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Press Release

Four Individuals Charged in Healthcare Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Northern District of Texas
This Case is a Result of the Largest Health Care Fraud Enforcement Action in Department of Justice History

DALLAS — Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced today the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units also participated in today’s arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses and pharmacists.

As part of that enforcement, Erik Bugen, 42, Jody Sheffield, 43, Matthew Hawrylak, 41, and Britt Hawrylak, 38, were charged by information for their role in a $36 million fraud scheme involving unnecessary and improperly prescribed toxicology and DNA cancer screening tests which were billed to TRICARE, announced the United States Attorney’s Office of the Northern District of Texas.

Each defendant faces a maximum statutory penalty of 5 years in federal prison and a $250,000 fine.

According to the one-count felony charge filed yesterday, from May 2014 and continuing to July 2017, Bugen, Sheffield, Matthew Hawrylak, and Britt Hawrylak caused false and fraudulent claims to be submitted for health care benefits. The false and fraudulent claims were for toxicology and DNA cancer screening tests that were not legitimately prescribed, not needed, not provided as billed, and which were the product of kickbacks.


Bugen, Sheffield, Matthew Hawrylak, and Britt Hawrylak operated ADAR Group, located in Killeen, Texas solely to achieve the objective of their scheme to defraud and to unlawfully enrich themselves by submitting false and fraudulent claims for health care benefits. Britt Hawrylak operated Tiger Racing Team, located in Fort Worth, Texas and Matthew Hawrylak operated Zorin Holdings, also located in Fort Worth, Texas. The Hawrylak’s received payments from Xpress Laboratories and Progen Lab for referring testing orders for TRICARE beneficiaries. Britt Hawrylak and Matthew Hawrylak then split payments from Xpress Laboratories and Progen Lab between themselves and Bugen and Sheffield.


According to the information filed in the case, Bugen and Sheffield would give Wal-Mart gift cards in exchange for urine and saliva specimens. These specimens were then mailed to Xpress Laboratories and Progen Lab for unnecessary toxicology and DNA cancer screening tests and billed to TRICARE by Cockerell Dermatopathology, a laboratory specializing in the evaluation of dermatologic disorders and located in Dallas, Texas. Bugen and Sheffield disguised the gift cards as a food assistance program for low-income beneficiaries. ADAR Group employees collected urine and saliva samples from as many as 200 beneficiaries per day.


Bugen and Sheffield paid doctors a flat fee per month to sign orders for toxicology and DNA cancer screening tests. The doctors never saw the patients and had no doctor-patient relationship with the patients. Beneficiaries did not receive the results of their tests. ADAR employees obtained signature stamps from the doctors and stamped the doctors’ signatures on testing orders before sending the forms to Xpress Laboratories and Progen Lab. ADAR Group employees also placed false diagnosis codes on TRICARE claim submissions to make it appear that the beneficiary needed the testing. This was done to ensure that TRICARE would accept, and pay, the claim.


Bugen, Sheffield, Matthew Hawrylak, and Britt Hawrylak caused to be submitted to TRICARE, at least approximately $36 million in false and fraudulent claims. TRICARE paid Cockerell approximately $4.8 million as payment for those claims.

The Defense Criminal Investigative Service, Veteran’s Affairs- Office of Inspector General, and Federal Bureau of Investigation, are investigating. Assistant U.S. Attorney Adrienne Frazior is in charge of the prosecution.

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Lisa Slimak

Updated July 13, 2017

Health Care Fraud