Clinical Laboratory and Owner Charged in Medicaid Kickback and False Billing Scheme

BOSTON — An independent clinical laboratory in New Bedford and one of its owners have been indicted on a range of criminal charges in connection with an illegal kickback and Medicaid fraud scheme involving urine drug screens at sober homes, Attorney General Maura Healey announced today.

New Bedford-based Optimum Labs, Inc. and William Owens, Jr., 60, of New Bedford, were indicted Thursday by a statewide grand jury on the charges of

Medicaid False Claims (3 counts), Larceny over $1200 under False Pretenses (3 counts), and Kickbacks, Bribery, or Rebates (2 counts). Arraignment will follow in Suffolk Superior Court.

The AG’s Office alleges that Optimum referred certain of its urine drug tests to two other laboratories, Dominion Diagnostics of North Kingstown, Rhode Island and Aspenti Health of South Burlington, Vermont, in exchange for a percentage of collected insurance reimbursements in violation of the Massachusetts anti-kickback statute. 

The AG’s Office further alleges that most of Optimum’s business was urine drug testing for residential sobriety monitoring purposes at Massachusetts sober homes. Under state regulations, laboratories may not bill MassHealth for tests performed for residential monitoring purposes because such tests are not medically necessary and thus not a MassHealth covered service. In many cases, the urine drug tests were not ordered by physicians, nurses, or an appropriate authorized prescriber. By billing MassHealth and its Managed Care Entities for these tests, Optimum and Owens are alleged to have submitted, and received payment for over $4.6 million in false claims.

These charges are allegations, and all defendants are presumed innocent until proven guilty.

This matter is being handled by Assistant Attorneys General Ali Russo and Matthew Turnell, Senior Healthcare Fraud Investigator Shelby Stephens, and Investigators William Welsh and Derek Bottari, all of the AG’s Medicaid Fraud Division. Investigations Supervisor Joe Shea also provided assistance throughout this investigation. The matter was referred by MassHealth, which along with the Department of Public Health, the Department of Health and Human Services, and the Office of the Inspector General assisted with the investigation.

The AG’s Medicaid Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award. The remaining 25 percent is funded by the Commonwealth of Massachusetts.