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DOJ Lowers The Boom On COVID-19 Healthcare Scams, Again

Posted  May 28, 2021

Hey, fraudsters, did you hear?  There was a global pandemic, so the government pumped trillions of dollars into the economy.  Probably a good time to get a piece of the cut, you ask?  They’ll never find out, right?  So many ways to grift!

Well, not so much.  From the start, the cops on the beat, led by the United States Department of Justice, have screamed from the rooftops:  “Don’t do it.  We WILL come after you.”

And this week, DOJ did just thatAnd Again. (And again.)

Six-State Dragnet Snatches Schemers Who Allegedly Looted Nearly $150 Million

On May 26, DOJ announced criminal charges against fourteen people in six states for COVID-19-related healthcare fraud that resulted in over $143 million in false COVID-19 testing and other billings.  The coordinated takedown involved fraudulent claims for lab testing, telemedicine fraud, pharmacy fraud, kickbacks for referrals, and misappropriation of COVID-19 Provider Relief Fund proceeds—schemes we predicted would find a foothold.

Fraudulent COVID-19 tests were at the core of most of the charges announced this week. But the variations among the cases illustrate the endless creativity of the criminal mind.

South Florida residents Leonel Palatnik and Michael Stein face charges connected to an alleged $75 million conspiracy to pay and receive kickbacks. The two men offered telehealth providers access to Medicare beneficiaries for whom they could bill consultations. In exchange, the telehealth providers agreed to refer beneficiaries to labs Palatnik owned for expensive and medically unnecessary cancer and cardiovascular genetic testing.

DOJ charged Billy Joe Taylor of Lavaca, Arkansas with healthcare fraud in connection with an alleged scheme to defraud the government of over $42 million in false claims related to COVID-19 tests. Taylor, who owns two testing laboratories, allegedly used beneficiary and medical provider information from prior testing orders to submit fraudulent claims for lab tests that were not ordered or performed, including tests for patients who were dead.

Haven’t We Met Before?

DOJ’s recent roundup also included some names that dedicated readers to Whistleblower Insider may recall.

California resident Mark Schena, president of the medical technology company, Arrayit Corporation, was charged with two others in connection with a scheme to submit over $70 million in false claims for allergy and COVID-19 testing. We chronicled Schena’s schemes last year when he was indicted for submitting false claims for allergy and COVID-19 tests again.  (Bonus points for those who remember that DOJ’s earlier announcement about Schena coincided with the SEC filing, a separate lawsuit charging a penny-stock trader for allegedly conducting a fraudulent pump-and-dump scheme to jack up the price of Arrayit’s stock.  We speculated back then that the actions were coordinated, but this week’s takedowns don’t shed light on that question.)

The new indictment additionally alleges Schena conspired with others to pay kickbacks, administer fraudulent and unnecessary tests, and made false statements about Arrayit’s COVID-19 testing products.

Two other men whose exploits we’ve documented before and were swept up in this week’s sting are Peter Khaim and Arkadiy Khaimov of New York.  The government’s superseding indictment charges the pair, who owned several pharmacies and sham pharmacy wholesaling companies, with an alleged $45 million healthcare fraud and money laundering scheme that included using COVID-19 emergency override billing codes to get around preauthorization requirements and limits on refills for expensive drugs.

Blow The Whistle On COVID-19 Fraud

With schemes so varied and their details so often buried, whistleblowers serve as a crucial line of defense against fraud schemes that affect everyone, siphoning away safety-net cash from those who need it most.

The government relies on whistleblowers to reveal fraud and if you blow the whistle on someone who commits fraud in applying for COVID-19 relief funds, spending those funds, or otherwise, you may be eligible for a reward under the False Claims Act or other whistleblower reward programs.

The whistleblower attorneys of Constantine Cannon are ready to assist whistleblowers in the United States and abroad who have knowledge of fraud related to the COVID-19 pandemic.


Tagged in: COVID-19, Criminal Proceedings, FCA Federal, Financial and Investment Fraud, Government Programs Fraud, Healthcare Fraud, Importance of Whistleblowers, Laboratory and IDTF, Lack of Medical Necessity, Market Manipulation and Trading Violations, Medical Billing Fraud, Misrepresentations, Pharma Fraud, Securities Fraud,