Federal authorities have charged eight businessmen in a massive alleged Medicare and Medicaid fraud case involving a genetic testing company and three marketing companies.
A federal grand jury in Nashville returned a 40-count superseding indictment Monday against the individuals, said Mark H. Wildasin, U.S. Attorney for the Central District of Tennessee. A replacement indictment is an indictment that replaces a previous indictment.
Three of the eight people were previously arrested on earlier indictments; the remaining indictments were unsealed after the arrest of the other five.
Federal authorities say the co-conspirators entered into fictitious contracts and paid bribes in exchange for genetic testing and urinalysis samples. They targeted and recruited elderly patients on the federal health care program to obtain their genetic material for genetic testing.
Often the patients or their treating physicians would never have received the test results. Although some of the victims were nursing home residents, the indictment announced Monday did not state that any nursing home provider was criminally involved in the alleged fraud.
Fadel Alshalabi, 54, of Waxhaw, North Carolina, was originally charged in July 2021 with conspiracy and anti-rebound law violations for his role in orchestrating the scheme, Wildasin said. Alshalabi is the owner and CEO of Crestar Labs, LLC, a series of labs based in Spring Hill, TN. Monday’s action charged Alshalabi and seven others with health care fraud, conspiracy to commit health care fraud and conspiracy to violate and violations of the Anti-Corruption Act. bribes. Alshalabi was also charged with money laundering.
The seven charged on Monday included Edward D. Klapp, former vice president of sales, and Dakota White, former director of customer services and vice president of operations, both at Crestar. In addition, individuals from three marketing companies that have contracted with Crestar: Melissa L. Chastain, owner and CEO, and Roger Allison, president, both of Genetix LLC; Robert Alan Richardson and Edward Burch, both directors of Freedom Medical Labs, LLC; and Samuel Harris, owner of Secure Health.
Edward Klapp and Lisa Chastain were originally charged in October 2021.
“The marketers, who were not medical professionals, obtained swabs from the mouths of patients at nursing homes, senior health fairs and elsewhere,” the indictment states. charge. “The tests were then allegedly approved by telemedicine physicians who did not engage in the treatment of patients, and often did not even speak with the patients for whom they ordered tests.”
Wildasin said Alshalabi and the co-conspirators paid illegal bribes and kickbacks in exchange for doctor’s prescriptions and tests, without regard to medical necessity, and during the period of 2016 as of July 2021, Alshalabi and his co-conspirators have billed Medicare and Medicaid over $150. million.
Genetic testing fraud on the rise
In 2019, the Department of Health and Human Services alerted the public to the growing incidence of fraud schemes involving genetic testing.
In December 2016, a woman pleaded guilty in a Medicare genetic testing program targeting the elderly. In this case, a New Jersey woman referred elderly people for genetic testing billed to Medicare, according to Bloomberg BNA. For nearly 18 months, the woman and her partner reportedly offered free ice cream and told the elderly that without test results they would be at greater risk of heart attack, stroke, cancer or suicide, authorities said.
A year later, the Justice Department announced that a qualified nursing facility operator based in Louisville, Ky., had agreed to pay nearly $1 million to settle claims related to his role in a genetic testing program that violated the False Claims Act. The activity allegedly involved performing genetic testing on Medicare residents without a doctor’s order to determine if they were “properly metabolizing” a certain drug, Justice Department officials said at the time.
If found guilty, Alshalabi faces up to 10 years on a money laundering charge, and all defendants face up to 10 years in prison for health care fraud and anti-corruption law charges. -bribes, and up to five years for conspiracy to violate the Anti – Bribery Statute.