Jury Finds Ex-NFL Player Turned Lab Owner Guilty of Genetic Testing Fraud Scheme

Jury Finds Ex-NFL Player Turned Lab Owner Guilty of Genetic Testing Fraud Scheme

Last week, a Dallas-based federal jury found Keith J. Gray, a former Carolina Panthers offensive lineman, guilty of orchestrating a $328 million fraud scheme that involved improper billing for cardiovascular genetic testing.

According to the government, Gray owned and operated two clinical laboratories — Axis Professional Labs LLC and Kingdom Health Laboratory LLC — through which he paid kickbacks to marketers in exchange for referrals of Medicare beneficiaries’ DNA samples, personal information, and signed test orders from medical providers. As part of the scheme, the marketers would use other companies to solicit Medicare beneficiaries. After obtaining the identity of beneficiaries’ primary care physicians, the companies would engage in “doctor chasing” by pressuring the physicians into approving genetic testing orders for patients who purportedly had already been “qualified” for the testing during telephone calls conducted by the companies’ non-medical personnel. Gray concealed the kickback payments using sham contracts and invoices reverse-engineered to match the illegal per-sample kickback amounts, as well as by disguising the payments as being for “software” and fictitious loans. Moreover, Gray laundered proceeds from the scheme by purchasing luxury vehicles, including a Dodge Ram truck worth over $142,000 and a Mercedes-Benz SUV worth over $145,000. 

The jury convicted Gray of conspiracy to defraud the United States and to pay and receive health care kickbacks, five counts of violating the Anti-Kickback Statute (AKS), and three counts of money laundering. Though sentencing has not been scheduled, Gray faces a maximum penalty of 10 years in prison for each count. 

The case is United States v. Gray, 3:24-cr-00250 (N.D. Tex.). 

You can read the US Department of Justice’s (DOJ) press release here.

Judge Dismisses FCA Suit Alleging Kickbacks to CPAP Suppliers

On February 23, a federal district court granted Philips Respironics, Philips North America LLC, and Koninklijke Philips N.V.’s (collectively, Respironics) motion to dismiss relator Chad Dietz’s qui tam complaint with prejudice. Dietz, a former sales manager at Respironics, alleged that the company’s Patient Adherence Management Service (PAMS) program and free Continuing Education Unit (CEU) offerings violated the False Claims Act (FCA) because they constituted illegal kickbacks designed to induce durable medical equipment suppliers (DME) to purchase more of Respironics’s CPAP machines and to submit those false claims to government health care programs like Medicare and Medicaid. According to Dietz, when a DME enrolled in PAMS, Respironics required patients to only use its products. Moreover, Respironics purportedly offered classes that qualified as CEUs for certain DMEs and their referral sources to induce purchases of Respironics’s products. 

Despite being given an opportunity to amend his complaint, the court found that Dietz failed to adequately plead Respironics knowingly and willfully engaged in unlawful conduct. The court concluded that Dietz’s allegations were largely conclusory. The allegations that Dietz added, including references to unnamed employees’ purported knowledge, unrelated prior settlements, annual AKS training, and a Medicare enrollment form, were too vague and speculative to create a plausible inference of willfulness. Because the FCA claims depended on establishing an underlying AKS violation that Dietz failed to plead, the court dismissed the FCA claims as well. Accordingly, the court dismissed Dietz’s federal claims with prejudice, concluding that further amendment would be futile given Dietz’s repeated failure to cure the deficiencies previously identified by the court. The court declined to exercise supplemental jurisdiction over the remaining state law claims and therefore dismissed them without prejudice. 

The case is United States ex rel. Dietz v. Philips Respironics, 2:21-CV-00272 (W.D. Pa.) 

Texas AG Sues Sanofi Alleging That It Paid Kickbacks to Encourage Prescriptions

The State of Texas, acting through Attorney General (AG) Ken Paxton and relator APBQR, LLC, filed a Petition in Intervention against Sanofi-Aventis US, LLC under the Texas Health Care Program Fraud Prevention Act (THFPA). The complaint alleges that Sanofi devised two unlawful schemes — a “Free Nurse Program” and a “Support Services Program” — to offer in-kind remuneration to medical providers as inducements to prescribe Sanofi’s drugs over competing therapies. The Texas AG alleges that these schemes violated both the THFPA and Texas’s AKS.

Under the Free Nurse Program, Sanofi allegedly provided free clinical nursing staff to providers to handle chronic-care patient monitoring, disease education, and follow-up communications — tasks that are time-consuming and generate little reimbursement for providers. Under the Support Services Program, Sanofi allegedly furnished free reimbursement and administrative support services — including insurance benefit verification, prior authorization processing, and appeals support — that providers would otherwise have to perform at their own expense. The Texas AG alleges that both programs functioned as kickbacks because they delivered substantial economic value to providers, reduced their workload and costs, and were available only so long as providers continued to prescribe Sanofi’s drugs. 

Because of these alleged schemes, the Texas AG asserts that Sanofi knowingly caused pharmacies, pharmacy benefit managers, and others to submit millions of dollars in kickback-tainted claims to Texas Medicaid for drugs that were ineligible for reimbursement. 

The case is Texas ex rel. APBQR, LLC v. Sanofi-Aventis US, LLC, No. D-1-GN-25-002394 (Travis Cnty., Tex. Dist. Ct.). 

You can read the Texas AG’s press release here.

The Texas AG’s petition contains allegations only. There has been no determination of liability. 

Texas Doctor Sentenced to 8.5 Years for Defrauding Department of Labor

Dr. Michael Taba, an orthopedic surgeon from McKinney, Texas, was sentenced to 102 months, or 8.5 years, in federal prison and ordered to pay over $13 million in restitution for his role in a health care fraud scheme targeting the US Department of Labor (DOL). Taba was convicted of accepting bribes and kickbacks from pharmacy owners in Fort Worth and Arlington, Texas, in exchange for prescribing medically unnecessary and ineffective compound creams to injured federal workers. The creams were mixed by untrained teenagers at a cost of roughly $15 per prescription but were billed to the DOL’s Office of Workers’ Compensation Programs (OWCP) and Blue Cross Blue Shield for as much as $16,000 each. 

Between May 2014 and March 2017, the pharmacies billed the DOL-OWCP and Blue Cross Blue Shield more than $145 million and were paid over $90 million for the unnecessary prescriptions referred by Taba and other medical providers. On November 16, 2023, a federal jury in the Northern District of Texas convicted Taba on all counts, including one count of conspiracy to commit health care fraud and three counts of health care fraud.

The case is United States v. Noryian, 3:17-CR-00155 (N.D. Tex.). 

The DOJ’s press release can be found here.

Arizona Hospital Pays $5.6 Million to Resolve FCA Allegations Following Disclosure

Southwest Orthopedic and Spine Hospital LLC (doing business as OASIS Hospital), United Surgical Partners International Inc. (USPI), and Dignity/USP Phoenix Surgery Centers LLC have agreed to pay $5.6 million to settle allegations that they violated the FCA through improper financial relationships between OASIS and Southwest Orthopedic and Spine Hospital Physicians Group LLC (Southwest Physicians). The government alleged that, from 2011 through 2018, Dignity/USP Phoenix made improper financial contributions to Southwest Physicians in the form of interest payments on convertible bonds. According to the DOJ, the purpose of these payments was to induce Southwest Physicians to refer patients to OASIS Hospital in violation of both the AKS and the Physician Self-Referral Law (Stark Law). 

As part of the settlement, the DOJ stated that it considered that OASIS and USPI cooperated with the government throughout its investigation and promptly took several remedial actions, including conducting an internal investigation in 2019 and disclosing the relevant arrangements to the government. 

The DOJ’s press release can be found here.

Nuclear Weapons Engineer Sentenced for 15-Year Kickback Scheme

Michael Clinesmith, a long-tenured employee of a major engineering firm and contractor, was sentenced to 29 months in prison for conspiring to fraudulently steer and award subcontracts related to nuclear weapons manufacturing projects at the National Nuclear Security Administration’s Kansas City National Security Campus. 

Clinesmith was responsible for designing and procuring specialized gauges used to measure components of nuclear weapons. According to the government, over the course of a 15-year period, Clinesmith exploited his position by soliciting and receiving over $1.2 million in kickbacks from Richard Mueller, an employee for a subcontractor, in exchange for steering subcontracts to Mueller’s company. The scheme involved Clinesmith telling Mueller how much money he wanted for secretly performing work under the gauge subcontracts. Mueller’s company would then include those amounts in its bids. Clinesmith approved the inflated bids and assured his employer they were fair and reasonable, while also providing Mueller with insider information concerning the bid, including budget figures, which gave Mueller’s company a competitive advantage when bidding on subcontracts. 

In October 2025, Clinesmith was convicted of one count of conspiracy to commit wire fraud and honest services wire fraud and four counts of wire fraud and honest services wire fraud. 

The case is United States v. Clinesmith, 2:23-CR-20063 (D. Kan.). 

The DOJ’s press release can be found here.