Georgia Laboratory Owner Pleads Guilty to Felony Charge and Agrees to Pay $14.3 Million to Resolve False Claims Act Allegations

ATLANTA, GA – Andrew “Drew” Maloney, 57, of Roswell, Georgia, has pleaded guilty to a criminal information charging him with conspiracy to pay health care kickbacks. The guilty plea is part of a global settlement with the United States and several states in which Maloney and the clinical laboratory that he owned, Capstone Diagnostics, of Atlanta, Georgia, have also agreed to pay approximately $14.3 million to resolve allegations that they violated the Anti-Kickback Statute by paying volume-based commissions to independent contractor sales representatives to arrange for or recommend medically unnecessary urine drug tests and respiratory pathogen panels (RPPs). Maloney and Capstone have also agreed to cooperate with the Department of Justice’s investigations of other participants in the alleged schemes.

“The law prohibits health care providers, including laboratories, from paying kickbacks to third parties to generate business,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “As we have repeatedly witnessed, such payments can undermine the integrity of federal health care programs by inducing unnecessary services and other fraudulent practices.”

“Unfortunately, Capstone and Maloney are hardly alone, as we have witnessed some clinical laboratories and their owners across the country engage in unscrupulous kickback and billing schemes that caused incalculable harm to Medicare,” said U.S. Attorney Ryan K. Buchanan. “We are committed to aggressively investigating and prosecuting those who defraud valuable government programs designed to benefit our most vulnerable citizens. By simultaneously obtaining criminal and civil resolutions, as well as working with our partners from the Georgia Attorney General’s Office, this case demonstrates our office’s commitment to using all available tools to hold accountable those who seek to steal from federal health care programs.”

“To maintain public trust in the health care system, we must ensure patients and taxpayers that care provided by federally funded healthcare programs is dictated by clinical needs, not fiscal greed,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “To do that, the FBI and our partners are committed to combining resources and holding providers who bill the government for unnecessary services accountable.”

“Health care providers who cause the submission of Medicare and Medicaid claims for medically unnecessary services pose a significant risk to these programs and the patients who rely on them,” stated Special Agent in Charge Tamala E. Miles of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG works diligently with our law enforcement partners to hold accountable individuals who, to satisfy their own greed, exploit federal health care programs.”

“The citizens of our country place immense trust in the integrity of our federal health care programs, and with it, the ability to ensure adequate care for all,” said Special Agent-in-Charge Darrin K. Jones, Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office. “Corruption in all forms undermines that trust, and we will work relentlessly with our investigative partners to pursue and hold accountable those who illegally profit from DoD healthcare programs.”

According to U.S. Attorney Buchanan, the charges, and other information presented in court: Between August 2017 and December 2018, Capstone entered into an arrangement with a program operating as Do It 4 the Hood (D4H), which held itself out as providing after school mentoring services to at-risk teenagers in Georgia. Once enrolled, participants were required to submit to frequent urine specimen collections for drug testing without regard to medical need or the history of the participant. Maloney was aware that the participants needed the tests to participate in the program and that many of these participants were covered by Medicaid.  Capstone, with Maloney’s knowledge and approval, paid the operators of D4H a percentage of Medicaid reimbursements for samples submitted by the program, in violation of federal law. While the scheme was ongoing, Capstone submitted over $1 million in claims, causing Georgia Medicaid to pay out at least $400,000 in claims related to the fraudulent drug testing. In addition to Maloney’s guilty plea, four other individuals have pleaded guilty in connection with this fraudulent drug testing scheme:

• Dr. Duriel Gray, 45, of Cartersville, Georgia, pleaded guilty to conspiracy to receive health care kickbacks in the Northern District of Georgia. Gray is licensed to practice medicine in Georgia and was recruited to be the “medical director” for D4H in Georgia. D4H used Gray to provide a “standing order” under which Capstone could submit the fraudulent drug testing claims to Medicaid. Gray did not have a physician-patient relationship with the students, never examined any of them, and did not review or discuss the drug tests with any of the participating students. For his role in the scheme, Gray received approximately $30,000. On April 13, 2023, Gray was sentenced to two years of probation and ordered to pay $417,200.40 in restitution.
• Bree’Anna Harris, 32, of Phoenix, Arizona, pleaded guilty to conspiracy to commit health care fraud and money laundering in the Western District of North Carolina to charges filed in the Northern District of Georgia and Western District of North Carolina. Among other things, Harris incorporated an entity, BPolloni Consulting, LLC, which entered into a purported marketing agreement with Capstone. The arrangement between BPolloni and Capstone was used to receive and conceal the fraudulent kickback payments and distribute them to her coconspirators. On December 5, 2023, Harris was sentenced to 36 months of imprisonment for her role in the D4H scheme and related schemes in North Carolina and elsewhere.
• Glenn Pair, 36, of Stonecrest, Georgia, pleaded guilty to conspiracy to commit health care fraud and money laundering in the Western District of North Carolina to charges filed in the Northern District of Georgia, Western District of North Carolina, and District of South Carolina. On July 27, 2022, Pair was sentenced to 70 months of imprisonment for his role in the D4H scheme and related schemes in North Carolina, South Carolina, and elsewhere.
• Rachel Sheats, 48, of Woodstock, Georgia, pleaded guilty to conspiracy to pay health care kickbacks in the Northern District of Georgia in January 2024. Sheats acted as Capstone’s chief operations officer during the relevant time and served as a key point person for D4H at Capstone. Sheats’ sentencing hearing remains pending.

Maloney and Capstone also entered into a civil settlement agreement under which they agreed to pay $14.3 million to the federal government, the State of Georgia, and several other states, to resolve claims arising from the submission of false claims to government health care programs. In addition to the allegations described above, the civil settlement resolves allegations that, between April 2020 and December 2021, Maloney and Capstone sought to profit from the COVID-19 pandemic by paying independent contractor sales representatives to recommend RPPs to senior communities interested only in COVID-19 tests. RPPs are an expensive panel that tests for many different respiratory pathogens, some of which are very rare, do not cause overlapping clinical syndromes, and are found only in specific patient populations. To generate orders, Capstone’s independent sales representatives completed test requisition forms for RPPs using forged signatures of physicians who had only ordered COVID tests and sham diagnosis codes that did not reflect the medical conditions of the senior community residents receiving the tests. Capstone subsequently billed federal health care programs for these medically unnecessary tests and paid its sales representatives a commission for each test. The federal share of the settlement is approximately $13.9 million and approximately $400,000 constitutes a recovery for state Medicaid programs.

The civil settlement resolves, in part, a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The claims resolved by the civil agreement are allegations only, and there has been no determination of civil liability. As part of today’s resolution, whistleblower Jesse Allen will receive approximately $2.86 million. Mr. Allen worked as Capstone’s laboratory manager from April 2017 to January 2019.

Maloney’s sentencing is scheduled for May 29, 2024, before U.S. District Judge J.P. Boulee.

This case is being investigated by the Federal Bureau of Investigation, U.S. Department of Health and Human Services-OIG, Defense Criminal Investigative Service, and the Georgia Medicaid Fraud Control Unit.

Assistant U.S. Attorney Alex R. Sistla and Georgia Deputy Attorney General Jim Mooney are prosecuting the criminal case. Assistant United States Attorney Neeli Ben-David, Deputy Director Paul R. Perkins, Civil Division, Commercial Litigation Branch, DOJ-Fraud Section, and Senior Assistant Attorney General Richard Tangum, Georgia Medicaid Fraud Division are handling the civil case. Former Assistant U.S. Attorney Mellori E. Lumpkin-Dawson also participated in the civil case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across the federal government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

One of the most powerful tools in combatting health care fraud is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 1-800-HHS-TIPS (800-447-8477).

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6280.  The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.