Fountain Healthcare Services: A Jet and a Porsche in the Settlement

Fountain Healthcare Services joined its Florida owner and three laboratory companies in a telemedicine settlement to resolve allegations that kickbacks procured medically unnecessary cancer genomic tests for Medicare billing. The alleged business began with a promise of free testing and ended with laboratories and a hospital submitting claims. For someone inside the marketing, ordering or billing operation, the connection matters: who paid for the order, who signed it, and who collected from Medicare.

The Justice Department announced the civil settlement on May 24, 2024, based on the owner’s ability to pay. The agreement reached cash, real estate, a plane, vehicles and laboratory equipment, with additional payments tied to future income. The order business explains the alleged fraud. The assets explain how the government pursued its recovery.

How Genetic-Test Orders Moved From Marketing to Medicare

The government alleged that telemarketing agents recruited Medicare beneficiaries for free cancer genomic tests, telemedicine providers prescribed them, reference laboratories performed them, and billing laboratories and a hospital sought payment. Its allegations covered January 2019 through November 2021.

In the government’s account, the remote prescription connected the marketing campaign to the laboratory claim. According to the settlement agreement’s account of the conduct, the owner and companies paid kickbacks to marketers, marketing companies, reference laboratories and telemedicine providers to procure medically unnecessary tests. The government alleged both the payments for those tests and the resulting false Medicare claims.

This is why a telehealth fraud inquiry can reach beyond the bill for a remote visit. In its July 2022 telemedicine fraud alert, the HHS Office of Inspector General described companies recruiting patients and practitioners, paying for reviews or signatures, and transferring orders to businesses that bill federal programs. The order itself can be the product. A review fee can finance a signature that a different business uses to obtain payment.

The allegation here puts the promise of free testing beside the bill to taxpayers. The beneficiary supplied access to Medicare. The paid order supplied the medical authorization for a test the government said the beneficiary did not need.

A Hospital Claim Without Hospital Testing

Fountain’s alleged role also reached the hospital’s billing. The government alleged that the owner, through Fountain, caused Ellwood City Medical Center to exceed the 30% cap on its use of reference laboratories and omit the claim modifier identifying outside laboratory work.

A whistleblower who worked as a consultant for Ellwood and Americore alleged that laboratories billed genetic tests as though the hospital had performed them. The complaint describes what the consultant found:

That allegation connects the laboratory floor to the claim. A hospital’s name on a bill says little about where the sample went. Here, the consultant’s account challenged the hospital’s claimed work at every physical step: receiving the sample, processing it and reading the result.

Which Companies and Cases the Agreement Covers

The civil agreement names four companies alongside their owner: Fountain Healthcare Services, Landmark Diagnostics, First Choice Laboratory and Sonoran Desert Pathology Associates. Fountain was a holding company entering cancer genomic testing agreements. Landmark, First Choice and Sonoran participated in Medicare, and the same owner served as president and chief executive of all four. Verify Health and Verify Health Partners owned Sonoran.

The settlement resolved allegations brought in three qui tam cases. One whistleblower was a minority owner of Sonoran who ran its cancer genomic testing billing operations. That is a view inside the business where test orders become claims and Medicare payments reach the company. The agreement also records the owner’s criminal guilty pleas, based on knowingly defrauding Medicare from approximately January through October 2019.

What the Civil Settlement Reached

The government alleged that the schemes caused Medicare to pay $152,894,293 in false claims. The asset terms give substance to the ability-to-pay resolution. They required the owner and companies to surrender property for sale, including Fort Lauderdale real estate, a Gulfstream plane, a Porsche, a Ford pickup, laboratory equipment and personal property. The agreement also reached proceeds from a future sale of specified business interests. The assets were to be sold, with the proceeds divided between the federal government and the Americore bankruptcy trustee after liens and sale expenses.

Future income was part of the bargain, too. The agreement required payments tied to income for ten calendar years beginning in 2025, including receipts such as gifts and inheritances. The government reached beyond property already held to money the owner might receive later.

What Evidence Is Needed to Prove Fraud?

For purchased genetic-test orders, the evidence must connect paid referrals and medical certifications to laboratory work and Medicare claims. That connection can run through several businesses. Our whistleblower experts work with insiders who understand the compensation, billing or testing operation to turn that knowledge into a health care fraud case.

The 2024 Rutgers University Law Review paper Plausible Cause: Connecting the FCA and AKS in the Context of Health Care Fraud argues that the company itself holds the records and billing knowledge that can connect a kickback to a claim:

That observation helps explain the value of the Sonoran billing insider and the hospital consultant. Each could see a working part of the business behind the Medicare claim.

The Same Order Market in Other Cases

Genexe and Immerge’s separate settlement concerned allegations that they collected samples through independent contractors, acquired physician orders through telemedicine companies or laboratory arrangements, and supplied samples and orders to laboratories for a portion of Medicare receipts. The government described initial payments around $800 per swab against laboratory reimbursement often above $6,000. The specimen and signed order had a price because they opened the way to the laboratory’s Medicare payment. In a separate Delaware physician case, an admitted statement of facts described signed genetic-test orders issued through MySpecialistMD without examining the beneficiaries.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In this settlement, the agreement set the whistleblowers’ share at 17% of the net proceeds the United States retained. The Justice Department described an award of up to $4.7 million.

You Know How the Orders Became Claims

If you saw Medicare test orders bought, signed or billed inside a laboratory or telemedicine operation, speak with our whistleblower experts. We work with you to connect the medical paperwork to the payments and bring in healthcare fraud whistleblower lawyers who understand laboratory referrals and remote ordering. We stay beside you to build your strongest Medicare whistleblower case and pursue a recovery.