Headlines that Matter for Companies and Executives in Regulated Industries

DOJ’s First Criminal Securities Fraud Prosecution Related to COVID-19 Results in Eight-Year Sentence

Mark Schena, the former president of Arrayit Corporation, a Silicon Valley-based medical technology company, was sentenced to eight years’ imprisonment and ordered to pay $24 million in restitution after his September 2022 convictions for health care fraud, securities fraud, paying kickbacks, and conspiracy to commit wire fraud. Schena’s case was the first criminal COVID-19 health care fraud case to go to trial.

Schena — who deemed himself the “father of microarray technology” — told Arrayit’s investors that he invented a revolutionary technology to test for any disease through the use of a single drop of blood from a finger stick sample. Schena further defrauded Arrayit’s investors by representing that Arrayit could be valued at $4.5 billion, even though it was on the verge of bankruptcy. Schena issued false public statements that Arrayit had lucrative partnerships with public institutions, companies, and government agencies, and filmed videos that falsely depicted Arrayit’s laboratory as high-tech and busy.

In addition, Schena oversaw an illegal kickback and health care fraud scheme that resulted in the submission of over $77 million in claims for COVID-19 and allergy testing. Schena paid kickbacks to marketers to obtain patient blood specimens, and then ran allergy testing for 120 different allergens regardless of medical necessity, even though Arrayit’s test was not a diagnostic test.

Schena also falsely announced that Arrayit had developed a COVID-19 test, even though the US Food and Drug Administration (FDA) had informed him that the Arrayit’s test was not accurate enough to receive an Emergency Use Authorization (EUA), which he concealed from investors.

Read the US Department of Justice’s (DOJ) press release here.

Florida Entity and Its Principals Agree to Pay Over $1.7 Million to Settle FCA Allegations

The Jena Medical Group, LLC, its principals Benjamin Weiss and Moishe Hoffman, and Dr. Jason Schultz each agreed to settle allegations that they violated the False Claims Act (FCA) through a scheme to defraud Medicare and TRICARE. According to the settlement agreement, Jena Medical and the three individuals allegedly billed Medicare for radiofrequency ablations that were performed by an unqualified technician, were not medically necessary, or both. The settlement resolves the lawsuit originally filed by Jena Medical’s former employee and Doctor of Nursing Practice, Michael Lomonaco, who will receive over $300,000 of the proceeds from the settlement.

Read the DOJ’s press release here.

Kentucky Company to Pay $200,000 to Resolve Fraudulent Billing Allegations

Oxygen Plus, Inc., a Kentucky-based provider of durable medical equipment, reached an agreement with the DOJ and Commonwealth of Kentucky over allegations that it violated the FCA by allegedly billing Medicare and Medicaid for respiratory devices that patients did not need or use between January 2017 and June 2021.

According to the settlement agreement, Oxygen Plus submitted over 300 false claims to Medicare and Kentucky Medicaid when it sought reimbursement for non-invasive ventilator (NIV) rentals — complex respiratory equipment designed to deliver pressurized air into the lungs of patients with serious respiratory diseases — even though the patients were either no longer using the devices or no longer needed the devices.

Read the DOJ’s press release here.

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