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Clinical Lab Owner Pleads Guilty to Three Healthcare Fraud Schemes

by | Sep 21, 2022 | News

The owner of several clinical labs and other businesses will pay big for the schemes that involved money laundering, kickbacks, and fraud.

In our roundup of key enforcement actions from last week that involved the healthcare industry, a 58-year-old businessman from Florida pleaded guilty on Sept. 15 for his role in three healthcare fraud schemes involving cancer genetic testing (CGx). According to the U.S. Department of Justice (DOJ), business owner Daniel Hurt pleaded guilty to three counts relating to the schemes:

  • One count of conspiracy to commit healthcare fraud, pay and receive unlawful kickbacks, and commit money laundering
  • One count of conspiracy to commit healthcare fraud
  • One count of conspiracy to pay and receive kickbacks

The Fraud Schemes

  1. The Florida Scheme

In the first scheme, Daniel Hurt and his accomplices defrauded health insurance plans, including CHAMPVA and TRICARE, by billing the programs for medically unnecessary and expensive medications. Hurt and others involved in the scam paid patient recruiters kickbacks to obtain beneficiaries’ information, which was then used to generate prescriptions for the medication. The medications were ordered at a pharmacy Hurt and his co-conspirators owned a three percent stake in, which then billed the various healthcare programs. The pharmacy then paid Hurt and the others kickbacks. Hurt alone received more than $4 million as part of the scheme.

2. The Pennsylvania Scheme

In the second scheme, which originated in Pennsylvania, Hurt and others involved in the scam obtained thousands of specimens from Medicare beneficiaries across the US through “targeted campaigns” run by marketers who were paid kickbacks, the DOJ states. Through Pennsylvania’s Ellwood City Medical Center (ECMC), third-party labs, and telemedicine companies, unnecessary CGx tests were ordered, run and billed to Medicare for a total of over $25 million. Kickbacks were hidden through sham contracts meant to make it appear that the payments were for legitimate services. Hurt also used some of the fraudulently-gained funds from the CGx testing for his own purchases, including a luxury watercraft.

3. The New Jersey Scheme

As G2 Intelligence recently reported in a Sept. 14 roundup, Hurt was charged Aug. 30 for his participation in a third scheme based in New Jersey in which he paid kickbacks for medically unnecessary CGx tests to be referred to several labs he owned. As with the Pennsylvania scheme, he disguised the kickbacks through fake contracts making it appear as if the payments were for legitimate referral and marketing services. That scheme caused at least $53.3 million to be fraudulently billed to Medicare, according to the DOJ.

As part of his plea bargain, Hurt agreed to a pay a total of $97,360,451.76 in restitution to CHAMPVA, TRICARE, and Medicare, and in a separate agreement, will forfeit a total of $31,148,624.70 worth of assets he obtained with his ill-gotten funds, in addition to his luxury watercraft.

He could also face up to 15 years in prison and up to $500,000 in fines, or alternate fines, depending on either how much he gained or how much others lost in the fraud schemes.1

In other key healthcare-related cases from last week:

Sept. 14: New York-Presbyterian/Queens Hospital settled allegations of federal healthcare fraud for more than $2.5 million. According to a DOJ statement, the hospital was accused of performing and then billing medically unnecessary services that involved replacing implantable cardioverter defibrillator pulse generator batteries.2

Sept. 14: An Illinois-based pharmaceutical company, Akorn Operating Company LLC, agreed to settle false claims allegations for $7.9 million. Akorn allegedly billed Medicare Part D for three of its generic drugs that were no longer eligible for coverage, the DOJ states.3

References:

  1. https://www.justice.gov/usao-wdpa/pr/florida-businessman-pleads-guilty-three-cases-involving-conspiracies-commit-health-care
  2. https://www.justice.gov/usao-edny/pr/new-york-presbyterianqueens-hospital-settles-allegations-federal-health-care-fraud-over
  3. https://www.justice.gov/usao-ma/pr/pharmaceutical-company-akorn-operating-company-llc-agrees-pay-79-million-resolve
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