The proprietor of Georgia-based Capstone Diagnostics, Andrew Maloney, has pleaded guilty to a felony charge and agreed to pay $14.3 million in order to resolve liabilities associated with kickbacks and unnecessary testing. The illicit payments were made to increase sales of unneeded urine drug tests for at-risk children and respiratory pathogen panels for seniors who were receiving COVID-19 tests.
In the unlawful scheme, the company was found to be paying volume-based commissions to independent contractor sales representatives. According to a press release by the Department of Justice (DOJ), between August 2017 and December 2018, Capstone collaborated with Do It 4 the Hood (D4H), an organization that provides after-school mentoring services to at-risk teenagers in Georgia. As Medicaid covered the drug testing for these students, Maloney paid D4H operators a percentage of the Medicaid reimbursements for the urine samples. By submitting over $1 million in claims, Capstone received at least $400,000 in claims from Georgia Medicaid for this fraudulent drug testing.
Capstone also attempted to capitalize on the COVID-19 pandemic by incentivizing independent contractor sales representatives between April 2020 and December 2021 to recommend Respiratory Pathogen Panels (RRPs) to senior communities interested solely in COVID-19 tests. RRPs are costly panels that test for respiratory pathogens. Maloney and Capstone have agreed on a civil settlement wherein $14.3 million will be paid to the federal government and several states to resolve submissions of false claims. An additional $400,000 will be paid towards recovery for state Medicaid programs. The DOJ believes that kickbacks have been operating at an escalated rate recently and views it as an urgent issue that needs addressing swiftly as such payments compromise the integrity of federal health care programs.
"Unfortunately, Capstone and Maloney are hardly alone, as we have witnessed some clinical laboratories and their owners across the country engage in unscrupulous kickback and billing schemes that caused incalculable harm to Medicare," said U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia. Buchanan added, "We are committed to aggressively investigating and prosecuting those who defraud valuable government programs designed to benefit our most vulnerable citizens. By simultaneously obtaining criminal and civil resolutions, as well as working with our partners from the Georgia Attorney General’s Office, this case demonstrates our office’s commitment to using all available tools to hold accountable those who seek to steal from federal health care programs."
