United States Recovers $6 Million in Cash and Property
From Troy Laboratories and Owners
Who Defrauded Medicare on Laboratory Tests
DETROIT – Three Troy laboratory companies will pay $6 million in cash and property to the U.S. government to resolve allegations that they violated the False Claims Act, U.S. Attorney Barbara L. McQuade announced today.
The complaint alleged that Accela Medical LLC defrauded Medicare by improperly billing for lab tests. The fraud was detected by analyzing billing records, which revealed that Accela was using a particular billing code more than any other Medicare provider in the nation. Two Troy companies, Coventry Diagnostics LLC and its wholly owned subsidiary, Western Slope Laboratory LLC, performed the testing. All three companies were controlled by Thomas McCormick of Troy.
The complaint alleged that McCormick organized and operated Accela Medical LLC, a front company, to conceal his own involvement because he had been debarred from billing Medicare based on a previous conviction for fraud on the health care system. A co-conspirator, Charles B. Reinhardt, of Tennessee, the nominal owner of Accela, applied to Medicare for a provider number, allowing Accela to bill the government and then split the profits with McCormick and his companies. When Medicare raised questions about the ownership and control of Accela, Reinhardt and McCormick submitted falsified documents to Medicare hiding the real ownership and control of the company.
Under the scheme set up by McCormick and Reinhardt, Reinhardt billed Medicare for approximately $900 worth of urine drug tests for virtually every patient referred to Accela by a physician, regardless of what the physician actually intended to order or what was medically necessary. Accela also improperly billed for 18 separate "procedures" for each patient to evaluate urine levels of opiates.
Included in the recovery is approximately $4.7 million in assets that United States District Judge Stephen J. Murphy, III froze at the start of the case under the Federal Debt Collection Procedures Act, payment of an additional $400,000 in cash, transfer of a North Carolina beach home and a retirement account to the government worth approximately $500,000, recovery of $400,000 transferred to a shareholder in Singapore, and recovery of another $18,000 representing double the amounts transferred to a company manager.
United States Attorney Barbara McQuade said, “This fraud was discovered by analyzing data to flag billing anomalies. Providers should be aware that law enforcement is scrutinizing billing records to identify providers who are stealing from taxpayers.”
This case was handled by Assistant U.S. Attorney Joan E. Hartman and Affirmative Civil Enforcement Investigator Jonathan Sonbay, with assistance from the Office of Inspector General of the Department of Health and Human Services.