Marketers and Physicians in Five States Agree to Pay Over $1.5 Million to Settle Laboratory Kickback Allegations

Two laboratory marketers, George Carralejo of Yorba Linda, California, and Michael Jeresaty of Daniel Island, South Carolina and their marketing companies, as well as five physicians, Dr. Paul Bierig of Plano, Texas, Dr. Mohd Azfar Malik of St. Louis, Missouri, Dr. Robert Ain of Wichita, Kansas and Drs. Barry Feinberg and Rachel Feinberg also of St. Louis, and certain affiliated entities have agreed to pay a total of $1,501,162 to resolve alleged False Claims Act violations arising from their involvement in laboratory kickback schemes. The parties have agreed to cooperate with the Justice Department’s investigations of other participants in the alleged schemes.

“Kickbacks can harm taxpayer-funded healthcare programs, distort the market for healthcare services and improperly influence healthcare providers’ medical decisions,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to pursue those involved in illegal kickback schemes, including marketers, doctors and medical practices.”

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded healthcare programs. The settlements announced today resolve allegations that laboratory marketers and their companies paid or conspired to pay kickbacks to doctors, and that doctors and their companies received kickbacks in return for laboratory referrals. The alleged kickbacks resulted in the submission of false or fraudulent laboratory testing claims to Medicare in violation of the False Claims Act.

The Marketer Settlements

George Carralejo and his marketing company, OC Genetic Consultants Inc. agreed to pay $400,000 to resolve allegations that they entered into two illegal schemes to pay kickbacks to doctors for their laboratory referrals. First, from August 2020 to September 2021, Carralejo and his company allegedly conspired with a South Carolina marketer, Ralston Health Group Inc. (Ralston), to pay kickbacks disguised as consulting and medical director fees to a doctor in Houston to induce him to order laboratory testing from RDx Bioscience Inc. (RDx), a clinical laboratory in Kenilworth, New Jersey, and NEXT Bio-Research Services LLC, doing business as NEXT Molecular Analytics (Next Molecular), a clinical laboratory in Chester, Virginia. Carralejo’s company and Ralston allegedly profited from the kickback scheme in the form of commissions from RDx and Next Molecular based on the Houston doctor’s referrals.

Second, from October 2021 to October 2022, Carralejo and his company allegedly conspired with a Texas marketer, BeauMed Consultants LLC, to pay kickbacks disguised as consulting fees to a doctor in Little Rock, Arkansas, to induce her to order laboratory tests from RDx. Carralejo allegedly provided commission numbers to the Arkansas physician or her staff, to allow for the preparation of false consulting invoices disguising that the Texas marketer’s payments were designed to reimburse for referrals rather than consulting work and were calculated based on the amount generated by those referrals. Carralejo allegedly tried to hide his role in the fraud scheme by deleting related text messages on the day he and the Texas marketer received subpoenas from the Justice Department.

In addition, Michael Jeresaty and his company, Ralston, agreed to pay $320,000 for allegedly paying kickbacks to the Houston physician referenced above and to a South Carolina doctor who previously settled related allegations involving referrals to RDx. The Justice Department previously settled with RDx allegations relating to Carralejo’s and Jeresaty’s kickback schemes.

The Physician Settlements

The settlements announced today also resolve allegations that five physicians and related entities received kickbacks in violation of the Anti-Kickback Statute from laboratory marketers’ purported management service organizations (MSOs) in return for making referrals to RDx and other laboratories.

• Paul Bierig: Dr. Bierig agreed to pay $120,634 to resolve allegations that from October 2016 to June 2022, he and his medical practice, Paul C. Bierig M.D., P.A., received thousands of dollars in payments from Avior Group LLC and other purported MSOs, including Infinity One Health Group MSO LLC and Infinity Three Health Group MSO LLC, in return for ordering laboratory tests from RDx and InHealth Diagnostic LLC doing business as RealLab (InHealth), a clinical laboratory in Dallas, Texas.
• Mohd Azfar Malik: Dr. Malik agreed to pay $217,430 to resolve allegations that from January 2019 to March 2020, he caused his medical practice, Psych Care Consultants LLC (PCC), to receive thousands of dollars in payments from Alari Group LLC (Alari) in return for ordering laboratory tests from Genesis Reference Laboratories LLC (Genesis), a clinical laboratory in Orlando, Florida, and InHealth. Genesis and InHealth allegedly paid commissions to an independent contractor recruiter, Corum Group LLC (Corum), which used Alari to pay kickbacks to Dr. Malik and other healthcare providers in return for their referrals. The Justice Department previously settled related allegations with Genesis and PCC.
• Robert Ain and Comprehensive Pain Treatment LLC: Dr. Ain and his pain management practice agreed to pay $100,632 to resolve allegations that from May 2017 to February 2019, they received thousands of dollars in payments from a purported MSO named Ruthenium Management LLC in return for ordering laboratory tests from Landmark Diagnostics LLC (Landmark), a clinical laboratory in Houston.
• Barry Feinberg, Dr. Rachel Feinberg and BIF Family Trust: Drs. Feinberg and Feinberg and a family trust agreed to pay $342,466 to resolve allegations that from January 2016 to December 2018, they received thousands of dollars in payments from purported MSOs named ESA Toxicology LLC and Beachwood Services LLC in return for ordering laboratory tests from Landmark.

“The kickbacks resulted in the submission of fraudulent laboratory testing claims to Medicare,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Clinical laboratories, marketing companies and health care practitioners are on notice that kickback arrangements in any form are not acceptable. No matter how they are named – as a ‘consulting fee,’ ‘commission’ or otherwise – or whether they are paid through intermediaries, kickbacks undermine the integrity of medical decision making and have no place in our healthcare system. Today’s agreement is yet another example of my office’s commitment to enforcing the False Claims Act and the Anti-Kickback Statute and protecting Medicare from shelling out taxpayer money for reimbursements tainted by improper kickbacks.”

“Violations of the Anti-Kickback Statute can induce medically unnecessary testing and inappropriately steer medical tests to providers who may not return timely or quality results,” said Special Agent in Charge Naomi D. Gruchacz of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to work with our law enforcement partners to seek resolutions and effect change to preserve the integrity of the federal health care system.”

The settlements were the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of New Jersey, with assistance from HHS-OIG. Senior Trial Counsel Christopher Terranova of the Civil Division’s Commercial Litigation Branch (Fraud Section) and Assistant U.S. Attorney Kruti Dharia for the District of New Jersey handled the settlements. The United States has recovered over $47 million relating to conduct involving MSO kickbacks to healthcare providers, including False Claims Act settlements with 46 physicians.

The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 1-800-HHS-TIPS (800-447-8477).

The claims resolved by the settlements are allegations only. There has been no determination of liability.