment alleges that Shams and Navarro fraudulently concealed Sham’s role in the clinical laboratory and his prior healthcare-related criminal convictions.
“She always tried to follow the law and provide appropriate and quality testing services to the laboratory’s patients. She looks forward to clearing her name in court,” Werksman said.
However, both Navarro and Shams have a checkered past with law enforcement agencies. According to a State of California Department of Justice news release, in 2000, the two were convicted in California on felony counts of Medi-Cal fraud, grand theft, money laundering, and identity theft for using the names of legitimate physicians without permission and filing thousands of false claims with the state for medical tests never performed.
The Calif. Attorney General’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA) seized approximately $1.1 million in uncashed warrants, which were returned to the Medi-Cal program. Since the 2000 case, Shams has been barred from filing for Medicare reimbursement, the New York Times reported.
Other Felony Indictments and Criminal Complaints for Healthcare Fraud
In a separate case, the DOJ announced Ron K. Elfenbein, MD, 47, of Arnold, Md., was charged by indictment with three counts of healthcare fraud in connection with an alleged scheme to defraud the US of more than $1.5 million in claims that were billed in connection with COVID-19 testing. Elfenbein is owner and medical director of Drs Ergent Care, LLC, which operates as FirstCall Medical Center. Elfenbein allegedly told his employees to submit claims to Medicare and other insurers for “moderate-complexity office visits” even though the COVID-19 test patients’ visits lasted five minutes or less.
And in April, the DOJ filed a criminal complaint against Colorado resident, Robert Van Camp, 53, for allegedly forging and selling hundreds of fake COVID-19 vaccination cards, which he sold to buyers and distributors in at least a dozen states.
“Van Camp allegedly told an undercover agent that he had sold cards to ‘people that are going to the Olympics in Tokyo, three Olympians and their coach in Tokyo, Amsterdam, Hawaii, Costa Rica, Honduras,’” the DOJ said in a news release, CNBC reported.
Van Camp also allegedly told that agent, “I’ve got a company, a veterinary company, has 30 people going to Canada every f— day, Canada back. Mexico is big. And like I said, I’m in 12 or 13 states, so until I get caught and go to jail, f— it, I’m taking the money, (laughs)! I don’t care,” the DOJ stated.
Clinical laboratory directors and pathologists know these fraud charges provide another example of how the misdeeds of a few reflect on the entire healthcare industry, potentially causing people to lose trust in organizations tasked with providing their healthcare.
The Department of Justice steps beyond the law’s original focus on opioid-related lab testing fraud
An interesting aspect with enforcement of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is the government’s willingness to go after charges tied to fraudulent COVID-19 testing.
The case U.S. vs. Malena Badon Lepetich provides a good example of this approach. A grand jury indicted Lepetich on various healthcare fraud charges last year, including that she allegedly offered to pay kickbacks for referrals of specimens for COVID-19 testing.
“The government had really only used EKRA in the context of addiction treatment space,” attorney Alexander Porter, a Partner at law firm Davis Wright Tremaine in Los Angeles, said in the latest issue of The Dark Report. “The Lepetich case shows that the government’s going to use EKRA beyond that context and go into other areas where they think that it can be useful—in particular, in the area of COVID-19 testing.”
Clinical laboratories and pathology groups should take note of this development.
Attorney Alexander Porter said EKRA enforcement now goes after fraudulent COVID-19 testing. (Photo: Davis Wright Tremaine)
Defendant Allegedly Filed $10 Million in Fraudulent Lab Claims
Lepetich was the owner of MedLogic, a clinical laboratory in Baton Rouge, La.
In addition to the fraudulent COVID-19 testing charges, she allegedly solicited and received kickbacks in exchange for referrals of urine specimens for medically unnecessary tests, according to the U.S. Department of Justice (DOJ).
EKRA Provisions Rose from the Opioid Crisis in the U.S.
EKRA is a criminal law that falls under the Communities and Patients Act, which lifted restrictions on medications for opioid treatment and sought to limit overprescribing of opioid painkillers. Originally, EKRA targeted fraudulent practices at sober homes and substance abuse treatment centers. However, the final draft of the bill added clinical laboratories to the list of providers under potential scrutiny.
At the time Congress passed EKRA, the law was primarily aimed at fraudulent activity in opioid treatment centers, including related lab testing.
Thus, the government’s use of EKRA in the COVID-19 charges against Lepetich case is newsworthy and establishes a precedent, noted Porter. He’ll speak about EKRA at the 2022 Executive War College on Laboratory and Pathology Management. The event takes place April 27-28 in New Orleans.
A contentious part of EKRA for clinical laboratories and pathology groups is that certain conduct protected under the federal Anti-Kickback Statute is treated as a criminal offense under EKRA. Some common lab practices come under that confusing designation, such as paying lab sales reps on a commission-based formula based on testing volumes they generate.
It did not take long for fraudsters to pursue hundreds of billions of federal dollars designated to support SARS-CoV-2 testing and it is rare when federal prosecutors bring cases only a few months after illegal lab testing schemes are identified
As if the COVID-19 pandemic weren’t bad enough, unscrupulous clinical laboratory operators quickly sought to take advantage of the critical demand for SARS-CoV-2 testing and defraud the federal government.
Unfortunately for the many defendants in these cases, federal investigations into alleged cases of fraud were launched with noteworthy speed. As a result of these investigations into alleged healthcare fraud by clinical laboratories and other organizations during fiscal year (FY) 2020, the US Department of Justice (DOJ) announced the US government has recovered $1.8 billion.
The federal prosecutions involved dozens of medical laboratory owners and operators who paid back “hundreds of millions in alleged federal healthcare program losses,” Goodwin Life Sciences Perspectives explained.
When combined with similar efforts starting in prior years, the program has returned to the federal government and private individuals a total of $3.1 billion, the DOJ noted.
“In its 24th year of operation, the program’s continued success confirms the soundness of a collaborative approach to identify and prosecute the most egregious instances of healthcare fraud, to prevent future fraud and abuse, and to protect program beneficiaries,” the report states.
According to the graphic above, which is based on analysis by B2B research company MarketsandMarkets, “North America will dominate the healthcare fraud analytics market from 2020–2025.” As clinical laboratory testing represents a significant portion of the fraud, medical lab managers will want to remain vigilant. (Graphic copyright: MarketsandMarkets.)
COVID-19 Pandemic an Opportunity for Fraud
The HHS report notes that the COVID-19 pandemic required CMS to develop a “robust fraud risk assessment process” to identify clinical laboratory fraud schemes, such as offering COVID-19 tests in exchange for personal details and Medicare information.
“In one fraud scheme, some labs are targeting retirement communities claiming to offer COVID-19 tests but are drawing blood and billing federal healthcare programs for medically unnecessary services,” the HHS report notes.
Still other alleged schemes involved billing for expensive tests and services in addition to COVID-19 testing. “For example, providers are billing a COVID-19 test with other far more expensive tests such as the Respiratory Pathogen Panel (RPP) and antibiotic resistance tests,” the report says.
“Other potentially unnecessary tests being billed along with a COVID-19 test include genetic testing and cardiac panels CPT (current procedural terminology) codes. Providers are also billing respiratory, gastrointestinal, genitourinary, and dermatologic pathogen code sets with the not otherwise specified code CPT 87798,” the report states.
Different Types of Healthcare Organizations Investigated in 2020
Beyond clinical laboratories, the HHS’ 124-page report also shares criminal and civil investigations of other healthcare organizations and areas including:
clinics,
drug companies,
durable medical equipment,
electronic health records,
home health providers,
hospice care,
hospitals and healthcare systems,
medical devices,
nursing home and facilities,
pharmacies, and
physicians/other practitioners.
According to the DOJ, “enforcement actions” in 2020 included:
1,148 new criminal healthcare fraud investigations opened,
440 defendants convicted of healthcare fraud and related crimes,
1,079 civil healthcare fraud investigations opened, and
1,498 pending civil health fraud matters at year-end.
“Federal Bureau of Investigation (FBI) investigative efforts resulted in over 407 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 101 healthcare fraud criminal enterprises,” the DOJ reported.
Furthermore, the report said OIG investigations in 2020 led to:
578 criminal actions against people or organizations for Medicare-related crimes,
781 civil actions such as false claims, and
2,148 people and organizations eliminated from Medicare and Medicaid participation.
Implications for Clinical Laboratories
In 2020, OIG issued 178 reports, completed 44 evaluations, and made 689 recommendations to HHS divisions.
Clinical laboratory leaders may be most interested in those related to patient identification as a means to combating fraud and Medicare Part B lab testing reimbursement.
The HHS report says, “Medicare Advantage (MA) encounter data continue to lack National Provider Identifiers (NPIs) for providers who order and/or refer … clinical laboratory services,” adding that, “Almost half of MA organizations believe that using NPIs for ordering providers is critical for combating fraud.”
Additionally, the report states, “Medicare Part B spending for lab tests increased to $7.6 billion in 2018, despite lower payment rates for most lab tests. The $459 million spending increase was driven by:
“increased spending on genetic tests,
“ending the discount for certain chemistry tests, and the
“move to a single national fee schedule.”
Medical laboratory leaders may be surprised to learn that federal healthcare investigators were so vigorous in their investigations, even during the worst of the COVID-19 pandemic.
Vigilance is critical to ensure labs do not fall under the DOJ’s scrutiny. This HHS report, which describes the types and dollars involved in fraudulent schemes by clinical labs and other providers, could help inform revisions to federal compliance regulations and statutes.
Clinical laboratory genetic testing labs and telemedicine groups among those charged
In the largest healthcare fraud bust in US history, the US Department of Justice (DOJ) announced it had levied criminal charges against 324 defendants for allegedly participating in various fraudulent healthcare schemes—including clinical laboratory genetic testing and telemedicine fraud—totaling over $14.6 billion in losses.
A DOJ press release states the agency’s 2025 National Health Care Fraud Takedown represents an unprecedented effort to alleviate fraud in healthcare that exploits patients and taxpayers.
The defendants include 96 doctors, nurse practitioners, pharmacists, and other licensed medical professionals. The cases are being prosecuted by Health Care Fraud Strike Force teams from the Criminal Division’s Fraud Section, 50 US Attorneys’ Offices, and 12 State Attorneys’ General Offices.
“This record-setting Health Care Fraud Takedown delivers justice to criminal actors who prey upon our most vulnerable citizens and steal from hardworking American taxpayers,” said Attorney General Pam Bondi in the press release. (Photo copyright: US Department of Justice.)
49 Clinical Lab Defendants Charged
The takedown relied on coordinated investigations from several agencies, including the:
Health Care Fraud Unit of the DOJ Criminal Division’s Fraud Section,
Department of Health and Human Services Office of Inspector General,
Federal Bureau of Investigation,
Drug Enforcement Administration, and,
Multiple US Attorneys’ Offices.
Clinical laboratory testing fraud was addressed in the takedown. Forty-nine defendants were charged with telemedicine and genetic testing fraud schemes where deceptive telemarketing campaigns targeted Medicare beneficiaries, resulting in $46 million in fraudulent claims being submitted to Medicare for durable medical equipment (DME), genetic tests, and COVID-19 tests.
“Make no mistake—this administration will not tolerate criminals who line their pockets with taxpayer dollars while endangering the health and safety of our communities,” said Attorney General Pam Bondi in the press release.
Other High-Profile Cases
The most prominent cases include a $10 billion urinary catheter scheme where foreign straw owners secretly purchased medical supply companies and then used stolen identities and personal health data of more than one million Americans to file erroneous Medicare claims. Known as Operation Gold Rush, the hoax resulted in the arrests of nineteen defendants, including four in Estonia and seven individuals attempting to avoid capture at US airports and at the Mexican border.
In another case involving foreign influence, owners and executives in Pakistan were charged in connection with a $703 million scheme where artificial intelligence (AI) was allegedly used to create fake recordings of Medicare recipients consenting to receive various products. The data was then sold to clinical laboratories and DME companies to fraudulently submit false claims to Medicare. In addition, some of these defendants allegedly conspired to conceal and launder proceeds from US bank accounts to overseas bank accounts.
Also, a defendant who owned a billing company allegedly planned a sham in which Arizona Medicaid was fraudulently billed $650 million for addiction treatment programs where services were never rendered or patients received substandard care. The defendant, who is based in Pakistan and the United Arab Emirates, supposedly received at least $25 million from the scheme and is also charged with a money laundering offense.
“It’s not done by small time operators,” said Mehmet Oz, MD, who leads the Centers for Medicare and Medicaid Services (CMS). “These are organized syndicates who are designing to hurt America.”
Other notable cases include a scam involving $1.1 billion in fraudulent claims for unnecessary amniotic wound allografts for elderly patients resulting in defendants receiving millions in illegal kickbacks. In another scheme, 74 defendants were charged with the illegal distribution of prescription opioids and other controlled substances.
DOJ Property Seizures
As a result of the fraud bust, the US government seized over $245 million in cash, luxury vehicles, cryptocurrency, and other assets and prevented an additional $4 billion from being paid out by CMS due to false and fraudulent claims.
“These criminals didn’t just steal someone else’s money. They stole from you,” Matthew Galeotti, JD, who leads the DOJ Criminal Division, told the Associated Press. “Every fraudulent claim, every fake billing, every kickback scheme represents money taken directly from the pockets of American taxpayers who fund these essential programs through their hard work and sacrifice.”
This latest bust demonstrates the DOJ’s increased resolve to pursue healthcare fraud, including cases involving clinical laboratory testing. Look for further coverage of this aspect in the 7-14-2025 issue of The Dark Report.
Charges include $1.1 billion in alleged telemedicine and fraudulent clinical laboratory testing
Nearly 200 individuals in 25 states are facing charges for alleged participation in a variety of healthcare frauds, the US Department of Justice (DOJ) announced in a press release. This major enforcement action involves telemedicine and clinical laboratory testing as well as other healthcare schemes. In total, the DOJ is alleging the defendants are responsible for $2.75 billion in intended losses and $1.6 billion in actual losses.
The charges include:
$1.1 billion in alleged telemedicine and clinical laboratory fraud.
As part of the action, the government has seized more than $231 million in assets, including cash, luxury vehicles, and gold.
Monica Cooper, JD (above), a DOJ trial attorney and member of the Texas Strike Force, is one of two attorneys prosecuting the case against Harold Albert “Al” Knowles of Delray Beach, Fla., and Chantal Swart of Boca Raton, Fla., in the DOJ’s latest crackdown on healthcare fraud. Charges against Knowles and Swart include conspiracy to commit healthcare fraud, conspiracy to defraud the United States, and paying/receiving healthcare kickbacks in a $359 million scheme to bill Medicare for medically unnecessary genetic tests at two Houston clinical laboratories. (Photo copyright: US Department of Justice.)
Houston-Area Labs Charged in $359 Million Scheme
In one case, the government charged Florida residents Harold Albert “Al” Knowles and Chantal Swart in a $359 million scheme involving fraudulent Medicare billing for medically unnecessary genetic tests. Knowles owned two Houston-area labs—Bio Choice Laboratories, Inc. and Bios Scientific, LLC—while Swart ran a telemarketing operation. According to DOJ case summaries, the government alleges that Knowles paid kickbacks to Swart to obtain DNA samples and doctors’ orders for tests.
“Knowles, Swart, and others obtained access to tens of thousands of beneficiaries across the United States by targeting them with deceptive telemarketing campaigns,” the indictments allege. “Call center representatives—who were almost never medical professionals—often prompted beneficiaries to disclose their medical conditions and induced them to agree to genetic testing regardless of medical necessity.”
In addition, “Knowles, Swart, and others agreed that Swart and others would pay illegal kickbacks and bribes to purported telemedicine companies to obtain signed doctors’ orders for genetic testing after only a brief telemedicine visit,” the indictment stated. “Knowles and his co-conspirators knew that the purported telemedicine companies’ physicians were rarely, if ever, the beneficiaries’ treating physicians and rarely, if ever, used the genetic testing results in the beneficiaries’ treatment.”
Dallas-Area Labs Charged in $335 Million Scheme
In another case, the federal government charged that the owner of two Dallas-area clinical laboratories engaged in a $335 million Medicare billing scheme.
Keith Gray, owner of Axis Professional Labs, LLC and Kingdom Health Laboratory, LLC, “offered and paid kickbacks to marketers in exchange for their referral to Axis and Kingdom of Medicare beneficiaries’ DNA samples, personally identifiable information (including Medicare numbers), and signed doctors’ orders authorizing medically unnecessary cardio genetic testing,” the government alleged. “As part of the scheme, the marketers engaged other companies to solicit Medicare beneficiaries through telemarketing and to engage in ‘doctor chase,’ i.e., to obtain the identity of beneficiaries’ primary care physicians and pressure them to approve genetic testing orders for patients who purportedly had already been ‘qualified’ for the testing.”
Other Clinical Laboratory and Healthcare Fraud Cases
DOJ attorneys charged the owners of Innovative Genomics, a clinical laboratory in San Antonio, in a $65 million scheme to bill Medicare and the COVID-19 Uninsured Program for “medically unnecessary and otherwise non-reimbursable COVID-19 and genetic testing,” according to the indictment. Also charged were two patient recruiters who allegedly received kickbacks for referring patients.
Richard Abrazi of New York City was charged in a $60 million Medicare billing scheme. Abrazi owned two clinical laboratories: Enigma Management Corp. and Up Services Inc. Both operated as Alliance Laboratories.
“Abrazi and others engaged in a scheme to pay and receive kickbacks and bribes in exchange for laboratory tests, including genetic tests, that Enigma and Up billed to Medicare,” the indictment alleges. “Abrazi and others also allegedly paid and received kickbacks and bribes in exchange for arranging for the ordering of medically unnecessary genetic tests that were ineligible for Medicare reimbursement.”
The DOJ charged Brian Cotugno, of Auburn, Ga., and James Matthew Thorton “Bo” Potter, of Santa Rosa Beach, Fla., in a $20 million Medicare billing scheme. Cotugno, the indictment alleges, sold Medicare Beneficiary Identification Numbers (BINs) to two Alabama laboratories co-owned by Potter.
“The BINs were used to bill Medicare tens of millions of dollars for OTC COVID-19 test kits, many of which had not been requested by the beneficiaries,” the government alleged.
These are only a few of the recent cases the DOJ brought against defendants nationwide for healthcare, telemedicine, and clinical laboratory fraud. Both Dark Daily and our sister publication The Dark Report have covered these ongoing investigations for years. And we will continue to do so because it’s important that lab managers and pathology group leaders are aware of the lengths to which the DOJ is pursuing bad actors in healthcare.
