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Florida Man Admits Role in $4.6 Million Health Care Fraud, Kickback Schemes Related to Genetic Testing

New Jersey

A Florida man today admitted his role in using his company to defraud the Medicare Program in connection with fraudulent orders for genetic tests, Attorney for the United States Rachael A. Honig announced.

Federal officials said Edward B. Kostishion, 60, of Lakeland, Florida, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to a superseding information charging him with two counts of conspiracy to commit an offense against the United States in connection with schemes to commit health care fraud and violate the Anti-Kickback Statute.

Kostishion and five co-defendants were previously charged by indictment in September 2019 in connection with these conspiracies.

According to documents filed in this case and statements made in court:

Kostishion and certain conspirators operated Ark Laboratory Network LLC (Ark), a company that purported to operate a network of laboratories that facilitated genetic testing. Ark partnered with Privy Health Inc., a company that another conspirator operated, and another company to acquire DNA samples and Medicare information from hundreds of patients through various methods, including offering $75 gift cards to patients, all without the involvement of a treating health care professional.

Matthew S. Ellis, a physician based in Gainesville, Florida, and a co-defendant charged in the indictment, served as the ordering physician who authorized genetic testing for hundreds of patients across the country that he never saw, examined, or treated.

These included patients from New Jersey and various other states where Ellis was not licensed to practice medicine.

Through this process, Ellis, Kostishion, and other conspirators submitted and caused to be submitted fraudulent orders for genetic tests to numerous clinical laboratories.

These orders falsely certified that Ellis was the patients’ treating physician and, in some cases, falsely indicated that a patient had a personal or family history of cancer.

In 2018 alone, Medicare paid clinical laboratories at least $4.6 million for genetic tests that Ellis ordered as part of this scheme.

In addition, Kostishion and certain conspirators entered into kickback agreements with certain clinical laboratories under which the laboratories paid Ark bribes in exchange for delivering DNA samples and orders for genetic tests.

Among other things, Ark concealed these kickback arrangements through issuing sham invoices to laboratories that purportedly reflected services provided at an hourly rate even though the parties had already agreed upon the bribe amount, which was based on the revenue the laboratories received from Medicare or an amount paid for each DNA sample.

In 2018, the clinical laboratories paid Ark at least $1.8 million in bribes.

Each conspiracy count carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Kostishion’s sentencing is scheduled for April 1, 2021.