Skip to main content
Premium Trial:

Request an Annual Quote

US Department of Justice Charges Company Executives, Others for COVID-19 Healthcare Fraud

NEW YORK — The US Department of Justice on Wednesday announced that it has filed criminal charges against 14 individuals for COVID-19-related healthcare fraud that resulted in over $143 million in false SARS-CoV-2 testing and other billings.

Among those accused are individuals who are alleged to have committed testing-related fraud, including Mark Schena, president of Arrayit, who is facing new charges after being indicted last year for submitting false claims for allergy and SARS-CoV-2 testing.

The other newly charged defendants are alleged to have conducted various healthcare fraud schemes around the SARS-CoV-2 pandemic. They include Billy Joe Taylor of Arkansas, the owner of testing labs Vitas Laboratories and Beach Tox, who has been accused of attempting to defraud the US of over $88 million by using beneficiary and medical provider information from prior laboratory testing orders to submit fraudulent claims for urine drug tests and other laboratory tests, including respiratory pathogen panel and COVID-19 tests, that were not actually ordered or performed. He is also charged with submitting claims for beneficiaries who had died or otherwise ceased providing samples.

Also charged are Michael Stein, owner of consulting firm 1523 Holdings, and Leonel Palatnik, owner of Texas-based laboratory operator Panda Conservation Group. Stein and Palatnik allegedly participated in a $73 million conspiracy that involved exploiting temporary waivers of telehealth restrictions enacted during the pandemic to offer telehealth operators access to Medicare beneficiaries for whom they could bill consultations and refer to Panda labs for expensive and unnecessary genetic testing.

Florida-based patient brokers Juan Nava Ruiz and Eric Frank were charged for an alleged $9.3 million scheme in which they received kickbacks from Christopher Licata, the owner of clinical lab Boca Toxicology, to refer Medicare beneficiaries to the lab for genetic and other testing that were unnecessary, including tests that were improperly bundled with COVID-19 testing. Licata had been previously charged in a separate indictment.

The DOJ said it has also charged Peter Khaim and Arkadiy Khaimov of New York, who owned several pharmacies and sham pharmacy wholesaling companies, for participating in an alleged $45 million healthcare fraud and money laundering scheme that included using COVID-19 emergency override billing codes to circumvent otherwise applicable preauthorization requirements and limits on the frequency of refills for expensive drugs.

Also charged are Petros Hannesyan, owner of California-based home health agency Hollywood Home Health Services, for theft of government property and wire fraud in connection with nearly $230,000 he obtained from COVID-19 relief programs; and Malena Lepetich, owner of Louisiana-based clinical lab MedLogic, for participating in a $15 million scheme involving kickbacks for referrals of specimens for COVID-19 and other testing and the submission of over $10 million in Medicare, Medicaid, and Blue Cross Blue Shield of Louisiana claims for unnecessary respiratory testing.

The DOJ also charged Alexander Baldonado of New York for, among other things, ordering unnecessary genetic testing along with authorized COVID-19 tests; and Donald Clarkin, a partner in a New York diagnostic testing lab, for offering kickbacks in exchange for respiratory pathogen panel tests that would be improperly bundled with COVID-19 tests and billed to Medicare.

Among those previously indicted who are now facing new charges is Schena, who last year was charged by the DOJ for submitting more than $69 million in false claims for allergy and SARS-CoV-2 testing. At the time, the DOJ also alleged that Schena had paid kickbacks to recruiters and doctors to order unnecessary allergy testing from Arrayit and that he made false claims about the company's ability to launch a SARS-CoV-2 on its platform in an effort to deceive potential investors.

Included in the new charges against Schena are allegations that he sought to induce the ordering of a COVID-19 test and to bundle it with an unnecessary allergy test. The COVID-19 test results were not provided in a timely fashion and were not reliable, the DOJ said.

The DOJ also charged Paul Haje, Arrayit's VP of marketing, for working with Schena on paying kickbacks and bribes, and for submitting fraudulent claims to insurers including Medicare and Medicaid. The DOJ also charged Marc Jablonski, president of an Arizona-based marketing organization, for soliciting and receiving payments from Schena in exchange for arranging for medical practitioners to collect blood samples and order allergy testing for beneficiaries and members to be conducted by Arrayit.

"These medical professionals, corporate executives, and others allegedly took advantage of the COVID-19 pandemic to line their own pockets instead of providing needed health care services during this unprecedented time in our country," Deputy Attorney General Lisa Monaco said in a statement. "We are committed to protecting the American people and the critical health care benefits programs created to assist them during this national emergency, and we are determined to hold those who exploit such programs accountable to the fullest extent of the law."