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Execs guilty in drug-test kickback scheme

November 14, 2012
by Alison Knopf
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State’s crackdown taints laboratory, snares sober-home and addiction-treatment operators

The crisis at Massachusetts-based Calloway Laboratories, a crisis highlighted by news of a state Medicaid fraud investigation in July 2010, a $20 million state settlement in March, and the lab’s acquisition by Boston-based private equity firm Ampersand in September, may now be passing with the October 22 guilty pleas of two departed Calloway Labs senior executives.  

With its acquisition by Ampersand set to close before yearend, Calloway Labs may at last “turn the page” on its recent troubles, but nationally, questions about the sometimes dubious ethics involved in the growing business of urine drug testing remain.

Unnecessary tests get AG’s attention

Patients who need drug tests are big business. So big, in fact, that the labs that test their urine for drugs are doing everything they can to maximize the profits. But in Massachusetts, Attorney General Martha Coakley has spent years investigating clinical laboratories that are bilking MassHealth – the state’s Medicaid program – for unncessary drug tests, which are done because people with access to patients—including some addiction treatment providers and sober home operators—take bribes in exchange for sending those patients to a particular laboratory.

In the spring of 2012, Calloway Laboratories paid $20 million to settle charges that it defrauded the state Medicaid program by, among other things, overcharging for drug screens. The scheme involved bribing sober living homes to have clients screened unnecessarily. The company did not admit guilt and said it was a result of “outdated practices.”

On October 22, three  defendants pleaded guilty to the Medicaid kickback scheme, in which they used “straw companies” and overcharged the state’s Medicaid program for urine screens. The three—Arthur Levitan,Calloway Labs' former chief executive officer, Patrick Cavanaugh, its former chief operating officer,  and William Maragioglio, a former sober house employee—pleaded guilty to engaging in the kickback scheme in which sober houses and a medical office illegally obtained urine drug screening business that was paid for by the state’s Medicaid program. "This pervasive kickback scheme cost the Medicaid program and taxpayers millions of dollars,” Coakley said when the pleas were entered. “With this resolution, these individuals will be barred from working in the public health sector again. The corresponding settlement returned $20 million back taxpayers, one of the largest Medicaid restitution amounts in the Commonwealth’s history.”

Superior Court Judge Kathe Tuttman sentenced each of the defendants to four years of probation, and none of them can be involved in any Massachusetts healthcare program or any Medicaid or Medicare program except as a patient. Calloway has severed relationships with these former officers as part of the agreement.

How the kickbacks worked

According to Coakley, Calloway set up straw companies – JAC Resources, Inc. and MJK & Associates, LLC, between 2005 and 2007. Levitan, Cavanaugh, and sober home employee Maragioglio paid bribes through these companies and a corresponding bank account to induce sober homes to order drug screens from Calloway. (The bribes are called kickbacks because the money for the bribes came from the drug tests that MassHealth paid Calloway to perform.) The lab then made inappropriate payments to Maragioglio, former owner and manager of New England Transitions, and to Kelli Ann Cavanaugh, the sister of Patrick Cavanaugh and a former manager of New England Transitions, a group of sober houses, Coakley explained.

“These allegations point to a scheme that is a blatant abuse of taxpayer dollars through the Commonwealth’s Medicaid program, which provides vital services to children, low-income families and people with disabilities, and others in need of quality, affordable health care,” said Massachusetts Medicaid Director Julian Harris, M.D. in March, when the settlement with Calloway was reached. “We are thankful to Attorney General Coakley and her staff for securing a $20 million payment.  We will continue to actively partner with the Attorney General to prevent fraud, so that we can protect the people who depend on Medicaid services and the taxpayers who support our programs.”

The agreement was the seventh settlement resulting from the industry-wide investigation by Coakley’s Medicaid Fraud Division in to urine drug tests billed to the state Medicaid program. So far, the state has recovered $30 million in restitution.

Another “intricate scheme” to be tried soon

In a similar case, Punyamurtula Kishore, M.D. and three other defendants will go on trial in February for allegedly bilking MassHealth of almost $3.8 million, in what Coakley’s office calls an “intricate scheme” involving drug testing, sober homes, and his Preventive Medicine Associates (PMA).

According to Coakley, Kishore used various bribes or kickbacks to persuade sober house owners to require residents to submit urine tests at least three times per week. The tests were performed by PMA’s office laboratories, then billed to MassHealth, which pays $100 to $200 for such screens. Also charged in the case were Carl Smith, manager of New Horizon House, John Coughlin, president of Gianna’s House, and Thomas Leonard, part owner and manager of Marshall House—all for receiving kickbacks.

"Medicaid Fraud cases involve the theft of taxpayer dollars and undermine the integrity of our health care system," said Coakley when she announced the arrest of Kishore a year ago. "In this case, we allege that Dr. Kishore orchestrated a complex kickback scheme to funnel drug screen business to his laboratories and then bill MassHealth for those services. Our investigation continues into his practices."

NAATP:  Providers warned to “err on the side of caution”

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MAD DOG MILLIONAIRE a.k.a. Punyamurtula Kishore MD, is a QUACK.
Patients Die of Improper Medical Treatment and Care Protocols!!!!
Many of Dr. Punyamurtula Kishore s patients have died because of improper treatment and care methods. This Quack MD ( Hitler of Medical Genocide ) should not be allowed to practice medicine anywhere. Preventive Medicine Associates, formerly Addiction medicine Associates was a DEATH CAMP (The Holocaust for Drug Addicts and Alcoholics, Auschwitz in Brookline, MA) I worked at his Brookline office and witness the death of many patients. Dr. Kishore should be arrested, arraigned and prosecuted for 1st. degree murder or manslaughter.
MAD DOG MILLIONAIRE aka PUNYAMURTULA KISHORE MD
Punyamurtula Kishore, M.D. and three other defendants will go on trial
for Medical Insurance
Fraud.
Dr. Punyamurtula Kishore was reprimanded, fined $2,500 and required to perform 50 hours of Board-approved community service and to complete additional continuing professional development credits. He was found to have inappropriately filed four Temporary Involuntary Hospitalization Applications for the purpose of drug treatment and drug testing. Dr. Kishore is a 1975 graduate of Andhra Medical College in India. He specializes in Addiction Medicine and has been licensed in Massachusetts since 1978
MAD DOG aka PUNYAMURTULA KISHORE MD
Punyamurtula Kishore, M.D. and three other defendants will go on trial i for allegedly bilking MassHealth of almost $20 million, in what Coakley’s office calls an “intricate scheme” involving drug testing, sober homes, and his Preventive Medicine Associates (PMA).
According to Coakley, Kishore used various bribes or kickbacks to persuade sober house owners to require residents to submit urine tests at least three times per week. The tests were performed by PMA’s office laboratories, then billed to MassHealth, which pays $100 to $200 for such screens. Also charged in the case were Carl Smith, manager of New Horizon House, John Coughlin, president of Gianna’s House, and Thomas Leonard, part owner and manager of Marshall House—all for receiving kickbacks.
MAD DOG a.k.a Punymurtula Kidhore MD and Lil Dog a.k.a. Carl Smith L.M.H.C. are responsible for the death of Eleanor Clark of Weston , Massachusetts.
Just look at what happen to James Clark .
James Clark was a client at the same address where the Director/Manager Carl Smith resided at ,50 Draper Street in Dorchester MA. Carl Smith is suppose to be a state licensed Mental Health Clinician , If so , than why did he discharge James Clark ? James clark never tested postive for a toxicology screen for illegal or prescription drugs, than why was he discharged ?
He was discharged for behavioral and attitude problems that were related to his psychiatric and substance abuse diagnosis. Carl Smith L.M.H.C. should have been able to detect that this man had psychological problems and referred him for treatment to MAD DOG aka Punyamurtula K...ishore s Neurological Clinic for treatment and to help James Clark get back on his psychiatric medication. Instead , Carl Smith discharged him and the following day , James Clark murdered his 81 year old grandmother Eleanor Clark in Weston Massachusetts .
Punyamurtula Kishore MD aka MAD DOG Millionaire referred James Clark to Carl Smith s Program New Horizon House after James Clark was Discharged from St. Elizabeths Hospital s S.E.C.A.P. s Detoxification unit. Punyamurtula Kishore aka MAD DOG had a Contract with Carl Smith to provide New Horizon clients with Medical and Mental health Treatment. No treatment was provided except for toxicology screens . Carl Smith collected James Clark s program fee and MAD DOG Kishore billed his insurance company . Carl Smith and Dr. Kishore donot care about thier clients or patients . The only thing they cared about was making money at the expense of HUMAN MISERY !!!!!!!! 2311

Punyamurtula Kishore MD a.k.a. MAD DOG MILLIONAIRE , Brookline Doctor Pleads Guilty, Sentenced to Jail and Ordered to Pay $9.3 Million for Running
Medicaid Kickback and False Billing Scheme
Punyamurtula Kishore MD a.k.a. MAD DOG MILLIONAIRE to Surrender Medical License, Sentenced to House of Correction
BOSTON – A Brookline doctor has pleaded guilty, was
sentenced to jail, and has been ordered to pay $9.3 million in
restitution for running an intricate Medicaid fraud scheme involving
millions of dollars in taxpayer funds, Attorney General Maura Healey
announced today.
Dr. Punyamurtula Kishore, 64, along with his company Preventive
Medicine Associates, Inc. (PMA), pleaded guilty on Monday in Suffolk
Superior Court. PMA pleaded guilty to charges of Medicaid Kickbacks (8
counts), Medicaid False Claims (19 counts) and Larceny over $250 (11
counts). Dr. Kishore pleaded guilty to one count of Larceny over $250.
“Dr. Kishore orchestrated a complex kickback scheme to funnel a
lucrative drug screening business to his laboratories and then billed
taxpayers millions of dollars for those services,” AG Healey said. “This
case exhibited blatant theft of state funds that were supposed to go
toward care for some of our most vulnerable residents. This is fraud
that undermines the integrity of our health care system.”
Today, Superior Court Judge Janet Sanders sentenced Kishore to 360
days in the House of Correction, with 11 months to serve and the balance
suspended for 10 years. As a condition to his sentence, Kishore has
also agreed to surrender his medical license. Judge Sanders also ordered
Kishore and PMA to pay, jointly and severally, a total of $9.3 million
in restitution.
Dr. Kishore previously owned and managed PMA, a network of 29 medical
branches throughout Massachusetts, including physician office
laboratories and one independent clinical laboratory. Based on the AG’s
investigation, Dr. Kishore used bribes, or kickbacks, to induce sober
house owners to send their residents’ urine drug screening business to
his laboratories for testing. Residents were typically screened three
times per week.
A urine drug screen may be billed to MassHealth by a physician if the
screen is medically necessary. Drug screens generally are billed to the
MassHealth program for approximately $100 to $200. Dr. Kishore
manipulated his business relationships with sober house owners to
illegally obtain tens of thousands of drug screens paid for by
MassHealth for sober house residents who were never treated by PMA
providers.
In September 2011, Dr. Kishore and PMA were indicted,
and individually charged with Medicaid Kickbacks (8 counts), and
Medicaid False Claims (8 counts). In November 2013, Dr. Kishore and PMA
were indicted on additional charges of Medicaid False Claims (11 counts)
and Larceny over $250 (11 counts) for billing MassHealth for millions
of dollars in drug screens using the names of PMA physicians and nurse
practitioners who were not actually treating the patients or determining
the drug screens to be medically necessary. State regulations require
that the services must be medically necessary and the provider must be
physically present and actively involved in the treatment of the
member.
Two other individuals previously pleaded guilty to one count of
Medicaid Kickbacks in connection with their involvement in Dr. Kishore’s
scheme to defraud MassHealth. In June 2012, Damion Smith, 42, of New
Jersey, president of Fresh Start Recovery Coalition, was sentenced to
two years in the House of Correction suspended for two years with
probation. Carl Smith, 69, of Dorchester, manager of New Horizon House,
pleaded guilty in January 2015 and was sentenced to two years in the
House of Correction suspended for two years with probation.
The case against Thomas Leonard of Malden, the part owner and manager
of the Marshall House, a sober house located in Malden, is ongoing.
John Coughlin of Carver, president of Gianna’s House Inc., which
operates several sober houses located in Wareham, New Bedford, and
Sandwich, began his trial today in Suffolk Superior Court.
This case, first referred to the AG's Office by MassHealth, was
prosecuted by Assistant Attorneys General Angela Neal, David Scheffler,
and Lee Hettinger of AG Healey’s Medicaid Fraud Division with the
assistance of victim witness advocates John Malone and Amber Anderson.
The case was investigated by Erica Schlain and Denise Long of the
Attorney General’s Office, Massachusetts State Police assigned to the
Attorney General’s Office, Examiners from AG Healey’s Computer Forensics
Lab, Special Agents from the Boston Office of the United States
Department of Health and Human Services Office of the Inspector General,
and investigators from the Massachusetts Insurance Fraud Bureau also
assisted in this case.666 (Edited April 21, 2015)

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