A Lexington toxicology lab, LabTox, LLC, its owner, Ronald Coburn, 76, and its compliance officer, Erica Baker, 31, agreed to civil judgments totaling $10,458,933 in favor of the United States, holding LabTox, Coburn, and Baker liable for submitting false claims for urine drug testing services to the Medicare and Kentucky Medicaid programs on Thursday. In December 2023, Judge Reeves sentenced Coburn to 46 months in prison, and Baker to 6 months in prison, followed by 6 months of home confinement; both are required to report to Bureau of Prisons’ custody on Friday.
Coburn owned and operated LabTox, LLC, a clinical laboratory that performed urine drug tests and billed them to Medicare and Kentucky Medicaid. Baker was the director of operations and compliance officer of LabTox. Both knew that Medicare and Kentucky Medicaid only pay for urine drug tests that are medically necessary. In his plea agreement, Coburn also admitted knowing that urine drug tests ordered by courts for use in judicial proceedings are not medically necessary, and thus not payable by Medicare or Kentucky Medicaid. With Coburn’s knowledge and approval, however, Baker recruited a company called Blue Waters Assessment and Testing Services to refer court-ordered urine drug tests to LabTox. Coburn knew this was not medical testing, but caused LabTox to bill the tests to Medicare and Kentucky Medicaid anyway, resulting in fraudulently-obtained payments of $1,864,429 between June 2019 and March 2021. Submission of these false claims for court-ordered urine drug tests constituted criminal health care fraud and also violated the False Claims Act, triggering additional civil penalties. Coburn and LabTox agreed civil judgment holds them liable for $5,593,287, because under the False Claims Act, losses to the Medicare and Kentucky Medicaid programs are mandatorily trebled.
Erica Baker’s sentence and False Claims Act judgment resulted from a similar fraud scheme. According to her plea agreement, she participated in a health care fraud conspiracy with Coburn between January 2019 and January 2021. Specifically, at Coburn’s direction, Baker solicited urine drug tests from substance abuse recovery programs that did not provide medical treatment.
The agreed civil judgments resolve a lawsuit brought by a private citizen under the qui tam provisions of the False Claims Act. Under those provisions, a private party can file a civil action on behalf of the United States, thereby bringing allegations of fraud to the Government’s attention, and share in any financial recovery. As part of this resolution, the individual who filed the qui tam complaint will receive a portion of the settlement proceeds. The civil case is captioned United States ex rel. Caitlin Secamiglio v. LabTox, LLC, et al., Case No. 5:20-CV-00305-DCR.
