Skip to main content
Premium Trial:

Request an Annual Quote

Government Secures $10.5M Civil Judgment Against Kentucky Lab Owner, Exec in Fraud Case

NEW YORK ─ The US Attorney's Office for the Eastern District of Kentucky said last week that the owner and compliance officer of a Lexington-based toxicology lab, called LabTox, have agreed to pay the US $10.5 million in civil judgments stemming from violations of the False Claims Act.

The lab's owner, Ronald Coburn, and compliance officer, Erica Baker, previously pleaded guilty to a laboratory fraud scheme in which they ordered medically unnecessary urine drug tests and billed them to Medicare and Kentucky Medicaid. In December 2023, Coburn was sentenced to 46 months in prison while Baker was sentenced to six months in prison followed by six months of home confinement.

According to their plea agreements, Coburn submitted urine drug tests ordered by courts for use in judicial proceedings to Medicare and Kentucky Medicaid despite such testing not being eligible for reimbursement by those programs while Baker helped solicit the urine drug test orders submitted by the company.

Between January 2019 and January 2021, Coburn and Baker worked with a company that the latter recruited, called Blue Waters Assessment and Testing Services, to refer court-ordered urine drug testing to LabTox. Despite knowing that this was not medical testing, Coburn billed it to Medicare and Kentucky Medicaid, obtaining payments of $1.9 million between June 2019 and March 2021.

Additionally, Baker recruited samples from nonmedical substance abuse treatment programs, putting some facility staff on the lab's payroll and compensating them based on the number of urine drug tests sent to the lab. LabTox billed Medicaid and Kentucky Medicare $1.6 million for this testing.

Coburn also pleaded guilty to concealing his income and ownership of LabTox by placing the business in the name of his partner.

Because penalties for fraud to Medicare and Kentucky Medicaid are mandatorily trebled, the pair must pay $10.5 million for the $3.5 million they received in payments for their fraudulent claims.