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.
McKesson agreed to pay a $150 million settlement for not reporting suspicious opioid orders and this case establishes a precedent that could ensnare other providers
In today’s world of the Internet-of-Things, it is becoming easier to collect data on every purchase made by individuals and companies. That ability to track the actions of consumers and commercial business has not escaped the notice of law enforcement and regulatory authorities. For example, at some future point, it could be that regulators would want to access data held by clinical laboratories on the test ordering patterns of their client physicians.
A recent ruling by the US Department of Justice (DOJ) in a case involving McKesson Corp. (NYSE:MCK), may set a precedent that could eventually be cause for concern for medical laboratories that work with physicians who may be ordering more tests than are considered medically necessary under current regulations.
McKesson is a retail distributor of pharmaceuticals, and provider of health information and care management technologies and medical supplies. In a settlement with the DOJ, McKesson agreed to pay a record $150 million in civil penalties, as well as a staggered suspension of sales of controlled substances for a period of time from distribution centers in Colorado, Ohio, Florida, and Michigan, for alleged violations of the Controlled Substances Act (CSA). (more…)
