After a dearth of lab-related enforcement cases in our previous weekly reports, last week saw a few key cases involving lab testing. In the biggest non-Theranos-related case, announced by the U.S. Attorney’s Office of the Eastern District of Missouri on Nov. 15, a psychiatrist and clinical lab owner pled guilty to his role in a complicated $3.8 million fraud scheme.
Dr. Franco Sicuro, 67, who is from Missouri, owned, operated, was associated with, or served as medical director for Benemed Diagnostics LLC, Genotec Dx, Midwest Toxicology Group, Sleep Consultants of St. Louis LLC, Centrec Care, Advanced Geriatric Management (AGM), and Millennium Psychiatric Associates LLC (MPA). The scheme involved fraudulent claims submitted by the clinical labs Sicuro owned, defrauding Medicaid, Medicare, and other insurers.
According to the Eastern District of Missouri U.S. Attorney’s Office, the scheme centered around AGM, which was certified under CLIA in 2014 to do quantitative lab testing, and Genotec, another lab located in the same building as AGM that Sicuro and his business partner opened in 2014. Despite being in the same physical location as AGM, Genotec “would bill insurance companies as a separate, ‘out-of-network’ lab,” the U.S. Attorney’s Office said. In addition:
- Sicuro’s associates and staff lied that Genotec and AGM “operated as separate labs” in order to receive CLIA certification for the former, though the labs shared equipment and some staff
- Sicuro’s financial interest in Genotec was hidden from government and private health insurance plans
- After receiving toxicology and other clinical lab test orders from companies associated with Sicuro and his accomplices, Genotec and AGM referred these tests to third-party labs, but billed as if they had done the tests themselves, for a much higher rate than they paid these reference labs
- Sicuro and his accomplices misrepresented Midwest Toxicology Group as a CLIA-certified testing lab and submitted clinical testing related claims on behalf of the company, though it was not certified and did not have the staff, supplies, or equipment required to perform clinical testing
In addition to his guilty plea, Sicuro also agreed to give up $3.1 million “from various sources.” Set to be sentenced Feb. 8, Sicuro faces a maximum of five years in prison. He’ll also be ordered to repay the money he obtained from the false claims.1
Other Key Enforcement Actions from Last Week
Nov. 16: Two pharmacy owners, Arkadiy Khaimov, 39, and Peter Khaim, 42, each pled guilty to one count of conspiracy to commit money laundering through several New York-area pharmacies they and their accomplices either controlled or owned. Through these pharmacies, the two submitted “millions of dollars in fraudulent claims to Medicare, including during the COVID-19 pandemic,” using so-called emergency override billing codes related to the pandemic to submit fraudulent claims for an expensive cancer medication as well as other phony claims, the U.S. Department of Justice (DOJ) said in a statement. The two will be sentenced on separate dates in early May 2023, with each facing up to 20 years in prison.2
Nov. 18: A Florida-based doctor pled guilty to receiving kickbacks and bribes in exchange for ordering items and services for CHAMPVA and Medicare beneficiaries, according to DOJ. Using an Internet-based platform that did not allow him to do anything other than sign for these orders, Dr. Sean Patrick O’Rourke was paid $25 per patient by a company, identified only as “Company # 1,” in exchange for his signature. In total, from September 2018 through March 2020, O’Rourke was paid about $31,075 for these orders, which included cancer genomic tests and durable medical equipment. Medicare also paid just over $2.7 million to various providers for the equipment and tests he ordered. O’Rourke agreed to forfeit the $31,075 he received in kickbacks and could see up to 10 years in prison.3
Nov. 18: A former employee of two medical clinics based in the Milwaukee area was sentenced to 32 months in prison for his role in a Medicaid and Medicare fraud scheme. He must also pay more than $1 million in restitution to these government health insurance programs. In exchange for more than $100,000 in kickbacks, David Guerrero, Jr., used his access to medical records for patients of the clinics where he worked to order pain creams from his co-defendant’s pharmacies on their behalf, but “without the patients’ knowledge or consent,” the DOJ said. In a second scheme, Guerrero was paid more than $150,000 in kickbacks by a medical lab company “in exchange for ordering urine drug tests that doctors at the clinics generally did not approve or review.” He pled guilty to one count of conspiracy in August.4
Nov. 18: Former Theranos chief executive officer Elizabeth Holmes was sentenced on Nov. 18 to a prison term of 11 years and three months, followed by three years of supervised release, for her role in defrauding investors in her blood testing company. See more in a separate news summary.5