Ten people have been charged with bilking insurance companies through an elaborate scheme using struggling rural hospitals, including the former Chestatee Regional Hospital in Dahlonega, to bill for drug testing.
In an indictment unsealed on Monday, the Department of Justice alleges that the conspirators would obtain urine specimens and other samples for testing through kickbacks paid to recruiters and health care providers, including substance abuse treatment centers. Some of the tests, the government alleges, were not even medically necessary.
The conspirators then billed insurers through the hospitals for about $1.4 billion for lab tests and were paid about $400 million, the government alleges.
In addition to the Georgia hospital, the scheme also involved hospitals in Florida and Missouri, according to the indictment.
Among those charged is Christian Fletcher, 34, of Atlanta, who faces one count of conspiracy to commit health care fraud and wire fraud; one count of conspiracy to commit money laundering; and two counts of substantive money laundering.
The indictment identifies Fletcher as the owner of LifeBrite Laboratories Inc., a Brookhaven clinical testing lab that performed toxicology testing on urine samples.
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In a written statement, Fletcher’s attorney, Steve Sadow of Atlanta, called the accusations unjustified and said Fletcher was not guilty of any criminal conduct. “Christian at all times engaged in legitimate, lawful business transactions with third party insurance companies and hospitals,” the statement said in part.
Fletcher also sought and received legal advice regarding the propriety of his business practices and dealings, the statement said.
Also indicted is Florida attorney and medical lab president Aaron Durall, 48. Through his company, Durall purchased the 49-bed Chestatee Regional Hospital in 2016, in a plan that was supposed to rescue the struggling facility.
He is charged with one count of conspiracy to commit health care fraud and wire fraud, five counts of substantive health care fraud, two counts of conspiracy to commit money laundering, and three counts of substantive money laundering.
» MORE: Read the Justice Department's allegations
Durall is falsely accused of a crime he did not commit, said his attorney Brian Rafferty of Atlanta. Durall, he said in a written statement, “has cooperated fully in this investigation, testified under oath about it, and is deeply disappointed that the government has ignored the facts…”
The government, Rafferty said, has turned a civil contract dispute with the insurers into a federal criminal case. He added that across the country, the same insurers have had to pay millions of dollars in civil proceedings for refusing to pay for the kinds of lab services at issue in the criminal case.
The government alleges that Durall, Fletcher and two other defendants along with others would research and identify financially distressed small, rural hospitals that they could take over to file claims for lab tests under the hospitals’ in-network contracts with insurers. By billing through the rural hospitals, the government says, reimbursements were significantly higher than if the bills were submitted by labs. But the government said none of the rural hospitals had the equipment or laboratory capacity to conduct large-scale urine analysis or blood tests, and that the testing actually took place in independent labs.
The lab tests were run for people from throughout the United States who were not patients of the rural hospitals and otherwise had no connection with them, the indictment also alleges.
As the testing bills from the Dahlonega hospital swelled to thousands a month, Blue Cross Blue Shield began to review all lab claims before determining whether to pay them. In response, Durall and another defendant began to submit claims in a manner to conceal the fact that urine analysis tests had been performed, according to the indictment.
In 2018, Blue Cross Blue Shield sued Durall, two of his Florida business associates and Durall's companies, including the hospital and Reliance Laboratory Testing, accusing them of using Chestatee to reap millions in improper testing fees. Durall denied any wrongdoing. The lawsuit was resolved with a confidential settlement in 2019, court records show.
The hospital closed about July 2018 and the property was later sold in a transaction where University System of Georgia Board of Regents purchased it and then leased it to Northeast Georgia Health System.
Others charged in the federal indictment include hospital managers and owners of laboratories and medical billing companies. They are Jorge Perez, 60; Ricardo Perez, 57; Neisha Zaffuto, 44; James Porter Jr. 49; Sean Porter, 52; Aaron Alonzo, 44; and Nestor Rojas, 45, all of Florida, and Seth Guterman, 54, of Chicago.
The case is in federal court in the Middle District of Florida
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