Damon Lab Executive Pleads and Is Sentenced For Conspiracy to Defraud Medicare, Reports U.S. Attorney.
The former President of Damon Clinical Laboratories, Inc., previously headquartered in Needham, Massachusetts ("Damon"), pled nolo contendere in federal court on July 28, 2000, to an information charging one count of conspiracy to defraud Medicare and was sentenced term of probation.
United States Attorney Donald K. Stern today announced that JOSEPH ISOLA, age 53, formerly of Westwood, Massachusetts, and former President of Damon, an independent clinical blood laboratory, pled nolo contendere last Friday before U.S. District Court Judge Edward F. Harrington to a one count information charging a conspiracy to defraud Medicare in connection with medically unnecessary clinical laboratory blood testing. Immediately following the plea of nolo contendere, Judge Harrington sentenced ISOLA to a three year term of probation.
U.S. Attorney Stern stated: "In a deliberate effort to avoid cost cutting efforts by Medicare, the defendant and others concocted a scheme whereby Medicare was billed for medically unnecessary tests. This was accomplished by the bundling of apolipoprotein to a pre-existing coronary risk panel of tests without providing the physicians information from which to make a knowing choice about the ordering of the additional and unnecessary tests."
Stern added: "While Damon has pled guilty and paid an appropriately large fine, this information also holds the President of the company accountable for this criminal act."
In October, 1996, the corporation, Damon, pled guilty to a conspiracy to defraud Medicare in connection with conduct alleged against four executives of the company, including ISOLA, in an indictment returned in January, 1998. The corporate defendant paid $119 million to the United States, $35,273,141 as a criminal fine and $83,726,859 to resolve related civil liabilities. The indictment against the other three Damon executives is pending.
According to the information, Medicare reimburses clinical laboratories for testing services only if those blood laboratory tests are medically necessary for the diagnosis and treatment of illness or injury to Medicare beneficiaries. In an effort to control mushrooming costs in the late 1980s, Medicare announced several actions, including across-the-board fee reductions to clinical laboratories for all laboratory services, and a reimbursement rule that affected reimbursement for the blood testing of dialysis patients. As charged in the information, this action by Medicare precipitated the conspiracy by ISOLA and others to defraud Medicare. As a direct result of the conspiracy to defraud Medicare, claims for unnecessary testing were also submitted by Damon to CHAMPUS, the insurance company for the Armed Services, resulting in a defrauding of CHAMPUS.
By pleading nolo contendere, ISOLA admitted that the Government can prove sufficient facts to show that he was willfully blind to the fact that many physicians did not exercise their independent medical judgment as to the necessity of the additional apolipoprotein tests and that he was willfully blind to the fact that a significant percentage of those tests were not medically necessary for the Medicare and CHAMPUS beneficiaries for whom they were ordered. Assistant U.S. Attorney Susan Winkler told the Court that ISOLA's admissions were legally sufficient for a finding of guilt against ISOLA on the charged conspiracy to defraud Medicare.
The Court subsequently accepted ISOLA's plea and imposed sentenced.
The investigation leading to this information was conducted by the Inspector General's Office of the U.S. Department of Health and Human Services, the Federal Bureau of Investigation, and the Defense Criminal Investigative Service. The case is being prosecuted by Assistant U.S. Attorneys Michael K. Loucks, Stern's Health Care Fraud Chief, and Susan G. Winkler.