A 55-year-old New Orleans man has been ordered to pay more than $7 million in restitution after admitting he helped run a scheme that billed Medicare $174 million for cancer and cardiovascular genetic tests that patients never needed. John M. Spivey and his Missouri-based co-conspirator, 50-year-old Jamie P. McNamara, both pleaded guilty for their roles in the fraud, according to officials with the Eastern District of Louisiana.
On October 13, a federal judge ordered Spivey to pay $7,002,410.26 in restitution to Medicare, jointly and severally with McNamara, according to the U.S. Attorney’s Office for the Eastern District of Louisiana. Spivey was sentenced to five years’ probation, with the first year to be served in home confinement, per the same officials. McNamara, who operated several laboratories with Spivey’s assistance, was sentenced separately to 10 years in prison and ordered to pay $174 million in restitution, along with forfeiture of around $7 million in funds and three vehicles seized before his indictment, officials said.
How the Scheme Worked
Prosecutors say the two men conspired to defraud Medicare by submitting genetic-testing claims that were never eligible for reimbursement in the first place, because the testing was not medically necessary and was procured through illegal kickbacks and bribes. The laboratories tied to the operation obtained doctors’ orders from telemarketers and call centers that ran aggressive campaigns to push Medicare beneficiaries into accepting the tests, according to officials. Those testing orders were signed by purported telemedicine doctors who were not the beneficiaries’ treating physicians and never consulted with or followed up with the patients, officials said.
The scheme allegedly began in November 2018, when McNamara purchased a lab called Clarity and began using it as a shell operation to bill Medicare for genetic testing, according to nola.com. Spivey allegedly helped McNamara operate three Orleans Parish-based labs, including Clarity, OPTEO and Signify, the outlet reported. Between November 2018 and July 2020, McNamara’s laboratories submitted more than $174 million in false Medicare genetic-testing claims, and received over $55 million in reimbursements, according to the Eastern District officials.
Millions in Alleged Kickbacks
Nola.com reported that prosecutors alleged the men paid nearly $17 million in kickbacks and bribes to telemarketers who recruited beneficiaries, while doctors separately received illegal payments to approve orders. From January 2019 through August 2020 alone, the men allegedly paid $8.5 million to a single call center for beneficiary referrals and doctors’ orders, the outlet reported. A civil settlement tied to the case separately named additional labs — Clarity Diagnostic Laboratories, Mercury Laboratory Services, Signify Laboratory and Opteo Laboratory — as part of McNamara’s operation, according to CLP Magazine…