You’ve Tested Positive for Fraud

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close up of word medicare block letter

Modern medicinal technology has developed rapidly to the point where one can now determine their heritage, muscle composition, taste preferences, likeliness to develop diseases and more based on genetic testing. Unfortunately, some medical companies will do anything to sell their genetic tests, including defrauding government programs.

Donald Matthews is the former Vice President of Market Development for California-based Proove Biosciences. Inc. He recently pleaded guilty to conspiring to pay physicians kickbacks in exchange for them ordering expensive genetic tests for Medicare beneficiaries. Matthews was found in violation of the Anti-Kickback statute.

Proove is a biotechnology company which provides laboratory genetic testing services. Their tests claim to indicate whether a patient is at risk for abusing narcotics. According to Matthews, the company paid doctors over $3.5 million in kickbacks so that they would order the genetic tests for their patients. (You may want to review your business plan if you’re having to pay people to use your product.)

The company covered their tracks by claiming the payments to the doctors were for their participation in a sponsored clinical research program. Prove was billed an estimated $45 million to Medicare for the ordered tests. This resulted in the company fraudulently receiving $21 million in payments. (This doesn’t seem worth the cost of a tarnished reputation, plummeting stock, and former executives facing prison time.)

Matthews claimed the kickbacks were a desperate attempt to incentivize doctors into ordering their tests. They had realized that without the monetary incentive, most doctors were not interested in ordering genetic testing for their patients. (A possible solution could have been to stop selling the tests instead of breaking the law and committing Medicare fraud.)

Sometimes this illegal partnership could be tumultuous among those involved. The money paid to doctors depended on the number of tests ordered by the physicians. Proove frequently demanded that the physicians order more tests and threatened to not pay them. Physicians would also threaten to stop ordering tests if they were not paid more. (Seems like a competition of who is feeling greedier that day.)

Prove’s own employees were placed in the offices of the doctors involved in the scheme to make sure ground operations ran smoothly. These ‘plants’ were in charge of collecting cheek swabs, filling out paperwork, and helping to maintain the ruse that they were conducting a clinical research program.

California U.S. Attorney Robert Brewer condemned the usage of kickbacks saying they “corrupt the medical judgment of physicians, generate unnecessary tests and treatments, increase health care costs, and create unfair competition.”

Report suspected Medicare fraud directly to their tip line by calling 1-800-633-4227.

Today’s Fraud of the Day comes from an article, “VP of Genetics Company Pleads Guilty to Paying Physicians Sham Clinical Research Fees as Part of $21 Million Medicare Fraud Scheme,” published by the U.S. Department of Justice on August 4, 2020.

SAN DIEGO – Donald Joseph Matthews, the former Vice President of Market Development for Proove Biosciences. Inc., pleaded guilty in federal court today to conspiring to pay physicians kickbacks to order genetic tests for Medicare beneficiaries in violation of the Anti-Kickback Statute.

According to Matthews’ plea agreement, Proove paid doctors at least $3.5 million to induce them to order Proove’s DNA tests—which the company claimed could determine a patient’s risk of abusing certain prescription narcotics.  Proove billed approximately $45 million to the Medicare program for the tests, in violation of Medicare’s prohibition against kickbacks, and Proove received approximately $21 million in unlawful payments. Proove concealed the true nature of the kickbacks by falsely characterizing the payments as compensation for participating in a clinical research program sponsored by Proove.  In furtherance of the scheme, Proove placed its own employees in doctors’ offices.  The Proove employees collected a cheek swab and completed most of the paperwork associated with the “clinical research” program. Without the financial compensation, Matthews admitted that most doctors were not interested in ordering Proove’s tests for their patients.

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.