ABINGDON, Va. – A Las Vegas, Nevada-based laboratory owner, who paid another lab owner to direct urine samples to his lab for testing and then billed the federal government for that testing, was sentenced last week to four months of house arrest and ordered to pay a total of $510,000 in forfeiture, restitution, and fines.
Rakesh Reddy Kothuru, 49, pled guilty in January 2022 to one count of knowingly and willfully making false representations of material facts for payments under federal health care programs. The conviction means Kothuru is subject to mandatory exclusion from future participation in federal health care benefit programs, including Medicare and Medicaid. Pursuant to his plea agreement, Kothuru was required to pay $500,000 prior to his sentencing to be credited toward the court-ordered forfeiture and restitution.
According to court documents, Kothuru was the majority owner of Laboratory Services of America, LLC (LSA), a Las Vegas-based lab that provided drug testing on urine samples. After performing that testing, ATL routinely sent tested samples to other laboratories for “confirmation” testing.
One of those other labs included American Toxicology Labs (ATL), formerly owned by Michael Norman Dube, who also owned a chain of clinics in Tennessee and Virginia that purported to treat opioid addiction with buprenorphine. Providers at those clinics frequently ordered urine drug screens for their patients in order to assess current drug use and to gather medically necessary information that would be pertinent to treatment.
In January 2015, Kothuru and Dube entered into an arrangement in which Dube would refer all of ATL’s tested urine samples to LSA for confirmation testing in exchange for cash kickback payments to Dube’s personal checking account.
Between March 23, 2015, and September 20, 2016, Kothuru’s lab received more than $750,000 from Medicare, Virginia Medicaid, Kentucky Medicaid, and TennCare in compensation for confirmation testing performed on samples directly related to services illegally billed and collected in accordance with the kickback scheme between Kothuru and Dube.
As part of a previous guilty plea in 2011 to intentionally omitting information from reports as required under the Controlled Substances Act, Dube had been prohibited by the Department of Health and Human Services from ever participating in any federal health care program again. As part of his involvement in the kickback scheme with Kothuru, Dube pleaded guilty in March 2021 to two counts of health care fraud, sentenced to 36 months in federal prison, and ordered to pay over $9,000,000 in fines, forfeitures, and restitution costs.
United States Attorney Christopher R. Kavanaugh of the Western District of Virginia announced the sentence today.
The Virginia Medicaid Fraud Control Unit of the Office of the Attorney General of Virginia, the Food and Drug Administration Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General investigated the case.
Assistant U.S. Attorneys Whit D. Pierce and Randy Ramseyer, and Special Assistant United States Attorney and Assistant Attorney General Janine M. Myatt prosecuted the case.