Coastal Diagnostic: Home Sleep Tests Billed as Intensive Office Studies

The criminal case against Coastal Diagnostic’s owner involved an estimated $2,124,363 loss from home sleep tests billed as intensive in-office studies and claims for tests never performed. In his August 2026 guilty plea, the owner admitted both practices. For someone who scheduled the patients, handled the equipment or submitted the bills, the question is concrete: does the claim describe the study that actually happened?

Coastal Diagnostic Testing Group and Coastal Diagnostic operated sleep-testing businesses in Oregon. The criminal information filed in June 2026 charged a scheme beginning in January 2021 in which the owner directed claims for office studies when patients tested at home or received no test at all. It alleged that the owner knowingly caused staff to use higher-paying codes, causing government programs to reimburse the businesses more than they were entitled to receive.

What an Office Sleep Study Claim Says

An attended office sleep study claim represents both a test and the staff who attended it. The criminal information explains that codes 95810 and 95811 accounted for the vast majority of Coastal Diagnostic Testing Group’s billings under investigation, and both required attendance by a technologist. The latter also described initiation of CPAP therapy or bilevel ventilation during the study.

The same filing contrasts those services with an unattended study under code 95806 and home tests using portable monitors under G0398 and G0399. It states that office or lab studies were billed and reimbursed at three to four times the rate of at-home studies. The claim could collect that higher rate while the patient slept at home.

Polysomnography records brain and body activity during sleep, and the filing explains that the setting depends on the disorder being examined. In this form of sleep-practice fraud, the billing description changes the service the payer thinks it bought. An office and a technologist can appear on the bill without appearing in the patient’s night.

Shared Staff Across Oregon Locations

Coastal’s locations in Coos Bay, Brookings, Reedsport, Florence and Roseburg shared employees, an office manager and a medical biller, according to the criminal information. The filing alleged that the owner directed staff across the shared businesses to bill for inflated services. Those bills went out on CMS-1500 claim forms, according to the information.

That shared structure matters to an insider who sees only part of the work. A scheduler may know where the patient was expected to sleep, a technologist may know which studies were attended, and a biller may know which service reached the payer. We connect those accounts to the same claimed study, including who instructed staff to bill it that way.

That makes the instructions inside the business part of the story, alongside the testing and billing records. The employee who can explain a repeated code choice may know something the claim form cannot tell us.

How Medicare, Medicaid and Veterans Affairs Claims Moved

The criminal information named Medicare, Medicaid and the Veterans Choice Program as targets of the alleged conspiracy, and separately described claims to private insurers. For veterans’ community care, the filing describes how the Department of Veterans Affairs approved services before the claims reached the payer. TriWest received and analyzed the provider’s claim, and PGBA processed and paid authorized claims.

The Department of Veterans Affairs also supplied Nationally Standardized Episodes of Care describing reimbursable care and possible procedure codes. For an employee handling those authorizations, that supplied a comparison with the service later billed.

For that work, we would compare the authorized care, the actual sleep study, the submitted claim and the payment. A Veterans Affairs authorization explains what care was approved. The testing and attendance records explain what happened. The alleged fraud lay in the service represented to the payer, and the filing says those representations produced higher payments from the government.

What Evidence Does a Whistleblower Need?

For a sleep-testing case, useful evidence connects the actual study to the submitted claim and the people directing it. We examine the patient’s testing location, study documentation, technologist attendance, selected code and payer response together. For an alleged phantom study, the comparison begins with whether the claimed service happened at all.

A 2017 Journal of AHIMA article explains why a billing record needs a clinical counterpart. It describes claims for unprovided care as lacking a corresponding patient health record, then makes the point that matters to someone who worked inside the practice:

That is where your knowledge of the work has value. A claim can show the code submitted, while a person who handled the study can explain why that description is wrong. A manager’s directions, the attendance record and the bill can tell the same story from different places inside the business.

A Real Test Can Still Become a False Claim

The owner’s criminal case concerned both falsely described tests and phantom studies. The difference focuses the evidence: what happened during the test, or whether there was a test to begin with.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud describes the same distinction in healthcare False Claims Act cases: requests for more expensive categories of care than were provided, and requests for services never provided. In the owner’s case, the higher-priced office description and the nonexistent study each put a different false account of the patient’s care into a payment claim.

The civil case involving Innovative Sleep Centers shows why the people doing the work also belong in that comparison. The Justice Department’s November 2023 settlement announcement reported that the practice paid $644,562 to resolve allegations of billing physician services performed by unqualified office staff and sleep studies performed by technologists without required credentials.

The cases turn attention to different facts behind the bill: where the patient slept, whether a study occurred, who performed the work and what the payer was told. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Where the Patient Slept

If the home-testing work you know became an attended office study on the bill, speak to our whistleblower experts about where the claim departed from the care. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand diagnostic testing and government payment claims. We stay beside you as your account of the work becomes the evidence behind the case.