The owner of a lab testing company has been ordered to pay $372 million by a federal court that ruled he had bilked Medicare through a fraudulent billing scheme.
A former operations manager for one of four labs owned by Kentucky businessman Rajen Shah filed a whistleblower lawsuit in 2019, alleging Shah billed Medicare for expensive molecular tests not ordered by a licensed healthcare provider. The federal government intervened in the civil lawsuit filed in Florida in August 2022.
In 2021, Shah received a jail sentence for a criminal contempt charge related to the government’s fraud investigation.
“Providers who seek to boost their own profits by submitting inaccurate billing information to federal healthcare programs like Medicare undermine the integrity of these programs, which beneficiaries rely on for safe and effective health care services,” Julie Rivera, acting special agent in charge of the Health and Human Services’ Office of Inspector General, said in a news release.
According to the whistleblower lawsuit, Shah allegedly bragged that he programmed the computer system used by Tomoka to make it seem that expensive urinary tract infection tests were warranted, despite the fact that a physician never signed off on the tests. Shah would allegedly replicate the strategy at his other labs.
Before Shah acquired Tomoka Medical Lab in June 2019, the lab never billed Medicare for complex tests known as urine polymerase chain reaction tests, which Medicare reimburses up to $490, the suit alleged. Medicare reimburses typical urinalyses between $4 and $13, according to the complaint.
In the 12 months after Shah acquired Tomoka, the suit alleged Shah submitted more than 1,000 claims for the complex tests that are generally only used for high-risk patients. Meanwhile, the number of traditional urinalyses Tomoka billed to Medicare plummeted, according to the allegations.
The suit alleged Shah transferred funds between the separate lab companies and use the proceeds to finance loans. He allegedly paid for one lab manager's trailer and a car to ensure the scheme was kept secret.