Lab Executive Sentenced for Medical Testing Kickback Scheme
The former co-owner of a medical testing company is headed to prison for his role in a medical testing kickback scheme.
Richard Reid of Astoria, Oregon, was sentenced to two years in prison. He was convicted in March 2022 of one count of conspiracy to solicit and receive kickbacks involving health care programs and four counts of receipt of kickbacks.
Reid was the co-owner and Vice President of Sales at the now defunct Northwest Physicians Laboratory (NWPL).
Prosecutors say Reid helped the Bellevue, Washington lab obtain more than $3.7 million in kickbacks by steering drug test specimens to two labs that would then bill the government for testing. The government ended up paying those two labs more than $6.5 million. This occurred between 2013 and 2015.
"Mr. Reid was the architect of a scheme to illegally profit on toxicology tests that were paid for by government insurance," said U.S. Attorney Nick Brown of the Western District of Washington.
NWPL was physician-owned, and therefore could not test urine samples for patients covered by government health programs.
According to court documents, two labs made payments to NWPL “in exchange for referrals of Medicare and TRICARE program business, in violation of the Anti-Kickback Statute.” TRICARE is the health care program for members of the U.S. military.
Prosecutors say that to hide the kickbacks, Reid and co-conspirators described the fees as being for marketing services but add that no marketing services were performed.
"The web of referrals and kick-backs led to significant profits for NWPL and its owners. Such illegal kickbacks simply inflate medical costs for the rest of us,” said U.S. Attorney Brown.
NWPL is now defunct and was hit with extensive civil and criminal litigation.
The company itself pleaded guilty in February 2021 and was ordered to pay $8,114,417 in restitution joint and several with the criminal defendants.
The other defendants include former NWPL CEO Jae Lee, who was sentenced to two years in prison in May 2022 and ordered to pay $7.6 million in restitution and former NWPL Executive Director Kevin Puls, who was sentenced to 90 days in prison and a year of supervised release.
The FBI, Health and Human Services Office of Inspector General (HHS/OIG), and the Defense Criminal Investigative Service (DCIS) investigated the case.
“DCIS will continue to work with its partners to root out fraudulent activities, like those in this particular investigation, that weaken TRICARE and inevitably increase costs unnecessarily,” said Bryan D. Denny, Special Agent in Charge of the Department of Defense Office of Inspector General (DOD/OIG), DCIS Western Field Office.
Reid is appealing the conviction.