United States District Court, S.D. Texas
United States of America, ex rel., Richard Drummond, Plaintiffs,
BestCare Laboratory Services, Inc., et al., Defendants.
OPINION ON PERSONAL LIABILITY
N. HUGHES, UNITED STATES DISTRICT JUDGE
laboratory billed the people of the United States of America
$10.6 million in travel expenses that it did not incur. This
court decided that the United States could recoup its money
from the laboratory. It wants to recover from the
laboratory's president, too. He says that he should not
be held personally liable. The government prevails.
Maghareh and his wife, Farzaneh Rajabi, founded BestCare
Laboratory Services, LLC, in 2002. Maghareh owns 51% and
Rajabi owns 49%. As a closely held corporation, it does not
pay income taxes directly - its revenue is directly allotted
to Maghareh and Rajabi.
operates a diagnostic laboratory in Webster, Texas - a suburb
of Houston - where it tests specimens primarily from disabled
and elderly patients. In addition to its operations in
Houston, it has workers in Dallas, San Antonio, and El Paso.
They collect specimens to be tested in Webster. The
government agreed to limit this case to bills for
specimen-collection trips of more than 200 miles one-way.
billed Medicare for all the miles a specimen itself traveled,
even when that specimen was not accompanied by a technician.
BestCare's workers shipped specimens on flights to
Houston for roughly $100 per batch. The workers did not
travel from these cities to Webster with the specimens.
Neither did they travel from Webster to Dallas, San Antonio,
and El Paso to collect the specimens. A worker accompanied
these specimens only when someone from the Dallas, San
Antonio, or El Paso laboratory collected them and delivered
them to the local airport and when someone from the Webster
laboratory retrieved the batches from Houston's airport.
technician did drive to other laboratories or homes to
collect samples, he collected several at a time, sometimes
from multiple locations. BestCare billed these trips as
though the samples were returned one 'by' one to
Webster when collected. Instead of prorating these trips as
logic and the regulation require, it calculated the maximum
number of miles a technician theoretically could have
traveled to collect each specimen and return it to the
is the president of BestCare. He is in charge of the company,
including its finances. He hired everyone who worked in
billing, and he fired some. As the "managing or
directing employee, " he signed BestCare's
enrollment agreement with Medicare, by which BestCare agreed
to bill honestly. His signature appears as the
"physician or supplier" on every claim for code
P9603 - the problem here.
also controls BestCare's proceeds. His wife and he used
the company credit card for personal expenses, including
clothing, jewelry, and travel. They used that card's
bonus points to purchase airline tickets. From 2005 to 2011,
they paid themselves $12, 426, 629.00 from BestCare in
corporate distributions in addition to their salaries.
court has decided that the government could recover from
BestCare on its theories of unjust enrichment and payment by
government may recover money it mistakenly paid from the
party who received the funds. It may also recover from a
third-party into whose hands the funds flowed if that person
participated in and benefitted from the
substantial portion of BestCare's revenue came from
billing for miles the ...