Calloway Labs Indicted

Calloway Labs was indicted on Friday by a Mass. Grand Jury for Medicaid fraud. Go to the Boston Herald or the state attorney generals website, Martha Coakley, for all the gory details.

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MARTHA COAKLEY

ATTORNEY GENERAL
July 02, 2010 - For immediate release:
Woburn Drug Screening Lab Indicted for Medicaid Fraud and Kickback Scheme
WOBURN — A Woburn-based clinical testing laboratory has been indicted for allegedly orchestrating an extensive Medicaid Fraud and kickback scheme using “straw companies” and overcharging the state’s Medicaid program, Attorney General Martha Coakley announced today.
A Middlesex Grand Jury returned 42 indictments yesterday against Callow Laboratories, Inc. (“Calloway”), two of its principals, and two employees of a sober house in connection with a wide-ranging investigation by Attorney General Coakley’s Medicaid Fraud Division.

The indictments allege that Calloway, Chief Executive Officer Arthur Levitan, and Chief Operating Officer Patrick Cavanaugh, engaged in a pervasive kickback scheme involving two straw companies which funneled kickbacks to sober houses, as well as paid middlemen and a medical office to illegally obtain urine drug screening business paid by MassHealth, the Commonwealth’s Medicaid program. The Commonwealth alleges that MassHealth paid in excess of $10.6 million for urine drug screen business obtained by Calloway as a result of these illegal kickbacks.

Other indictments returned today allege submission of false claims to MassHealth, Larceny Over $250, and Corruption of a Witness.

The defendants are charged as follows:

Calloway Laboratories, Inc.
Medicaid False Claims (3 counts)
Medicaid Kickbacks (16 counts)
Larceny over $250 (2 counts)

Arthur Levitan, 38, of Weston
Medicaid Kickbacks (12 counts)

Patrick Cavanaugh, 46, of Gloucester
Medicaid Kickbacks (5 counts)
Corruption of a Witness (1 count)

William Maragioglio, 41, of Malden
Medicaid Kickbacks (2 counts)

Kelli Ann Cavanaugh, 41, of Lynn
Medicaid Kickbacks (1 count)

The indictments allege that between 2005 and 2007, Calloway set up two corporations, JAC Resources, Inc. (“JAC”) and MJK & Associates, LLC (“MJK”), and a bank account for the purpose of carrying out a Medicaid Fraud kickback scheme. Calloway, Levitan and Cavanaugh allegedly made a series of inappropriate kickbacks through JAC, MJK and the bank account in order to induce sober houses to order urine drug screens from Calloway. Payments for those tests were then made to Calloway by MassHealth, a state program that provides health insurance for the economically disadvantaged.

These indictments allege that Calloway made inappropriate payments to Maragioglio, owner and manager of New England Transitions, and to Cavanaugh, the sister of Patrick Cavanaugh and a former manager of New England Transitions, a group of sober houses, in return for ordering, arranging for or recommending that urine drug screens for the residents of the sober houses be performed by Calloway.

It is alleged that payments to third parties to induce the ordering of drug screens from Calloway continued into 2010. Upon learning that a woman had been subpoenaed by the Attorney General’s Office to testify before a grand jury, it is alleged that Cavanaugh offered her a highly compensated sales position with Calloway.

The indictments further allege that Calloway paid an office manager and the salaries of office staff of a Brighton medical office to induce the ordering of drug screens from Calloway.

In addition to the schemes outlined above, it is alleged that Calloway was falsifying laboratory records and submitting claims to MassHealth for urine drug screens that were not ordered by an authorized prescriber for a medically necessary purpose, a requirement of the MassHealth program.

After a thorough investigation, the case was presented to a Middlesex Grand Jury which returned indictments yesterday against the defendants. The defendants will be summonsed for arraignment in Middlesex Superior Court at a later date.

Assistant Attorney General Toby Unger, of Attorney General Coakley’s Medicaid Fraud Division, is the prosecutor assigned to this case. The case was investigated by investigators Joseph Shea; Denise Long; Lisa Bailey; Donna Mitchell and Assistant Investigators Erica Schlain and Bridget Horan. Both the Massachusetts Medicaid Program and the Department of Public Health assisted in this investigation.

What is going to happen to them?

Buh bye Calloway ...wait till other states follow suit.

one of the other players will, or should, buy them out. Wait for the top to crumble then purchase at rock bottom pricing. If nothing else, you get current lab equipment and customers. Although, I guess you would have to figure out which of those customers you can continue to ethically do business with and which of those you cant.

Who wants to buy a bunch of GC/MS when the industry has gone to HPLC? Calloway is going to go away-Welcome to the land of a corporate integrity agreement, and once accounts get wind of this- they will flock to the first company in the door.

Bye Bye..

I worked for calloway for a long time and I always thought there was something sketchy going on there. Does anyone know what is going to happen to them? I still know alot of people there and would hate to see them lose their jobs because of corporate greed.

Originally Posted by Anonymous

Who wants to buy a bunch of GC/MS when the industry has gone to HPLC? Calloway is going to go away-Welcome to the land of a corporate integrity agreement, and once accounts get wind of this- they will flock to the first company in the door.

Bye Bye..

Do you think doctors give a shit about HPLC or GC/MS? Try getting into a discussion about HPLC and see how far your conversation goes. They are worried more about how much medicare will reimburse them for the screens. The heydays of the full service labs are over. They are tired of dealing with the poor service and greed from the these lab companies. This is why the big pain offices are buying their own units and billing out for the screens.

Originally Posted by Anonymous

one of the other players will, or should, buy them out. Wait for the top to crumble then purchase at rock bottom pricing. If nothing else, you get current lab equipment and customers. Although, I guess you would have to figure out which of those customers you can continue to ethically do business with and which of those you cant.

Maybe these labs will buy them?

http://doj.nh.gov/publications/nrele...5dominion.html

http://www.mass.gov/?pageID=cagopres...suit&csid=Cago

http://www.mass.gov/?pageID=cagopres...ment&csid=Cago

Originally Posted by Anonymous

Maybe these labs will buy them?

http://doj.nh.gov/publications/nrele...5dominion.html

http://www.mass.gov/?pageID=cagopres...suit&csid=Cago

http://www.mass.gov/?pageID=cagopres...ment&csid=Cago

Now that Massachusetts has mandated health care for everyone in the State, they are broke. (Obamacare Lite)
Taking it back is the only game in town now, for details so small as to be laughable. The Salem Witchhunts have not ended in this state yet.

http://www.mass.gov/?pageID=cagopres...ment&csid=Cago

I work for another company but I think Calloway is doing the same thing in NJ. I have tried to get business there from clinics, most of which is medicaid. I find out that not only is that clinic using Calloway but the owner is a employee of the company. Is this legal?

Most of the employees that knew what was going on, or asked questions about what was going on, are no longer employed there. Very sketchy people running a very sketchy company. I have no doubt they are doing this in more than one state. I hope all the people at the top involved in this scam crumble and another more reputable company takes over to save the employment of the little people just trying to make it.

Any company billing $1000 for a $25 test is committing fraud. This is only the start. Good luck to you. Audits are coming.

Originally Posted by Anonymous

Most of the employees that knew what was going on, or asked questions about what was going on, are no longer employed there. Very sketchy people running a very sketchy company. I have no doubt they are doing this in more than one state. I hope all the people at the top involved in this scam crumble and another more reputable company takes over to save the employment of the little people just trying to make it.

You could say the same thing about Ameritox

Originally Posted by Anonymous

Any company billing $1000 for a $25 test is committing fraud. This is only the start. Good luck to you. Audits are coming.

$1000 is not Calloway, but definately AmeriCox! Balance bill the sh*t out of the patient at a grand a pop, you dopes, and wonder why you lose business!!! Your accounts doctors think you suck after a few months of listening to their patients complain about your gouging them!

No Calloway is more like $3000 --

Name a lab who hasnt been investigated at one point or another? The state is looking for money wherever they can get it. Easy target. If you probe deep enough I would place bets that every lab out there has something they could be fined for. It makes me laugh that some labs such as Willow are out there throwing the indictments around to current calloway customers. Hello you morons, you went through the same thing!!! They are a joke.

Originally Posted by Anonymous

Name a lab who hasnt been investigated at one point or another? The state is looking for money wherever they can get it. Easy target. If you probe deep enough I would place bets that every lab out there has something they could be fined for. It makes me laugh that some labs such as Willow are out there throwing the indictments around to current calloway customers. Hello you morons, you went through the same thing!!! They are a joke.

Actually, the Mass AG is also well aware of the Ameritox "Panel 16" that is confirming negative screening samples, and they are investigating this as we speak. Hold onto your hats folks, you are in for some fun ahead! You are living in a glass house!!!

Originally Posted by Anonymous

Actually, the Mass AG is also well aware of the Ameritox "Panel 16" that is confirming negative screening samples, and they are investigating this as we speak. Hold onto your hats folks, you are in for some fun ahead! You are living in a glass house!!!

Yet another lab hit by Martha Coakley:

http://www.mass.gov/?pageID=cagopres...ment&csid=Cago

Originally Posted by Anonymous

I work for another company but I think Calloway is doing the same thing in NJ. I have tried to get business there from clinics, most of which is medicaid. I find out that not only is that clinic using Calloway but the owner is a employee of the company. Is this legal?

I work for a new lab in NJ and Calloway is changing the way we do business in our industry. Never before has any of us hired people to monitor urines thats why they are getting most of the business across the country. If we are going to keep up with them we are going to have to follow them, I found out it's legal to do that. As for that owner employee I found out that's legal also in NJ most of the politicians have 2 or more jobs, who can afford to live off 1 job in this economy.

They should stick with selling golf clubs

Did you see the press on Calloway using the whistleblower law to attack Avee, Ameritox, Millennium, and Aegis for supporting docs using POCs?

http://www.pharmaservice.net/Le_port...e.php?id=51255

It's one thing to file a suit when there's a legitimate fraud going on - it's another entirely to use this law as a way to attack their competition.

I'd never believe this if I hadn't seen Calloway's own criminal issues going on for the last couple of years.

Do you think Calloway is the problem? Lets review - all of these other lab companies - except for AIT and Calloway are riping off the health care industry. Let us review: the doctor does a screen in the office and bills the insurance company for that screen - either the correct way - by using one code for the test or by unbundling the device and charging the insurance company for X number of screens (which is incorrect coding based on the new regulations unless the office has an analyzer which is highly complex). Once the sample is screened in the office - these lab companies convince the poor doctors office to send in all the samples to them to do confirmation testing. These lab companies then do confirmations on 10 - 15 drugs - eventhough the screen in the doctors office didn't warrent those tests to be done. The poor doctors office is now ordering unnecessary testing. There are no published studies that prove doing confirmations on negative urine tests is warrented. The bills to the insurance companies from these labs are outrageous - over $1000 for a urine test that is negative. Plus the doctors office did their own screening for a couple hundred dollars - a negative urine test for over $1200 and lets test this poor patient 3 - 4 times per year. If the doctors office used a lab that does traditional testing that bill to the insurance company would only have been $200 - $300 total. Hummm - who do you think is going to take the fall for this - the lab companies or the doctors office? Probably the doctors office because they ordered the test.


To be clear - I am not saying that the doctors office shouldn't try to maximize their revenue - I think they should make sure they know everything there is to know about their Lab partner's business model - how they do their testing and what they bill for. They should only be requesting confirmations on the positive results on their in office screens. Additionally some of these confirmation tests are being billed as the only test - a confirmation test is a secondary test not a primary test. The insurance companies are becoming wise to this and will stop this practice unfortunately at the expense of the doctors offices.

The patients and the insurance companies are getting financially abused - believe me I am a well educated patient. I have spoken to my insurance company about it.

The whole industry is seedy and needs to be regulated - hopefully the national audits will stop this lets get rich doing urine drug screens all the way around.

Originally Posted by Anonymous

Do you think Calloway is the problem? Lets review - all of these other lab companies - except for AIT and Calloway are riping off the health care industry. Let us review: the doctor does a screen in the office and bills the insurance company for that screen - either the correct way - by using one code for the test or by unbundling the device and charging the insurance company for X number of screens (which is incorrect coding based on the new regulations unless the office has an analyzer which is highly complex). Once the sample is screened in the office - these lab companies convince the poor doctors office to send in all the samples to them to do confirmation testing. These lab companies then do confirmations on 10 - 15 drugs - eventhough the screen in the doctors office didn't warrent those tests to be done. The poor doctors office is now ordering unnecessary testing. There are no published studies that prove doing confirmations on negative urine tests is warrented. The bills to the insurance companies from these labs are outrageous - over $1000 for a urine test that is negative. Plus the doctors office did their own screening for a couple hundred dollars - a negative urine test for over $1200 and lets test this poor patient 3 - 4 times per year. If the doctors office used a lab that does traditional testing that bill to the insurance company would only have been $200 - $300 total. Hummm - who do you think is going to take the fall for this - the lab companies or the doctors office? Probably the doctors office because they ordered the test.


To be clear - I am not saying that the doctors office shouldn't try to maximize their revenue - I think they should make sure they know everything there is to know about their Lab partner's business model - how they do their testing and what they bill for. They should only be requesting confirmations on the positive results on their in office screens. Additionally some of these confirmation tests are being billed as the only test - a confirmation test is a secondary test not a primary test. The insurance companies are becoming wise to this and will stop this practice unfortunately at the expense of the doctors offices.

The patients and the insurance companies are getting financially abused - believe me I am a well educated patient. I have spoken to my insurance company about it.

The whole industry is seedy and needs to be regulated - hopefully the national audits will stop this lets get rich doing urine drug screens all the way around.

Why don't you ask the Premier Fraud guy in KY what they charge. The # listed above is no where close to theirs........$$$$$$$$$

Originally Posted by Anonymous

Did you see the press on Calloway using the whistleblower law to attack Avee, Ameritox, Millennium, and Aegis for supporting docs using POCs?

http://www.pharmaservice.net/Le_port...e.php?id=51255

It's one thing to file a suit when there's a legitimate fraud going on - it's another entirely to use this law as a way to attack their competition.

I'd never believe this if I hadn't seen Calloway's own criminal issues going on for the last couple of years.

"Many physicians conduct drug testing at point of care; including Calloway’s customers. At the heart of this issue is Millennium’s position that physicians should be fairly reimbursed for performing drug testing at their point of care vs. the position that Calloway takes – that they should not,” Mr. Appel stated. "

The above is a quote from the rebuttal: The point of Care Device costs on average $7 and was billed for on average $300 without factoring staff time and billing time this is a 4200% profit margin with staff time and billing time the total costs is about $20.. this is a 1500% profit margin.. How is this a fair reimbursement for insurance companies that are funded by tax payers, companies and private citizens?
I need to become a pain management physician if the "fair" reimbursements are like this

Originally Posted by Anonymous

Do you think doctors give a shit about HPLC or GC/MS? Try getting into a discussion about HPLC and see how far your conversation goes. They are worried more about how much medicare will reimburse them for the screens. The heydays of the full service labs are over. They are tired of dealing with the poor service and greed from the these lab companies. This is why the big pain offices are buying their own units and billing out for the screens.

How is a doctor buying an instrument like a tabletop immunoassay, referring / sending their patients specimens to it and billing the lab work for a profit not a violation of the Stark Laws?

What about all the other violation that is going on inside this company,you cannot get anywhere,unless you are part of the crew,there are Nepotism,favortism and Racism going on as well

Read and all of you happy people and employees of Calloway knew it, took your paycheck and violated well stated laws, you took from the poor, jeopardized people health , abused the addicted vulnerable, pain care is a disease, from cancer to any ailment that creates pain. Spend your commissions well as you will have no health insurance. To the other 49 States, stand up, be counted and do the work MA did. You will save millions, allow healthcare money to be spent responsibly and save your damns asses. How many millions of dollars of fraud need be alllowed so those with no insurance must die for the 49 states stand up and be counted , Sales people are know targeted as an accessory to such fraud and will also be indicted, found guilty and will have no health insurance. Did you bank your wages and conmmissions? Hope so, not for you but for your families.

http://www.boston.com/Boston/whiteco...6GN/index.html

so that is your excuse for participating in fraud, time is up pal. someone like you will be the first to go. Take that to the bank , they know who you are!

http://www.boston.com/Boston/whiteco...6GN/index.html

http://www.boston.com/Boston/whiteco...6GN/index.html

heard they were shutting down

http://www.boston.com/Boston/whiteco...6GN/index.html

the state owns them those going to trial buried the money, will go to jail and those left will not have jobs as no one will ever do business with them as they will be guilty by association and nothing has changed since they opened in 2003. as an employee as of today, looking really quick for a job as they have not changed their practices, employees who figure it out quit or get fired.the stae will take years to figure out how much fraud id left and ongoing, damn the state took 2 years just to settle for 20 million and bring the owners to trial. The cash is gone. layoffs will happen very soon

Originally Posted by Anonymous

Buh bye Calloway ...wait till other states follow suit.

loser, think all states are not in the process

Originally Posted by Anonymous

Calloway Labs was indicted on Friday by a Mass. Grand Jury for Medicaid fraud. Go to the Boston Herald or the state attorney generals website, Martha Coakley, for all the gory details.

It is finally over, they are done with no credit or cash except for more lawyers and pr firms they paid off the key guilty ones to close up shop

http://www.boston.com/Boston/whiteco...6GN/index.html

dont they make drivers?

To the poor soul who said on 9/2/11 that there were no studies to support confirmation testing when immunoassay screening is negative, did you ever bother to do your homework? There are actually several scientific studies to support that. (Even if you don't know your way around toxicology literature, some are even published in free journals online.) Many drugs and metabolites are missed by poor immunoassay cross-reactivity and high thresholds.

I suggest studying up on your field before making any more egregiously wrong arguments!

lets see - you must be from one of the labs that is over billing the poor insurance companies and the poor unsuspecting patient. I had a urine test done at a pain clinic with a lab that did 15 confirmation tests. I do not take any medication. My test was negative, the confirmation test was negative and my insurance was billed $1200. I think the greed by lab companies in this industry is horrible. The clinic told me that if they did the test with Calloway the insurance would have been billed about $250 - still too much but much more reasonable. The doctor got paid, the lab got paid, I got a bill for a copay and I don't even take any meds. I reported this to my insurance company - claiming over testing and unnecessary testing. The insurance company told me that they are looking into this practice. This is very very abusive.