TEXARKANA, Texas — A 60-page federal indictment unsealed Wednesday accuses 12 people of defrauding the government of more than $36 million in a kickback scheme involving Medicare.
The indictment accuses 12 defendants from Texas, Arizona and California of violating federal law known as the "anti-kickback statute" which prohibits incentivizing referrals for treatment and lab testing involving Medicare patients. The indictment's single count charges Philip Lamb, Nicolas Arroyo, Vincent Marchetti Jr., William Flowers, Steven Donofrio, James J. Walker Jr., Timothy Armstrong, Virginia Blake Herrin, Patrick Ridgeway, Chismere Mallard, Ray W. Ng and Ashley Kretzschmar with violating federal law preventing kickbacks for medical referrals.
Walker, Armstrong and Herrin reside in Frisco, Texas, and Flowers resides in Houston, according to the indictment. The other defendants reside in Arizona and California.
"Arrangements in which laboratories provide free or below-market goods or services to physicians or make payments to physicians that are not commercially reasonable in the absence of Federal health care program referrals potentially raise four major concerns typically associated with kickbacks corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition," the indictment states. "This is because such transfers of value may induce physicians to order tests from a laboratory that provides them with remuneration, rather than the laboratory that provides the best, most clinically appropriate service. Such transfers of value also may induce physicians to order more laboratory tests than are medically necessary, particularly when the transfers of value are tied to, or take into account, the volume or value of business generated by the physician."
The indictment notes that doctors typically order lab tests with little, if any, input from the patient.
According to the indictment, some of the kickbacks were allegedly made in the form of bogus research grants and one of the defendants allegedly received kickbacks in the form of tuition payments to Yale University where his children attended.
The indictment seeks the defendants' forfeiture of $36,282,569.60. If convicted of conspiracy to commit illegal remunerations, each defendant faces up to five years in federal prison. The defendants also face the possibility of a fine up to $250,000 or a fine up to two times the profit a defendant received for their illegal conduct or a fine up to two times the loss to the victim.
The case is assigned to U.S. District Judge Robert Schroeder III in the Texarkana Division of the Eastern District of Texas.