NEW YORK ─ The US Attorney's Office for the Eastern District of Kentucky said last week that the owner and CEO of a Lexington, Kentucky-based lab and the lab's compliance officer have pleaded guilty to a $2.8 million healthcare fraud scheme.
According to the plea agreements, Ronald Coburn, owner and operator of LabTox, 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. Meantime, Erica Baker, LabTox's compliance officer and director of operations, helped solicit the urine drug test orders submitted by the company.
Between January 2019 and January 2021, Coburn and Baker worked with a company 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 $937,594 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. Under his plea agreement, he must pay $3.6 million to the IRS, representing income tax he owed in 2017 through 2021.
Coburn and Baker are scheduled to be sentenced on Dec. 18 and both face a maximum of 10 years in prison and a fine of up to $250,000.