Federal prosecutors have sued two former executives of an Atlanta laboratory, alleging schemes targeting church events and senior communities caused Medicare to pay $13.7 million for unnecessary testing.
The Justice Department filed a civil False Claims Act complaint Sept. 17 against former Capstone Diagnostics CEO Jay Johnson, former Chief Sales Officer Austin Whiles and entities. The alleged conduct occurred from 2019 through 2021.
Prosecutors say Johnson and Whiles used church-sponsored health fairs and religious conferences to generate genetic testing physicians had not requested. Johnson allegedly directed employees to swab attendees, then used doctors’ names, signatures and standing orders without permission to make the tests appear medically necessary.
A second scheme involved senior living communities seeking COVID-19 tests. The government says the defendants added unnecessary respiratory pathogen panels, increasing Medicare reimbursements. They allegedly copied physician signatures, used broad standing orders, standardized diagnosis codes and allowed sales personnel to enter orders instead of treating providers.
The complaint alleges unlawful payments under the federal Anti-Kickback Statute. Johnson allegedly transferred millions of dollars from the schemes to his former wife, Sarah Haslock, while Whiles routed $4.75 million in volume-based commissions to himself.
The case began as a whistleblower lawsuit filed by former Capstone laboratory manager Jesse Allen. The False Claims Act allows private citizens to sue on the government’s behalf and potentially receive part of any recovery.
The government previously reached a $14.3 million settlement with Capstone and owner Andrew Maloney and a $300,479 settlement with billing company VitalAxis over related liability.
Johnson faces pending criminal charges including health care fraud, wire fraud and kickback offenses. The government’s Sept. 17 announcement identifies Whiles only as a defendant in the civil case.
Johnson is presumed innocent unless convicted.
