New York Federal Court Dismisses False Claims Act Suit Against COVID-19 Testing Facility Company, Without Prejudice

New York Federal Court Dismisses False Claims Act Suit Against COVID-19 Testing Facility Company, Without Prejudice

A New York federal court dismissed a False Claims Act suit against Enzo Biochem, Inc., holding that the relator’s complaint failed to allege any conduct, “much less fraudulent conduct” by the defendant company. Rather, the relator’s complaint attributed the alleged fraudulent COVID-19 billing to a former subsidiary, Enzo Clinical Labs, Inc., which was not named as a defendant, along with three of that subsidiary’s executives. Those executives were originally named in the action but were voluntarily dismissed by the relator in connection with a 2024 settlement reached among the relator, the State of Connecticut, Enzo Biochem, and Enzo Clinical Labs, pursuant to which the companies agreed to pay over $1.7 million. That same year, the US Department of Justice (DOJ) and the State of New York declined to intervene in the action.

The court’s order dismissing the case identified a “threshold pleading defect.” Namely, the complaint defined “Enzo” as “Enzo Clinical Labs, Inc.” and defined the “Defendants” as that entity plus the three executives of Enzo Clinical Labs. As a result, the court found that every allegation in the complaint against either Enzo or the “Defendants” failed to allege any conduct by Enzo Biochem, the named defendant. The court held that the complaint did not plead any fact sufficient to ascribe any conduct to Enzo Biochem. The court thus granted the motion to dismiss without prejudice and further granted the relators 30 days to file an amended complaint. 

The case is United States ex rel. Fraud Buster, LLC v. Enzo Biochem, Inc., No. 1:22-cv-7613-GHW (S.D.N.Y.).

Two Individuals Charged With Bribing Medicare and Medicaid Recipients in Alleged $120 Million Fraud

On February 6, the DOJ announced an unsealed criminal complaint charging two individuals from Queens, New York, with orchestrating an alleged decade-long plan to defraud Medicare and Medicaid of up to $120 million. 

According to the criminal complaint, Inwoo Kim owned a pharmacy and two social adult daycare centers in Flushing, Queens, and Daniel Lee allegedly served as program director at one of the centers. Between 2016 and 2026, the two men allegedly paid illegal bribes and kickbacks in the form of cash and supermarket gift cards to Medicare beneficiaries and Medicaid recipients to induce them to fill prescriptions at Kim’s pharmacy and enroll with the daycare centers. The two men also allegedly submitted claims for services that exceeded the facilities’ permitted capacity and for services that were medically unnecessary.

Both individuals are charged with conspiracy to commit health care fraud and, if convicted, face a maximum penalty of 10 years in prison.

A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in the court of law. 

Read the DOJ’s press release here.

‘The Housing Guys’ Plead Guilty to Wire Fraud

On February 10, two Pennsylvania men, Anthony Waddell Jefferson and Lester Brown, pleaded guilty to wire fraud charges stemming from the false submission of $3.5 million to Minnesota’s Housing Stabilization Services (HSS) program. The program uses federal funds to provide housing assistance to individuals with disabilities, including Medicare and Medicaid enrollees. 

As part of their plea agreements, Jefferson and Brown admitted they enrolled as HSS providers, and from February 2022 through June 2025, traveled repeatedly from Philadelphia to Minneapolis with the goal of enrolling participants in the HSS program. Marketing themselves as “The Housing Guys,” the two men recruited approximately 230 Medicaid beneficiaries at homeless shelters and Section 8 housing, and billed HSS for services never rendered to those participants. 

Jefferson and Brown also admitted to fabricating emails and client notes using artificial intelligence (AI) tools such as ChatGPT to support their submission of false claims. The government noted in their press release announcing the guilty pleas that this case “represents the first charges involving the use of [AI] to further a fraud scheme targeting health care programs in Minnesota.” 

Jefferson and Brown each pleaded guilty to one count of wire fraud. They each face a maximum penalty of 20 years in prison and await sentencing.

Read the DOJ’s press release here.

Two Individuals Charged for Role in Health Care Fraud, Sending Funds to Pakistan

On February 12, the US Attorney’s Office (USAO) for the Northern District of Illinois announced unsealed criminal complaints against two individuals, Burhan Mirza and Kashif Iqbal. Both men are alleged to have submitted thousands of false claims to Medicare and private insurers, resulting in more than $10 million in improper reimbursements. 

According to the court documents, from August 2023 through August 2024, Mirza and Iqbal allegedly operated sham clinical laboratories and durable medical equipment suppliers. Using these fake entities, the two men submitted thousands of fraudulent claims to Medicare for services that were never rendered. Several co-conspirators are alleged to have registered businesses and opened bank accounts to facilitate the submission of false claims and receive reimbursement from Medicare and private insurers. Mirza, Iqbal, and other co-conspirators then allegedly facilitated the transfer of these funds to bank accounts in Pakistan. 

Last August, the USAO for the Northern District of Illinois announced the creation of its Health Care Fraud Section, which we covered here. US Attorney Andrew S. Boutros credited the newly created Health Care Fraud Section for this indictment. 

Mirza is charged with 12 counts of health care fraud and five counts of money laundering, and Iqbal is charged with 12 counts of health care fraud, six counts of money laundering, and one count of making a false statement to US law enforcement officers. Both await arraignment.

A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in the court of law. 

Read the USAO for the Northern District of Illinois’ press release here.