Co-Owners of Medical Testing Lab Face Plead Guilty Over Illegal Kickback Scheme

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Jae Lee, and Richard Reid, and their co-conspirators were sentenced by the US District Court to two years of imprisonment for violating the Anti-Kickback Statute by organizing an illicit kickback scheme. Jae Lee headed NWPL as the CEO while Richard Reid served as the Vice-President of Sales and co-owner. The FBI, Health and Human Services Office of Inspector General, and the Defense Criminal Investigative Service uncovered their conspiracy after investigating the activities of NWPL that suggests evidence of healthcare fraud.

Reid, Lee, and their co-conspirators orchestrated a scheme that enabled them to earn illegally from toxicology tests paid by government healthcare insurance. From January 2013 to July 2015, records disclosed that the company solicited kickbacks from medical testing labs for a scheme where they would refer government testing businesses to the involved medical labs.

Two labs that were not operated by a physician paid NWPL to secure referrals to MEDICARE and TRICARE programs. It’s important to note that NWPL is owned by a physician which means that it is not authorized to test urine samples for patients who are covered by the government’s healthcare insurance. So, NWPL directed these patients to the two labs involved in a conspiracy to charge the government insurance program. Through this scheme, NWPL got hold of more than $3.7 million in kickbacks whereas the two labs billed the government more than $6.5 million for urine testing.

The Anti-Kickback Statute prohibits medical providers from soliciting and exchanging incentives for referrals in the healthcare program business. Thus, Reid, Lee, and their co-conspirators were found guilty of committing healthcare fraud as they cheated their way into reaping illegal profits. Moreover, Mr. Lee attempted to manipulate the two labs to compete against each other to fuel his greed. The conspirators masked their fraudulent activities by designating the fees to marketing services yet none of these services occurred. Jae Lee reportedly acquired an amount of more than $800,000 and the kickback payments to NWPL were commingled with the company’s other revenue. According to the sentencing memo, the prosecutors recounted that it was a greed-driven scheme.

The statement continued to state, “The crime was based purely on Mr. Lee and the others’ greed. The NWPL business model was profitable.  It 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.”

As for Mr. Reid, he is incriminated as an accomplice to the crime. The authorities conveyed that Reid aided Lee in covering the truth and “lying to the sales force, providers, and sharing fraudulent opinion letters from attorneys.” For this, Reid was convicted by the court on one count of conspiracy to solicit and receive kickbacks related to health care programs and four counts of receipt of kickbacks. NWPL pleaded guilty to the charges in February 2021. Both Reid and Lee were sentenced to federal prison for 2 years. Ultimately, their lies and dirty tactics crumbled an empire that they built on ill-gotten gains of healthcare fraud.

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