NEW YORK (360Dx) – The chief executive and a marketing executive of a New Jersey medical testing laboratory were sentenced to federal prison this week for their roles in a scheme in which Maryland pain management clinics referred urine specimens to the lab in return for $1.37 million in kickbacks, the US Attorney's Office District of Maryland announced on Friday.
Konstantin Bas, CEO of Accu Reference, was sentenced to a year and a day in prison, followed by three years of supervised release for his role in the scheme. He was ordered to forfeit $241,600 and pay a fine of $5,000.
Mubtagha Shah Syed, who marketed the lab's tests, was sentenced to three months in prison, followed by three years supervised release, the first three months of which must be served in home detention with electronic marketing. He was ordered to forfeit $23,400 and pay a fine of $4,000.
According to their plea agreements and other court documents, the kickback scheme was hatched in February of 2011 when Syed had a meeting with Muhammad Ahmad Khan, the chief administrative officer of a group of Maryland-based pain clinics incorporated under the name Advanced Pain Management Services and operating under the name American Spine Center. Khan then shared the scheme that he and Syed had discussed with Atif Malik and Sandeep Sherlekar, co-owners of the pain clinics. Bas and Vic Wadhwa, the clinics' chief financial officer, subsequently agreed to an arrangement in which Accu Reference's profits from the urine toxicology tests would be shared with American Spine Center executives.
In addition, Bas agreed to pay Syed a 5 percent share of the proceeds for arranging the scheme, according to court records. Unknown to Bas, Wadhwa and Khan skimmed off approximately 60 percent of the kickback payments for themselves.
Each month from April 2011 through July 2012, American Spine Center referred between 700 and 1,300 patient urine specimens to Accu Reference in return for kickbacks. Starting in the spring of 2011, American Spine Center also referred patients for back braces to another company operated by Bas in exchange for kickbacks.
Accu Reference received approximately $4.4 million in payments from claims submitted to Medicare and private insurers for testing the specimens submitted by American Spine Center. Companies owned by Bas paid approximately $1.37 million in kickbacks to American Spine Center.
Sherlekar died before his initial court appearance. Malik was sentenced to eight years in prison followed by three years of supervised release. He was also ordered to forfeit $241,976, pay a fine of $74,000, and pay restitution of $175,000. Wadhwa pleaded guilty to violating the Anti-Kickback Act and is scheduled to be sentenced on Sept 26. Khan was charged with the kickbacks conspiracy and conspiracy to defraud the United States and he remains a fugitive.