United States ex rel. Allen v. Capstone Diagnostics, LLC, et al.

Atlanta, Georgia, civil litigation lawyers represented the Defendant accused of violating the False Claims Act.

Jay Johnson, the former Chief Operating Officer and Chief Executive Officer of the Atlanta-based clinical laboratory Capstone Diagnostics, LLC (“Capstone”); Austin Whiles, Capstone’s former Chief Sales Officer and Vice President of Business Development; and associated entities caused Medicare to pay approximately $13.7 million for genetic and respiratory pathogen panel testing that was not medically necessary. Johnson also faces criminal health care and wire fraud charges arising from the scheme, which allegedly exploited church health fairs, religious conferences, and senior living communities to generate testing volume, including by paying kickbacks to conference organizers and independent marketers.

Johnson and Whiles allegedly took advantage of individuals at religious events and senior living facilities to line their pockets and drain millions of dollars from the Medicare trust fund.

Between 2019 and 2021, Johnson and Whiles allegedly engaged in two schemes to defraud Medicare. First, Johnson and Whiles allegedly targeted church-sponsored health fairs and religious conferences to perform and claim reimbursement for massive amounts of genetic testing not requested by physicians. Johnson allegedly directed Capstone personnel to swab attendees at mass events and then, without permission, used physicians’ names, signatures, standing orders, and other paperwork to make the testing appear properly ordered and medically necessary.

Second, Johnson and Whiles allegedly added medically unnecessary respiratory pathogen panels to COVID-19 tests sought by senior living communities, which inflated the Medicare reimbursements paid to Capstone. They allegedly did so by improperly using community- and chain-wide standing orders, copying physician signatures, standardizing diagnosis codes, having sales personnel enter orders rather than treating providers, and paying unlawful remuneration in violation of the Anti-Kickback Statute.

In total, the defendants allegedly caused Medicare to pay approximately $13.7 million for laboratory tests generated through the two schemes from 2019 through 2021. Johnson allegedly transferred millions of dollars derived from the schemes to his now-former wife, Sarah Haslock, and Whiles secretly routed to himself approximately $4.75 million in volume-based commissions from independent marketers.

Settled in part for more than $14 million with Capstone and VitalAxis.