Operators of South Florida Urinalysis Lab Sentenced to Prison and Ordered to Pay More Than $9.6 Million in Restitution for Healthcare Fraud

MIAMI, FL – The U.S. District Court for the Southern District of Florida has sentenced the chief executive officer and the chief operating officer of Smart Lab LLC to prison and ordered them and the company to pay more than $9.6 million in restitution after a federal investigation found that they had defrauded healthcare benefit programs.

The court sentenced H. Hamilton Wayne of Palm Beach Gardens, Florida, to 63 months in prison, followed by three years of supervised release, and a $50,000 fine; and his brother, Justin Morgan Wayne of Boca Raton, Florida, to 46 months in prison, followed by three years of supervised release, and a $20,000 fine. In addition, the court ordered $3,851,733 in restitution by H. Wayne and $2,897,389 in restitution by Justin Wayne. The court also ordered Smart Lab LLC to pay $2,897,389 in restitution.

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) found that the pair participated in a multi-million dollar healthcare fraud scheme that involved the filing of fraudulent insurance claim forms, defrauding healthcare benefit programs, and money laundering.

EBSA investigators found that H. Wayne and Justin Wayne established Smart Lab to perform confirmatory urinalysis testing. Both established bank accounts to receive proceeds of insurance claims for medically unnecessary testing and to pay kickbacks and bribes to individuals and entities that referred urine samples to their lab for testing. The pair established agreements with co-conspirators to solicit body fluid samples from substance abuse treatment centers. In exchange, Smart Lab would kick back a portion of the insurance reimbursements - disguised as payments for sales commissions - that would eventually funnel back to owners, operators, or clinicians at the treatment centers that referred the insured patients’ urine samples for testing.

The investigation also determined H. Wayne and Justin Wayne, along with co-conspirators, developed drug testing protocols that called for duplicative and medically unnecessary testing regardless of the patients’ individual needs. Often, patients were required to submit to drug testing approximately three times per week, which Smart Lab would then bill to the patients’ insurance plans. In addition, the pair did not inform the insurance plans that they were not collecting mandatory co-payments or deductibles from patients that could otherwise cause them to refuse to submit to drug testing.

EBSA investigators found that Smart Lab’s dealings resulted in the testing facility paying commissions of approximately 50 percent of the insurance reimbursements to other co-conspirators. From 2005 through 2017, Smart Lab paid the other co-conspirators more than $600,000 in payments, which came from proceeds of healthcare fraud.

“Healthcare fraud victimizes the individuals involved and the community at-large,” said Employee Benefits Security Administration Regional Director Isabel Colon, in Atlanta. “Fraudulently inflating healthcare bills for unnecessary or non-existent treatments increases the cost for others in need of health insurance. The U.S. Department of Labor remains committed to ensuring that benefits are not abused, and anyone found guilty of committing fraud is held accountable.”

EBSA, the FBI, the IRS, the Amtrak Office of the Inspector General, the Office of Personnel Management-Office of the Inspector General, the Florida Department of Insurance Fraud, the Martin County and Palm Beach sheriff’s departments, and other local police departments combined efforts in the investigation. The U.S. Attorney’s Office in the Southern District of Florida prosecuted the case.

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa.