LEXINGTON, Ky. – 2nd Chance, PLLC (“2nd Chance”), a substance abuse treatment center in Lexington, has agreed to pay $200,494 to resolve civil allegations that it violated the False Claims Act, a federal law that prohibits causing the submission of false or fraudulent claims to the federal government. 

According to the settlement agreement, the United States alleged that 2nd Chance caused the submission of false claims to the Kentucky Medicaid program through its referral of urine drug testing services to Compliance Advantage, LLC, a toxicology laboratory in Nicholasville, Kentucky known as “CAL Lab.”  CAL Lab provided 2nd Chance with a chemistry analyzer, which is a valuable piece of laboratory equipment that enabled 2nd Chance to perform some urine drug testing on-site beginning on or around October 3, 2016.  On November 29, 2016, CAL Lab and 2nd Chance entered into a lease agreement that required 2nd Chance to pay CAL Lab a monthly fee for use of the analyzer.  But, 2nd Chance did not make any payments for use of the analyzer until March 14, 2017.

Accordingly, for a five-month period, 2nd Chance received the benefit of the analyzer without paying for it.  The United States alleged this was a substantial benefit to 2nd Chance:  not only did 2nd Chance receive the benefit of the test results for use in patient care, 2nd Chance also received over $400,000 from Kentucky Medicaid for drug tests performed on the analyzer during this period. 

For its part, CAL Lab received referrals for more complex drug testing from 2nd Chance’s physicians.  CAL Lab then submitted claims for payment for that testing to Kentucky Medicaid, totaling close to $90,000.  According to the settlement agreement, the United States alleged that these claims were false, because they were tainted by 2nd Chance’s acceptance and use of the chemistry analyzer without making lease payments to CAL Lab in violation of the Anti-Kickback Statute, a federal law that prohibits healthcare providers from accepting anything of value in exchange for the referral of services paid for by federal health insurance programs, including Kentucky Medicaid. 

“Sweetheart deals paid for by taxpayers, as the Government alleged in this case, will not be tolerated,” said Derrick Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “We will work with our law enforcement partners to investigate and prosecute organizations entering into such illicit arrangements.”   

This case is part of a larger investigation into CAL Lab and affiliated individuals and entities.  Earlier this year, in a criminal matter, Samuel L. Ford and Dinesh Goyal pled guilty to conspiracy to commit an offense against the United States in connection with their illegal billing arrangement with CAL Lab.  Specifically, Ford, Goyal, and CAL Lab’s owner, Mason Routt, agreed that urine drug tests referred to and performed by CAL would be billed to certain federal health insurance programs using another laboratory’s billing information in order to evade payment restrictions placed on CAL by those insurers.  Earlier this week, Mr. Ford was sentenced to 24 months in federal prison and 36 months supervised release for his role in this scheme.  Mr. Goyal is scheduled to be sentenced on October 15, 2019.

In June 2018, CAL Lab agreed to a civil settlement with the United States that included the entry of a civil judgment against it and in favor of the United States in the amount of $2,816,015.  As part that settlement, CAL Lab admitted that it violated the False Claims Act by knowingly failing to return to federal health insurance programs overpayments it received for specimen validity testing – a service not covered by Medicare or Kentucky Medicaid.

The Government’s work in this investigation illustrates its commitment to combatting health care fraud, waste, and abuse.  Tips from all sources about potential fraud, waste, and abuse can be reported to the U.S. Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). 

The case against 2nd Chance was investigated by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Attorney’s Office for the Eastern District of Kentucky.  Assistant United States Attorney Christine Corndorf represented the United States.  The claims resolved by the settlement with 2nd Chance are allegations only; there has been no determination of liability.

  LEXINGTON, Ky. – On Monday, a Lexington man was sentenced, by Senior U.S. District Judge Joseph M. Hood, for his involvement in a health care fraud conspiracy.  Samuel L. Ford, 40, was sentenced to 24 months in federal prison and 36 months of supervised release, for his role in submitting fraudulent claims for urine drug testing to insurers that administer the Kentucky Medicaid program.

Ford previously admitted to the conspiracy with Mason Routt, the owner of a toxicology laboratory in Nicholasville, Kentucky, known as C.A.L. Laboratory Services (“CAL”), and Dinesh Goyal, the owner of a separate toxicology laboratory in Owensboro, Kentucky known as Tristate Medical Laboratory (“Tristate”).  CAL provided urine drug testing services for physician clients.  Beginning in late 2015, health care organizations who administer the Kentucky Medicaid program placed payment restrictions on CAL’s claims seeking reimbursement for urine drug tests, due to concerns about the legitimacy of those claims.  Ford acknowledged that these payment restrictions dramatically reduced CAL’s revenue.

Ford admitted that in order to evade these payment restrictions, in October 2016, he, Goyal, and Routt agreed that urine drug tests referred to and performed by CAL would be billed to the health insurance programs using Tristate’s billing information, falsely representing that the tests were performed by Tristate.  In this way, CAL received reimbursements to which it was not entitled.  Ford admitted in his plea agreement that these fraudulent claims caused Humana Caresource, Aetna Coventry Cares, and Anthem Blue Cross & Blue Shield Medicaid to suffer a combined loss of $1,378,449.  As part of the sentence imposed today, Ford was ordered to repay that $1,378,449 as restitution, and will not be allowed to work in the medical billing field during his three years of supervised release.

Dinesh Goyal pled guilty to the same offense in July 2019, and is scheduled to be sentenced on October 15, 2019.

Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky; James Robert Brown, Jr., Special Agent in Charge, Federal Bureau of Investigation, Louisville Field Office; and Derrick L. Jackson, Special Agent in Charge, Department of Health and Human Services, Office of Inspector General (HHS-OIG), Atlanta Field Office, jointly announced the sentence.

The investigation was conducted by the FBI and HHS-OIG.  The United States was represented by Assistant U.S. Attorney Paul McCaffrey.