Columbia, S.C. — The United States, along with Georgia, Colorado, and South Carolina, has achieved over $114.5 million in judgments and settlements in a significant Medicaid fraud case related to cancer genetic testing. This case focused on a network of individuals and companies accused of taking advantage of vulnerable populations and billing state Medicaid programs for unnecessary and illegally acquired lab tests.
Kevin S. Murdock, the former CEO and owner of Premier Medical, Inc. based in Greenville, has consented to a $27.5 million judgment just one day prior to the start of his civil trial. This judgment is part of a larger initiative to hold accountable those involved in a complex kickback scheme that targeted low-income Medicaid recipients under the pretense of cancer screening.
Premier Medical and its associates faced allegations of providing illegal kickbacks to secure patient referrals for expensive cancer genetic (CGX) testing. These tests were then fraudulently charged to Medicaid in Georgia, Colorado, and South Carolina — frequently at rates surpassing $9,000 per patient. In numerous instances, patients were never adequately diagnosed, consulted, or even informed of their test results.
Fraud in Broad Daylight
As per the government’s complaint, which resulted in default judgments and several settlements, representatives from Freedom Medical Labs, LLC — a co-defendant in this matter — established makeshift testing stations at bus stops, dollar stores, and street corners within low-income communities. They lured Medicaid patients into providing DNA samples, offering up to $20 as compensation.
The labs only accepted samples from individuals with active Medicaid coverage. After collecting the samples, Freedom Medical compensated telehealth providers to endorse the tests — even though they had no treating relationship with the patients. Under Murdock’s direction, Premier Medical handled the tests and billed Medicaid for procedures that were not medically necessary.
In April, the court had already issued a $71 million default judgment against Premier Medical. The new settlements have increased the total recovery in this case to over $114.5 million.
Key Defendants and Penalties
Robert Alan Richardson and Edward Burch from Freedom Medical Labs both consented to judgments of $8 million. They had earlier pleaded guilty to comparable schemes in Tennessee.
Michael Conroy, who was the former VP of Compliance at Premier Medical, confessed to aiding the scheme and reached a settlement of $15,000. Additionally, he agreed to a three-year exclusion from federal healthcare programs. Freedom Medical Labs has been prohibited from engaging in federal healthcare programs for a duration of seven years.
As a result of the investigation, Premier Medical has been removed from participating in Medicaid across all three states involved. The fraud cost the Medicaid programs in Georgia, Colorado, and South Carolina a combined $13.7 million, with Georgia bearing the highest burden at over $7 million.
“This is a significant victory in the fight against fraud, waste, and abuse,” said U.S. Attorney Bryan Stirling for the District of South Carolina. “The scheme was fueled by greed and kickbacks, which have no place in health care.”
Officials from all three states shared a common sentiment, with Georgia Attorney General Chris Carr pledging to remain vigilant in safeguarding taxpayer funds, while South Carolina Attorney General Alan Wilson highlighted the significance of teamwork and accountability.
Whistleblower Led to Breakthrough
The case was initially brought forth under the whistleblower provisions of the False Claims Act by Karen Mathewson, who is a former employee of Premier Medical. As a “qui tam” relator, she could be eligible for a share of the recovery.
The investigation was spearheaded by the U.S. Attorney’s Office in South Carolina, receiving assistance from the attorneys general of Georgia, Colorado, and South Carolina, along with federal agencies such as the Department of Health and Human Services Office of Inspector General and the Defense Criminal Investigative Service.
Individuals with knowledge of possible healthcare fraud are urged to reach out to the HHS fraud hotline at 1-800-HHS-TIPS (800-447-8477).
