Former medical laboratory CEO sentenced to prison for kickback scheme | USAO-WDWA

Seattle – The former chief executive of the Northwest Physicians Laboratory (NWPL) was sentenced today in U.S. District Court in Seattle to two years in prison and $7.6 million in restitution for conspiring to solicit bribes, US Attorney Nick Brown said. Jae Lee, 51, of Bellevue, Washington, served as CEO of the Northwest Physicians Laboratory (NWPL). Between 2013 and 2015, Lee conspired with others to obtain bribes from medical testing labs in exchange for government testing activities referred to the labs. In passing sentence, U.S. District Judge John C. Coughenour noted that the scheme was significant and clearly illegal.

“Mr. Lee knowingly set up a profit-making scheme by referring government healthcare companies to other labs – even more troubling, he tried to pit one lab against another to increase his ill-gotten gain U.S. Attorney Nick Brown said. “Such conduct increases health care costs for all of us. This case should be a wake-up call to others who may be considering such schemes.”

The activities of the Bellevue-based Northwest Physicians Laboratory (NWPL) have been the subject of numerous civil and criminal litigation. CEO Lee helped NWPL secure more than $3.7 million in kickback payments by directing urine drug test samples to two labs that could charge the government for the tests. This resulted in government payments to these two labs of over $6.5 million.

According to records filed in the case between January 2013 and July 2015, two labs, which were not owned by physicians, made payments to NWPL in exchange for referrals to Medicare and TRICARE program activities, in violation of the law. anti-bribery. Paying compensation to medical providers or provider-owned laboratories in exchange for referrals encourages providers to order medically unnecessary services. The anti-kickback law works, in part, to discourage such behavior. The NWPL was owned by physicians and, for this reason, could not test urine samples from patients covered by government health programs such as Medicare, Medicaid and TRICARE. In order to conceal the payment of the bribes, Lee and other involved co-conspirators described the fees as being for marketing services; however, no marketing services were performed.

The bribes paid to NWPL were mixed with other company revenue. During the program, Lee received over $800,000 in distributions from NWPL’s combined funds. As prosecutors wrote in their sentencing note, “The crime was based solely on the greed of Mr. Lee and others. NWPL’s business model was profitable. He could afford to pay doctors thousands of dollars a month in dividends. It could afford to pay healthy distributions to its owners. This did not satisfy Mr. Lee. He was determined to maximize profits even if it meant breaking the law.

The company, NWPL, pleaded guilty in February 2021 and was ordered to pay $8,114,417 in joint and several restitution with the other defendants. NWPL has been disbanded. To date, the labs and individuals involved in this investigation have agreed to pay over $14 million to settle related civil claims.

“Mr. Lee’s conviction culminates in his illicit and greed-driven scheme to defraud federal health care programs, including the Department of Defense’s TRICARE program,” said Bryan D. Denny, Special Agent in Charge of the Department of Defense Inspector General’s Office, Defense Criminal. Investigative Service, Western Field Office. “Fraudulent health care billing inflates costs, erodes public trust and, in the case of the Department of Defense, ultimately degrades the readiness of American warfighters and undermines the missions of our military services.”

“Individuals who participate in kickback schemes do so at the risk of undermining the integrity of federal health care programs,” said Special Agent in Charge Steven J. Ryan of the Office of the Inspector General of the US Department of Health and Human Services (HHS-OIG). “HHS-OIG will continue to work with its law enforcement partners to bring to justice those who steal these programs for personal gain.

“Mr. Lee was one of the ringleaders of a conspiracy that stole more money per month than some honest Americans make in a year,” said Donald M. Voiret, special agent in charge of the field office of the FBI in Seattle “By stealing these benefit programs, he was not just stealing from taxpayers, but taking funds from people who rightfully relied on these programs for their health and well-being.”

In addition to Lee, two other defendants are awaiting sentencing. Kevin Puls, 57, the former executive director of NWPL, is due to be sentenced on September 6, 2022. Richard Reid, 53, was found guilty after a six-day jury trial. He is due to be sentenced on October 11, 2022.

The case was investigated by the FBI, the Office of Inspector General of Health and Human Services (HHS-OIG), and the Defense Criminal Investigative Service (DCIS).

The case is being prosecuted by Assistant United States Attorneys Brian Werner and Michael Dion.

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