Feds Charge Man With Operating Coronavirus Kickback Scheme

The Federal Docket

March 31, 2020

March 30, 2020.

The Department of Justice announced its latest effort in coronavirus-related prosecutions. The U.S. Attorney for the District of New Jersey has charged Erik Santos, a resident of Georgia, with operating a kickback scheme in which he allegedly solicited and received payments in exchange for funneling patients to lab companies for coronavirus testing and other screenings that weren’t “medically necessary,” but which the labs billed Medicare for anyway. The feds are accusing Mr. Santos of using his marketing company to recruit doctors to write fraudulent prescriptions for Medicare beneficiaries to get tested, and then receiving payments from the lab companies that processed those test results and billed Medicare for reimbursement.

According to the criminal complaint, Santos is accused of starting a kickback scheme in 2019 revolving around lab test kits for cancer and then, when the COVID-19 outbreak began, pivoting to testing kits for COVID-19. Santos’s marketing company would allegedly contact Medicare beneficiaries, persuade them to seek testing for genetic cancer screenings of the coronavirus, and then use its network of healthcare professionals to prescribe tests that weren’t needed or warranted. The test kits would then be sent to the lab companies who billed Medicare to process the results. In exchange for each patient tested, Santos allegedly received a kickback ranging from several hundred dollars to well over $1,000. Santos allegedly handled hundreds of these tests.

With the coronavirus testing scheme, Santos allegedly would bundle COVID-19 tests with “Respiratory Pathogen Panel tests” (RPP Tests), which couldn’t test for coronavirus but were reimbursed for a much higher rate from Medicare. The complaint states that Santos would use his network of healthcare providers to prescribe these tests and then send them to labs that Santos either owned or had a kickback agreement with.

Santos is currently under arrest and charged with violating the anti-kickback statute and conspiracy to commit healthcare fraud. Given the headlines about a lack of coronavirus tests available to the public and reports about individuals and companies taking advantage, the feds will likely look to make an example out of Santos if they can. It is also likely that Santos will not be the only individual arrested or charged in this scheme, as federal investigators are likely looking at the labs and healthcare providers that he worked with.

While the existence of the coronavirus outbreak sensationalizes the nature of this case, it is important to focus on the evidence. It remains to be seen whether the doctors involved in this case truly intentionally prescribed these tests without a legitimate medical purpose. And while the complaint alleges that Santos discussed COVID-19 as an opportunity to make money, it will be crucial for the government to prove that he had a criminal intent when he acted–it is not illegal to make money during a crisis, even in distasteful ways sometimes. Labs are also permitted to pay marketers and others who generate leads for them, though they are not allowed to pay them on a per-patient basis, as is alleged here, so how these labs compensated Santos will be an important issue in this case.

This criminal complaint is just the latest step that the DOJ has taken to target those it suspects of committing “coronavirus-related fraud.” Last week, the U.S. Attorney in Macon, Georgia appointed a “coronavirus fraud coordinator.” Around the same time, the feds arrested a man in California for soliciting investments in a fake coronavirus cure. Healthcare providers, lab companies, and anyone else working in the healthcare industry during this time should be aware that the federal government is taking an aggressive stance in scrutinizing their practices.

It’s probably only a matter of time before Santos, and potentially others, are indicted. We will likely learn more about this alleged scheme, and who else might have been involved, when that happens.

Click here to read the DOJ’s press release and the criminal complaint.

Click here to read our firm’s primer on healthcare fraud and anti-kickback prosecutions.

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

Scroll to Top