Federal COVID Fraud Charges Include Doc’s Testing Scheme

A physician and 13 other defendants exploited the pandemic and participated in healthcare fraud schemes that resulted in more than $143 million in false billings, according to criminal charges filed by the Department of Justice (DOJ).

Alexander Baldonado, MD, of New York City, was charged with six counts of healthcare fraud, according to a statement Wednesday. The 65-year-old is alleged to have participated in an event that advertised COVID-19 testing but also ordered expensive and unnecessary cancer genetic testing for Medicare beneficiaries who attended the event. DOJ said Baldonado also billed Medicare for services — such as lengthy office visits — that were never provided.

About $2 million in claims were submitted as a result of the physician’s alleged COVID-19 testing scheme, and about $17 million in claims were submitted as a result of an alleged broader scheme, the DOJ said.

Owners of a laboratory, consulting company, and pharmacy are also among those cited in the pandemic-inspired fraud schemes. These include charges against Billy Joe Taylor, 42, of Lavaca, Arkansas, for allegedly defrauding the U.S. of more than $88 million, more than $42 million of which was during the pandemic. The agency’s claims against Taylor — the owner and operator of a pair of testing labs, Vitas Laboratories and Beach Tox — include that he used access to beneficiary and medical provider information from prior testing to submit fraudulent claims for other tests, including COVID-19 tests.

The DOJ has also charged Michael Stein, 35, and Leonel Palatnik, 42, both of Palm Beach County, Florida, in connection with an alleged $73 million conspiracy to pay and receive healthcare kickbacks during the pandemic. The pair allegedly exploited temporary waivers of telehealth restrictions by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations. In exchange, providers agreed to refer beneficiaries to labs operated by Palatnik’s company for expensive and unnecessary cancer and cardiovascular genetic testing, according to the DOJ.

Others charged also include Peter Khaim, 41, and Arkadiy Khaimov, 38, both of Forest Hills, New York, who owned several pharmacies, according to the DOJ. Khaim and Khaimov were charged for their alleged participation in a $45 million fraud and money laundering scheme, according to the agency. DOJ alleges the pair submitted false claims to Medicare — including by using COVID-19 billing codes — to navigate around pre-authorization requirements and limits on refills for expensive drugs, such as treatment gels used for skin cancer.

Legal counsel for those charged were not immediately clear.

The charges announced by the DOJ this week are tied to the early days of the pandemic, when there was high demand for COVID-19 tests but limited supply, and when Medicare had loosened restrictions on telehealth consultations, AP reported. More recently, the news agency noted, COVID-19-related scams have shifted to those involving fake vaccination cards, according to Chris Schrank, assistant inspector general for investigations with HHS.

Separately, CMS has taken administrative actions against more than 50 medical providers for their involvement in schemes related to COVID-19 or the abuse of agency programs to promote access to care during the pandemic, the DOJ said.

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