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Illinois COO Accused of Fraudulent COVID-19 Billing; Texas Firm Pays $2M to Settle Fraud Claims

NEW YORK – The US Department of Justice on Wednesday said the chief operating officer of a suburban Chicago company has been indicted on charges of embezzling at least $1.8 million through fraudulent orders for COVID-19 testing kits.

Separately, the DOJ also said Wednesday that a company that operated hospitals in the Houston area agreed to pay $2 million and make additional contingent payments to resolve accusations of claiming excessive payments from government healthcare programs and double billing for COVID-19 tests.

The DOJ accused Dennis Haggerty Jr. of making payments to himself from the bank account of his employer, a Willowbrook, Illinois-based firm that sold COVID-19 testing kits. The payments were purportedly for services and goods provided by himself or the firm's main vendor, a manufacturer from which his employer purchased the test kits. The services and goods were not provided, however.

The DOJ announcement and the indictment do not name the companies involved.

Haggerty also is accused of writing checks from the company's bank account to himself and concealing his fraud with false and misleading statements on the checks and to the company president.

According to the DOJ, Haggerty defrauded his employer while he was on court-ordered release and facing separate charges that he bilked an Iowa company out of millions of dollars in payments for undelivered N95 respirator masks.

One year ago, Haggerty was sentenced to 57 months in prison and ordered to pay about $1.9 million in restitution for defrauding a hospital in Iowa out of $2.5 million for 500,000 N95 respiratory masks that he never delivered. He and two business partners formed a company, At Diagnostics, in March 2020 and the hospital signed the deal for the masks the same month.

Federal prosecutors said that following sentencing, Haggerty withdrew $147,000 of that total in cash and spent hundreds of thousands more on automobiles, credit card payments, and a $20,000 payment to a friend.

DOJ officials also said Wednesday that Ravishanker Mallapuram, one of the principals of United Memorial Medical Center, will pay $2 million to resolve accusations that the company overbilled federal healthcare programs for COVID-19 tests as well as double-billed federal programs for testing services that were also reimbursed by either the state of Texas or city of Houston. UMMC formerly operated hospitals in the Houston area.

"UMMC made millions by overbilling those healthcare programs and intentionally double billing for COVID-19 testing," US Attorney Alamdar Hamdani for the Southern District of Texas said in a statement. "Instead of returning those monies to America’s taxpayers, they pocketed the money for themselves."

The DOJ announcement said that the settlement resolves a whistleblower lawsuit brought by former UMMC employee Ryan Griffin, who accused the company of fraud. He will receive $300,000 from the settlement.