The former leader of a rural hospital chain is among 10 defendants charged with fraud for allegedly participating in an "elaborate pass-through billing scheme," according to the Department of Justice.
An indictment unsealed June 29 alleges Jorge Perez and nine others billed private insurance companies about $1.4 billion for laboratory claims as part of a billing scheme from November 2015 through February 2018. The defendants were allegedly paid $400 million for the claims, according to the Justice Department.
The indictment alleges Mr. Perez and the other defendants took over struggling rural hospitals and then used those hospitals as shell companies to bill private insurers for expensive blood tests and urinalysis drug tests processed at outside labs in other states. The labs were allegedly controlled by the defendants, and the claims were submitted using billing companies they also controlled.
Though the outside labs processed the blood and urine tests, private insurers were allegedly billed as if the tests were performed at the hospitals using higher rates allowed by rural hospitals.
The indictment further alleges that many of the lab tests were not medically necessary. The defendants allegedly obtained samples for testing by paying kickbacks to recruiters and healthcare providers.
"This was allegedly a massive, multi-state scheme to use small, rural hospitals as a hub for millions of dollars in fraudulent billings of private insurers," said Assistant Attorney General Brian Benczkowski of the Justice Department's Criminal Division in a statement.
The four rural hospitals named in the indictment are Campbellton-Graceville Hospital in Graceville, Fla.; Regional General Hospital in Williston, Fla.; Chestatee Regional Hospital in Dahlonega, Ga.; and Putnam County Memorial Hospital in Unionville, Mo.
In October, the former CEO of Putnam County Memorial Hospital pleaded guilty to a $114 million fraudulent billing scheme. David Byrns admitted that he submitted fraudulent claims for toxicology and blood testing services to insurers for patients who never visited Putnam County Memorial Hospital.
Over the past two years, eight hospitals managed by Mr. Perez and his companies have closed and 12 have entered bankruptcy, according to Kaiser Health News.