Five defendants, including laboratory executives and hospital executives, have been found guilty of conspiracy to violate the Anti-Kickback Statute, US Attorney Damien M. Diggs announced today.
Susan L. Hertzberg, 65, of New York, New York; Matthew John Theiler, 57, of Mars, Pennsylvania; David Weldon Kraus, 65, of London, Tennessee; Thomas Gray Hardaway, 51 of San Antonio, Texas; and Jeffrey Paul Madison, 48, Georgetown, Texas, were found guilty by a jury on November 30, 2023, following a seven-week trial before US District Judge Jeremy D. Kernodle.
“Patients need to be confident that their doctors are ordering tests and making laboratory referrals based on what’s best for the patient, and not because doctors are looking to pack their pockets the profits from the kickbacks,” said US Attorney Damien M. Diggs. “For years, these defendants used an elaborate marketing scheme to facilitate payments to physicians in return for physician laboratory referrals. Improper financial relationships such as these undermine the integrity of federally funded health care programs by influencing physician decision-making. This case underscores our District’s commitment to justice by prosecuting hospital and lab executives who seek to influence the doctors and the doctors who accepted the illegal kickbacks.
“HHS-OIG’s reach is far and wide. Our agents and law enforcement partners are not limited by the scope of a health care fraud investigation or the location of its defendants,” Jason said. E. Meadows, Special Agent in Charge of the US Department of Health and Human Services, Office of Inspector General (HHS-OIG), Dallas Region. “Kickback arrangements, regardless of their intended complexity, will always be a review priority for our agency.”
“The Department of Defense’s Office of the Defense Criminal Investigative Service (DCIS) of the Inspector General is committed to protecting the integrity of TRICARE, the health care system for members of the military and their dependents,” said Gregory P. Shilling, Acting Special Agent-in-Charge at the Southwest Field Office of DCIS. “Today’s guilty verdicts send a clear message that DCIS, along with our law enforcement partners and the U.S. Attorney’s Office, will diligently pursue fraudsters seeking self-aggrandizement by undermining the integrity of this critical program.”
On January 12, 2022, Hertzberg, Theiler, Kraus, Hardaway, and Madison, as well as Jeffrey Paul Parnell, 55, of Tyler; Laura Spain Howard, 49, of Allen; Todd Dean Cook, 58, Wimauma, Florida; William Todd Hickman, 60, of Lumberton; Christopher Roland Gonzales, 47, of McKinney; Ruben Daniel Marioni, 39, from Spring; Jordan Joseph Perkins, 39, of Conroe; Elizabeth Ruth Seymour, 40, of Corinth; Linh Ba Nguyen, 59, from Dallas; Thuy Ngoc Nguyen, 55, from Dallas; Joseph Gil Bolin, of Dallas; Heriberto Salinas, 63, from Cleburne; and Hong Davis, 55, of Lewisville, were indicted for conspiracy to commit illegal bribery in violation of the Anti-Kickback Statute. The law prohibits offering, paying, soliciting, or receiving remuneration to induce referrals for goods or services covered by Medicare, Medicaid, and other federal healthcare programs. The defendants were indicted for their roles in a conspiracy in which doctors were induced to make referrals to rural hospitals and an affiliated laboratory in exchange for kickbacks disguised as investment returns; and where vendors were incentivized to arrange or recommend ordering services from rural hospitals and an affiliated lab.
Two rural Texas hospitals, Little River Healthcare (LRH) based in Rockdale, and Stamford Memorial Hospital based in Stamford, have partnered with Boston Heart Diagnostics (BHD), a clinical laboratory based in Framingham, Massachusetts, to specialize in advanced cardiovascular lipid testing. For a fee, BHD processes the blood tests while hospitals bill the tests to insurers as hospital outpatient services, with the hospitals charging insurers a higher rate than would be received in BHD as a clinical laboratory. The hospitals use a network of marketers who in turn run managed service organizations (MSOs) that offer investment opportunities to physicians throughout the State of Texas. MSOs are simply a way to facilitate payments to physicians in return for physician laboratory referrals. Under the kickback scheme, hospitals pay a portion of their laboratory profits to marketers, who in turn kick back a portion of the funds to referring physicians who order BHD tests from hospitals or directly from BHD. BHD executives and sales force personnel used MSO kickbacks to gain and increase referrals and, in turn, to increase their earnings, bonuses, and commissions.
Parnell, Howard, Cook, Hickman, Gonzales, Marioni, Perkins, Seymour, Thuy Nguyen, Salinas, and Davis pleaded guilty before the trial.
In January 2022, Robert O’Neal, 65, of San Antonio, pleaded guilty to conspiracy to commit illegal payments, violation of the Anti-Kickback Statute, and conspiracy to commit money laundering. His role in the kickback conspiracy was to arrange for doctor referrals and recommend ordering services at rural hospitals and BHDs. O’Neal also had kickback proceeds laundered for him and, at various times, obtained proceeds from the kickback conspiracy.
In July 2023, Peter J. Bennett, 49, of Houston, was convicted of money laundering conspiracy, money transmitting conspiracy, and perjury. According to information presented in court, Bennett created sham trusts and shell corporations through which he laundered at least $2,724,080.41 in healthcare kickback proceeds. Bennett used his law firm’s Interest on Lawyers Trust Account (IOLTA), operating account, and personal bank account to launder and remit the kickback proceeds.
The defendants face up to five years in federal prison at sentencing. The maximum statutory sentence prescribed by Congress is provided here for informational purposes, as sentencing is determined by the court based on advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the US Probation Office.
This case was investigated by the US Department of Health and Human Services, the Office of Inspector General, and the US Department of Defense – Defense Criminal Investigative Service (DCIS) with assistance from the US Secret Service and the US Department of Commerce – Export Enforcement. It was prosecuted by Assistant US Attorneys Adrian Garcia, Nathaniel C. Kummerfeld, Lucas Machicek, and Robert Austin Wells.