News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

Southern California Physician and Clinical Laboratory Owners Charged in Federal Crackdown on Pandemic-Related Billing Fraud

Federal prosecutors build the new healthcare-related fraud cases on previous nationwide enforcement actions from 2022

Federal charges have once again been brought against a number of physicians and clinical laboratory owners in what the US Department of Justice described as the “largest ever” coordinated nationwide law enforcement effort against COVID-19 pandemic-related healthcare fraud.

In total, the DOJ filed criminal charges against 18 defendants in five states plus the territory of Puerto Rico, according to an April 20 press release.

The highest dollar amount of these frauds involved ENT physician Anthony Hao Dinh, DO, who allegedly defrauded the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program for millions of dollars, and Lourdes Navarro, owner of Matias Clinical Laboratory, for allegedly “submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing” while performing “COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools,” the press release states. Both court cases are being conducted in Southern California courtrooms.

The DOJ’s filing of charges came rather speedily, compared to other cases involving fraudulent clinical laboratory testing schemes pre-pandemic. The amount of money each defendant managed to generate in reimbursement from the fraud represents tens of thousands of patients. If feds were paying $100 per COVID-19 test, then the $153 million represents 153,000 patients, in just 18 to 24 months.

Assistant Attorney General Kenneth A. Polite, Jr.

“Today’s announcement marks the largest-ever coordinated law enforcement action in the United States targeting healthcare fraud schemes that exploit the COVID-19 pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. (above), in an April 20 DOJ press release. “The Criminal Division’s Health Care Fraud Unit and our partners are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from a public health emergency.” Clinical laboratory managers may want to pay close attention to the DOJ’s prosecution of these newest cases of alleged COVID-19 fraud. (Photo copyright: Department of Justice.)

Matias Clinical Laboratory, Inc.

The DOJ first brought fraud charges against Lourdes Navarro, owner of Matias Clinical Laboratory (Matias) in Baldwin Park, California, in April 2022. The Dark Daily covered that federal crackdown in “California Clinical Laboratory Owners among 21 Defendants Indicted or Criminally Charged for COVID-19 Test Fraud and Other Schemes Totaling $214 Million.

Then, in April of 2023, the DOJ filed expanded charges against the 18 defendants, including the owners of Matias which provided COVID-19 screening for schools, rehab facilities, and eldercare facilities, according to a United States Attorney’s Office, Central District of California press release.

Prosecutors allege that Navarro and her husband, Imran Shams, who operated Matias—also known as Health Care Providers Laboratory—perpetrated a scheme to perform medically unnecessary respiratory pathogen panel (RPP) tests on specimens collected for COVID-19 testing, even though physicians had not ordered the RPP tests and the specimens were collected from asymptomatic individuals.

In some cases, the indictment alleges, Navarro and Shams paid kickbacks and bribes to obtain the samples.

The indictment notes that reimbursement for RPP and other respiratory pathogen tests is generally “several times higher” than reimbursement for COVID-19 testing. Claims for the tests were submitted to Medicare and an unidentified private insurer, as well as the HRSA COVID-19 Uninsured Program, which provided support for COVID-19 testing and treatment for uninsured patients.

Claims to the HRSA falsely represented that “the tested individuals had been diagnosed with COVID-19, when in truth and in fact, the individuals had not been diagnosed with COVID-19 and the tests were for screening purposes only,” the First Superseding Indictment states.

The indictment further states that both Navarro and Shams had previously been barred from participating in Medicare and other federal healthcare programs due to past fraud convictions. Navarro, the indictment alleges, was reinstated in December 2018 after submitting a “false and fraudulent” application to the HHS Office of Inspector General.

It also alleges that Navarro and Shams concealed their ownership role in Matias so the lab could maintain billing privileges.

More Alleged Abuse of HRSA Uninsured Program

In a separate case, Federal prosecutors alleged that Anthony Hao Dinh, DO, an ear, nose, and throat physician in Orange County, California, engaged in a scheme to defraud the HRSA COVID-19 Uninsured Program as well.

Dinh, prosecutors allege, “submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary.”

The criminal complaint, filed on April 10, alleges that Dinh submitted claims for approximately $230 million, enough to make him the program’s second-highest biller. He was paid more than $153 million, prosecutors allege, and “used fraud proceeds for high-risk options trading, losing over $100 million from November 2020 through February 2022,” states the US Attorney’s Office, Central District of California press release.

Dinh was also charged for allegedly attempting to defraud the federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. He faces a maximum sentence of 50 years in federal prison, the press release states.

Dinh’s sister, Hang Trinh Dinh, 64, of Lake Forest, California, and Matthew Hoang Ho, 65, of Melbourne, Florida, are also charged in the complaint, the Los Angeles Times reported.

Both of these cases are notable because of the size of the fraud each defendant pulled off involving COVID-19 lab testing. Clinical laboratory managers may want to review the original court indictments. The documents show the brazenness of these fraudsters and detail how they may have induced other doctors to refer them testing specimens.

Stephen Beale

Related Information:

Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat COVID-19 Health Care Fraud

DOJ Announces Nationwide Coordinated Law Enforcement Action to Combat Health Care Fraud Related to COVID-19—Summary of Criminal Charges

Criminal Complaint: US v. Dinh, et al.

Criminal Complaint: US v. Navarro

Newport Coast Physician Faces Federal Charges in Healthcare Fraud Cases

COVID Fraud Takedowns: Feds Charge 18 People, Including Doctors, with Raking in Nearly $500M from Scams

California Clinical Laboratory Owners among 21 Defendants Indicted or Criminally Charged for COVID-19 Test Fraud and Other Schemes Totaling $214 Million

UK Continues to Use Innova’s SARS-CoV-2 Antigen Rapid Test Despite Recall and FDA Warning Letter

FDA cites ‘risk of false results’ and concerns about labeling and ‘performance claims’ in its official warning letter to Innova, a company with connections to Chinese firms

By many standards, the US government’s response to the COVID-19 pandemic has been phenomenal. However, the many emergency use authorizations (EUAs) awarded by the US federal Food and Drug Administration (FDA) to bring as many COVID-19 tests to market as quickly as possible means some of those tests in use today at clinical laboratories nationwide have not undergone the normal pre-market review and clearance typically required by the FDA. 

Thus, Innova Medical Group’s recent recall of its SARS-CoV-2 Antigen Rapid Test is not a complete shock considering the circumstances.

But in its recall announcement, the FDA described Innova’s recall of its SARS-CoV-2 Antigen Rapid Test as a “Class 1 recall” and gave the stern warning, “Use of these devices may cause serious injuries or death.”

And in its public Safety Communication, the federal agency wrote, “The FDA has significant concerns that the performance of the test has not been adequately established, presenting a risk to health. In addition, labeling distributed with certain configurations of the test includes performance claims that did not accurately reflect the performance estimates observed during the clinical studies of the tests. Finally, the test has not been authorized, cleared, or approved by the FDA for commercial distribution or use in the United States, as required by law.”

So, it is odd that the UK government’s Medicines and Healthcare Products Regulatory Agency (MHRA) would disregard the FDA’s warning and extend its own exceptional use authorization (EUA) of the Innova COVID-19 antigen test through late August. Nevertheless, that is exactly what the MHRA did.

Innova's COVID-19 SARS-CoV-2 Antigen Rapid test kit

In May 2021, Innova Medical Group of Pasadena, Calif., announced it would start producing millions of its COVID-19 SARS-CoV-2 Antigen Rapid test kits (above) per day in the United Kingdom by opening a production facility in Rhymney, South Wales. (Photo copyright: Innova Medical Group, Inc.)

FDA Warns Public to Stop Using Innova’s Rapid Antigen COVID-19 Test

Widescale COVID-19 testing has been viewed as key to containing community spread of the SARS-CoV-2 coronavirus, and fast, inexpensive rapid COVID-19 testing is a necessity in that fight.

However, as clinical laboratory scientists know, rapid tests are not as specific as molecular polymerase chain reaction (PCR) tests, which means there is a higher chance of false negatives and false positives with a COVID-19 rapid test than with a molecular test. When diagnosing COVID-19, a PCR test is considered the gold-standard, though results can take multiple days to produce.  

Nevertheless, according to the Innova Europe website, the Innova rapid antigen test has a sensitivity on symptomatic individuals of 97% and a specificity of 99% and is the most widely used test in the world. More than 500 million units are in circulation.

Regardless, in its June 10th warning, the FDA called for the public to stop using the Innova Medical Group SARS-CoV-2 Antigen Rapid test for diagnostic use.

“The FDA has significant concerns that the performance of the test has not been adequately established, presenting a risk to health,” the FDA stated. “In addition, labeling distributed with certain configurations of the test includes performance claims that did not accurately reflect the performance estimates observed during the clinical studies of the tests. Finally, the test has not been authorized, cleared, or approved by the FDA for commercial distribution or use in the United States, as required by law.”

In its warning, the FDA recommended anyone in possession of Innova tests “destroy the tests by placing them in the trash” or return the tests to Innova.

The Innova SARS-CoV-2 Antigen Rapid test is also distributed under the names:

  • Innova COVID-19 Self-Test Kit (3T Configuration),
  • Innova Medical Group SARS-CoV-2-Antigen Rapid Test (7T Configuration), and
  • Innova Medical Group SARS-CoV-2-Antigen Rapid Test (25T Configuration).

Innova Medical Group was formed in March 2020 by Charles Huang, PhD, founder and chairman of private-equity firm Pasaca Capital. The Pasaca website states Innova worked with its primary contract manufacturer, China-based Xiamen Biotime Biotechnology Co., for several months to design “a highly accurate rapid antigen test for COVID-19.”

“The simple test takes less than five minutes to administer and generates results in as little as 20 minutes without the need for a machine,” the website states. “Equally important, Innova and its partner have been able to manufacture the product at scale, presently in excess of ten million kits per day.”

However, The Los Angeles Times claims that in September 2020 Innova “secured a vast supply of rapid coronavirus tests from an obscure Chinese manufacturer before established pharmaceutical companies could do so.” The LA Times adds that Innova distributed more than 70,000 tests in the United States even though the FDA had not acted on Innova’s application to sell its tests domestically.

This may have contributed to the FDA’s dire warning to discontinue use and discard the Innova tests.

UK’s MHRA Disagrees with FDA Warning

But in the UK, it is a different story. According to The Guardian, Innova’s lateral flow tests are the cornerstone of “Operation Moonshot”, the government’s mass testing plan aimed at reducing community transmission by identifying asymptomatic COVID-19 positive people using an inexpensive, quick-response test distributed for home use and to workplaces, schools, and test centers.

In “Rapid COVID Tests Used in Mass UK Programme Get Scathing US Report,” The Guardian reports that “criticism of the Innova test has been fierce” in the UK following the FDA’s “scathing review” of its rapid antigen test. However, after investigating the concerns raised by the FDA, the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) reiterated that the Innova lateral flow tests were safe to use.

“We have now concluded our review of the risk assessment and are satisfied that no further action is necessary or advisable at this time,” said Graeme Tunbridge, MHRA Director of Devices, in a UK government response statement which announced that the MHRA was extending the Exceptional Use Authorization (EUA) for the tests use in its national asymptomatic testing program through Aug. 28, 2021. “This has allowed us to extend the EUA to allow ongoing supply of these [lateral flow devices] over the coming months. People can be assured of the MHRA’s work to continuously monitor the tests in use; as is our standard process.”

Innova Defends Its Test, FDA Repeats Its Warning

An Innova spokesperson told The Guardian: “The Innova rapid antigen test has been widely used, studied, tested, scrutinized and analyzed with data supporting the efficacy of the test from the largest mass testing program out of the UK. Innova is confident about the quality of its product.”

However, the FDA maintains Innova’s COVID-19 lateral flow test included labeling that provided “false and misleading” estimates of the test’s clinical performance. In its warning letter to Innova, the FDA also pointed out that the clinical study data Innova submitted as part of its EUA request was “identical to data previously provided by other manufacturers in their EUA requests. The data reliability and accuracy issues noted herein raise significant concerns that the performance of the SARS-CoV-2 Antigen Rapid Qualitative Test has not been adequately established, and that the products distributed by Innova without FDA approval, clearance, or authorization could present a serious risk to the public health.”

Pathologists and clinical laboratory professionals in this country will want to watch carefully to see if efforts to increase regulatory scrutiny of diagnostic tests in the UK spills across the Atlantic.

—Andrea Downing Peck

Related Information

Following a Satisfactory Review, MHRA Extends Authorisation of NHS Test and Trace Lateral Flow Devices

Stop Using Innova Medical Group SARS-CoV-2 Antigen Rapid Qualitative Test: FDA Safety Communication

What Is No 10’s ‘Moonshot’ COVID Testing Plan and Is It Feasible?

UK Extends OK of Innova COVID-19 Test Criticized by FDA in Warning Letter

Rapid COVID Tests Used in Mass UK Programme Get Scathing US Report

Warning Letter: Innova Medical Group, Inc. MARCS-CMS 614819–June 10, 2021

The Royal Statistical Society Calls for New Standards for Diagnostic Tests, to Address Testing Problems During the Pandemic

A Pasadena Startup Got Billions Selling COVID Tests. Then Came Questions

Innova Medical Group Recalls Unauthorized SARS-CoV-2 Antigen Rapid Qualitative Test with Risk of False Test Results

Stop Using Innova Medical Group SARS-CoV-2 Antigen Rapid Qualitative Test: FDA Safety Communication

How Likely Is a Positive COVID-19 Lateral Flow Test to be Wrong?

Asymptomatic Lateral Flow Testing: What’s the Verdict?

Coronavirus (COVID-19) Update: FDA Authorizes Antigen Test as First Over-the-Counter Fully At-Home Diagnostic Test for COVID-19

Hospitals in Three States Offer Patients Free Medical Laboratory Tests Following Arrest of Surgical Technician for Allegedly Stealing Fentanyl from Operating Room

A 1999 case involving California phlebotomist charged with reusing needles resulted in similar widespread testing of thousands of patients

Because of possible exposure to HIV, hepatitis B, and hepatitis C from a healthcare worker, thousands of patients treated in multiple hospitals in different states are being offered free clinical laboratory testing. This situation is attracting national media attention and is a reminder to pathologists and medical laboratory professionals of the increased transparency that is being given to different types of medical errors that expose patients to risk.

A surgical technologist who allegedly stole the drug fentanyl from multiple hospitals provides an example of how the healthcare system can miss systematic misconduct by individual employees that can put thousands of patients at risk. (more…)

CMS Begins the New Year by Instituting Fines for Insurance Payers That Issue Error-Filled Provider Directories

Increased accuracy in listings should benefit in-network medical laboratories and anatomic pathology groups

Regional and smaller medical laboratories will welcome a new enforcement initiative by the Centers for Medicare & Medicaid Services (CMS). Health insurers now will face fines as high as $25,000 per beneficiary as a sanction from regulators in many states for errors in provider directories that can result in patients receiving surprise out-of-network bills.

As the number of consumers with high-deductible health plans has grown, the demand for more price transparency by physicians, hospitals, and other healthcare providers has increased, with states such as New Hampshire and Colorado legislating public price transparency websites.

Now the federal government is taking another step toward increased transparency in healthcare by fining payers whose provider directories are not current and include inaccurate listings that may cause consumers to unknowingly select out-of-network providers. This is especially important as insurance providers continue to narrow their provider networks. Increased accuracy in provider directories should help clinical laboratories and pathology groups that participate in insurance networks. (more…)

CMS Says Obamacare Premiums to Increase by an Average of 7.5% in 2016, But Squeeze on Consumers’ Wallets Will Vary Depending on Where They Live

UnitedHealthcare announces it may exit the federal marketplace because of slow growth and higher-than-expected claims; clinical laboratories may see less reimbursement

Health insurance premiums in 2016 for plans offered through federal Obamacare exchanges (more formally known as the Health Insurance Marketplace) will see an average rate hike on midrange plans of 7.5%. This amount may vary widely depending on which state a consumer lives. In 2016, 38 states will have healthcare consumers apply for and enroll in coverage through the HealthCare.gov platform.

Big increases in healthcare premiums from one year to the next have a direct link to the amount of money health insurers will pay clinical laboratories for lab test claims. That’s because, when health insurers are in a financial squeeze, they tend to reduce reimbursement to providers, including clinical laboratories.

This news about premium increases for 2016 comes from a report issued by the Centers for Medicare and Medicaid Services (CMS). The rate analysis is part of the federal agency’s 2016 Marketplace Affordability Snapshot. CMS said that nearly eight in 10 returning marketplace consumers will be able to find a plan with premiums for less than $100 per month after tax credits and seven out of 10 will pay less than $75, once taxpayer subsidies are factored in.

“For most consumers, premium increases for 2016 are in the single digits and they will be able to find plans for less than $100 a month,” stated Kevin Counihan, CEO of the Health Insurance Marketplace, in the CMS statement. (more…)

;