Court Sentences Founders of Laboratory Marketing Companies After U.S. Department of Labor Uncovers Healthcare Fraud

WEST PALM BEACH, FL – After an investigation by the U.S. Department of Labor's Employee Benefits Security Administration (EBSA), the U.S. District Court for the Southern District of Florida has sentenced one co-founder of several Florida laboratory marketing companies and substance abuse recovery homes to prison and two other co-founders to probation for their parts in a widespread healthcare fraud scheme.

The court sentenced John Skeffington to 52 months in prison, followed by 36 months of supervised release and ordered him to pay a $200 special assessment after he pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of obstruction of a criminal healthcare investigation. Also sentenced were Babette Hayes – who received 24 months' probation – and Mona Montanino – who received 24 months' probation and was ordered to pay a $2,500 fine. Hayes and Montanino pleaded guilty to one count each of obstruction of a criminal healthcare investigation. In addition, both were ordered to pay a $100 special assessment.

EBSA investigators found that Skeffington, Hayes, and Montanino established five laboratory marketing companies - Zenith Health Services Inc., Monty Health Care Services Inc., Peaceful Encounters LLC, National Diagnostic Testing Inc., and Paramount Health Solutions Inc. - in the Boynton Beach and Delray Beach, Florida, area. Co-conspirators established two substance abuse recovery residences – Footsteps to Freedom Recovery Center Inc. and Pantherview Sober House LLC, which operated as Panther View and A Beautiful Life – in Royal Palm Beach and Boynton Beach.

EBSA determined that Skeffington and co-conspirators unlawfully agreed to refer medically unnecessary and excessive bodily fluid tests from the recovery residences and substance abuse treatment facilities to a series of clinical laboratories in exchange for kickbacks. Skeffington and co-conspirators agreed with the testing facilities to file fraudulent claims for insurance reimbursements, which were then submitted for reimbursement to the patients' insurance plans.

When the claims from the clinical laboratories received greater scrutiny from insurance plans, Skeffington and his co-conspirators established written and unwritten agreements with rural hospitals, which allowed them to take advantage of the hospitals' higher insurance reimbursement rates for bodily fluid testing.

EBSA also discovered that, under these agreements, Skeffington and his partners would solicit bodily fluid samples from recovery residences and treatment centers to submit to the hospitals for confirmatory testing. In return, the hospital would kick back a portion of the insurance reimbursements – disguised as sales commissions to Skeffington's corporate entities – with the understanding that the commissions be paid directly or indirectly to the owners, operators, or clinicians of the residences and facilities that referred the testing for the patients. The hospitals would then submit claims to the insurance plans as though the patients were receiving treatments at the hospitals, despite the patients being hundreds of miles away. In some cases, the hospitals never treated the patients, who were unaware their insurance plans were being billed for the services. Some hospitals did not possess the necessary equipment to conduct the confirmatory testing, so the tests were conducted at a separate clinical laboratory, but were billed as though the tests occurred at the hospitals.

Investigators also determined that, after learning the federal government was investigating the fraudulent claims for bodily fluid testing, Hayes and Montanino created dozens of fraudulent documents to obstruct healthcare fraud investigators.  For example, they created invoices that falsely made it appear that the kickbacks were hourly payments for marketing services.

"Healthcare fraud schemes continue to place great strain on hardworking Americans' ability to find affordable healthcare insurance," said EBSA 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 Palm Beach Sheriff's Department, 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.