Booneville Laboratory Operator Kickbacks: Marketing Contracts That Bought Doctors’ Orders

Genetic testing fraud in the Booneville laboratory operator’s case involved buying doctors’ orders and disguising the payments as marketing work. The Justice Department’s account of his guilty plea describes businesses that billed Medicare without regard to medical necessity, then sent part of the proceeds back to the people supplying the orders. For someone inside a laboratory, the revealing connection is between the service described in the contract and the event that actually earned the payment.

The businessman, from Booneville, Mississippi, pleaded guilty to conspiracy to commit health care fraud in Newark federal court, the department announced on May 22, 2024. He and others owned, operated, held financial interests in or were affiliated with a laboratory, pharmacies and durable medical equipment companies. Genetic cancer screening was one part of a business that also billed for equipment and compounded medications.

Doctors’ Orders Became Something to Buy

The order was the thing the businesses paid to obtain. In the Justice Department’s account of the criminal plea, the participants offered and paid kickbacks and bribes in exchange for doctors’ orders. The laboratory and the other businesses submitted claims, or caused claims to be submitted, and used some of the reimbursement to pay for those orders.

The doctor decides which test the patient needs and keeps the supporting patient record. The laboratory performs the test, reports the result and submits the claim. Medicare’s laboratory ordering rule puts the documentation of medical necessity with the ordering practitioner. Buying access to the order reaches the decision that brings the laboratory its business.

An employee who saw only the marketing agreement would see a different explanation from an employee who knew why the payment was approved.

The Contracts Described Hours, Expenses and Flat Fees

The sham contracts made payments for doctors’ orders look like compensation for legitimate marketing and referral services. According to the guilty-plea announcement, the agreements described payment based on hours and expenses incurred, or on a flat-rate basis. Those descriptions concealed the bribes.

The contract gave the payment a business explanation that could travel with it through the accounts. The people producing the orders appeared on paper as suppliers being paid for services. Someone approving the bill could read about hours or expenses while someone managing the relationship knew the money bought orders.

In the separate criminal case involving Axis Professional Labs and Kingdom Health Laboratory, the Justice Department’s announcement of the laboratory owner’s conviction described how invoices for supposed marketing hours were worked backward to match agreed per-sample kickbacks.

The Laboratory Was One Part of the Scheme

The Booneville case covered genetic cancer screening tests, durable medical equipment and compounded medications across the participating businesses. The Justice Department reported approximately $51 million billed to Medicare and other health care benefit programs for tests and orders produced through the scheme.

The businessman personally received approximately $10 million from the reimbursements, according to the same guilty-plea announcement. The VA inspector general’s update also identified approximately $330,000 in losses to VA.

Medicare, VA and the taxpayers behind those healthcare programs paid for a scheme that bought doctors’ orders without regard to whether patients needed the services. For a laboratory insider, the genetic-test claims and the payments attached to them are the relevant part of that larger transaction.

What the Contract and Payment Records Can Show

The 2008 Issues in Accounting Education paper The Psychology and Sociology of Fraud distinguishes the act from its concealment and the way participants benefit. Applied here, the marketing contract supplied the cover story for the order payment. The reimbursement trail showed who got the money. An insider who knew what triggered approval could connect the paperwork to the payment’s real purpose.

For an insider whose job involved these agreements, the useful knowledge may be very specific: what services the supplier actually performed, what triggered approval of its payment, or who directed that the payment be described as marketing.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Marketing Payment Bought

If you handled a laboratory contract that called an order payment a marketing fee, talk with our whistleblower experts about what happened behind that description. We build the case with you, bring in laboratory fraud whistleblower lawyers who understand referral payments and genetic-test billing, and stay beside you through the pursuit of a recovery.