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DOJ Resolves Two Medicare Fraud Cases Totaling $100M in False Claims

NEW YORK — The US Department of Justice announced last week the resolution of two Medicare fraud schemes in which individuals submitted a total of nearly $100 million in false claims.

In one case, Daniel Hurt of Florida, the owner and/or operator of Fountain Health Services, Verify Health, Landmark Diagnostics, First Choice Laboratory, and Sonoran Desert Pathology Associates, agreed to pay more than $27 million to resolve allegations that he conspired to submit claims to Medicare for medically unnecessary cancer genomic tests.

In the other case, a federal jury convicted Texas doctor David Young of signing medical records and prescriptions that enabled the billing to Medicare of medically unnecessary orthotic braces and genetic tests totaling more than $70 million.

In Hurt's case, the government alleges that between January 2019 and November 2021, he and his companies conspired with telemarketing companies to prescribe medically unnecessary cancer genomic tests, with reference labs to conduct the tests, and with labs and a hospital to submit claims for the tests to Medicare.

Hurt previously pleaded guilty to criminal charges stemming from the scheme and was sentenced to 10 years in prison and ordered to pay $97 million in restitution.

The settlement includes the resolution of allegations brought in three cases filed under the whistleblower provisions of the False Claims Act, including an action filed by Robert Gerstein, a minority owner of Sonoran Desert Pathology, where he worked for Hurt, running the billing operations for cancer genomic tests. Gerstein will receive up to $4.7 million or 17 percent of the government’s recovery.

In its case against Young, the government alleged that he prescribed braces and genetic tests for over 13,000 Medicare beneficiaries, including undercover agents posing as different Medicare beneficiaries, many of whom he did not see, speak to, or otherwise treat. These false prescriptions were used to bill Medicare more than $70 million, and Young received roughly $475,000 in exchange for signing the prescriptions.

The jury convicted Young of one count of conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison, and three counts of false statements relating to health care matters, each of which carries a maximum penalty of five years in prison. His sentencing date has not yet been set.