Federal prosecutors charged two Illinois medical laboratory owners with submitting more than $227 million in fraudulent COVID-19 test kit claims to Medicare, using foreign nationals as nominee owners and targeting deceased beneficiaries.
What happened
Syed Murtuza Kablazada and Mehdi Hussain, owners and operators of medical laboratories in Illinois, face federal charges for an alleged Medicare fraud scheme. The government accuses them of submitting fraudulent claims for COVID-19 test kit reimbursements for Medicare beneficiaries. The defendants allegedly installed foreign nationals as nominee laboratory owners to submit false claims, with these individuals fleeing the United States when investigations began. The test kits rarely reached Medicare beneficiaries, and some individuals listed as requesting test kits were already deceased. The defendants paid a marketing company to obtain names of hundreds of thousands of Medicare beneficiaries for claim submissions. Both face four counts of health care fraud, each carrying a maximum 10-year prison sentence.
What was said
Matthew R. Galeotti, Head of the Justice Department's Criminal Division, stated: "As alleged, the defendants used straw owners at multiple laboratories to cause the submission of more than $200 million in fraudulent claims to Medicare for COVID-19 test kits. Health care fraud harms Americans by squandering taxpayer money and diverting limited resources from those who need them most."
Special Agent in Charge Douglas S. DePodesta of the FBI Chicago Field Office said: "The overwhelming fraud uncovered in this investigation details a blatant disregard for America's critical health care program, Medicare, and puts all patients at risk."
Deputy Inspector General for Investigations Christian J. Schrank of HHS-OIG stated: "The submission of fraudulent claims to Medicare for products or services not dispensed or not medically necessary undermines the integrity of this valuable program, intended to protect the most vulnerable in our community.
By the numbers
- $227 million: Total fraudulent claims submitted to Medicare
- Four counts: Health care fraud charges against each defendant
- 10 years: Maximum penalty for each count (40 years total potential sentence per defendant)
- Hundreds of thousands: Medicare beneficiaries whose names were purchased for fraudulent claims
In the know
Medicare fraud schemes targeting COVID-19 testing became prevalent during the pandemic as the federal government expanded reimbursement for testing services. These schemes often exploit the high volume of testing claims and relaxed oversight that occurred during the public health emergency. Nominee ownership structures involve installing individuals as paper owners of healthcare facilities while the actual operators remain hidden, making it difficult for regulators to track accountability and enabling quick dissolution when investigations begin.
Why it matters
This case shows the vulnerability of Medicare's COVID-19 testing reimbursement system to large-scale fraud schemes. The use of foreign nationals as nominee owners who flee when investigations begin demonstrates how fraudsters exploit regulatory gaps and international jurisdictional challenges. The targeting of deceased beneficiaries reveals systematic data mining operations that compromise the integrity of Medicare enrollment databases.
The bottom line
COVID-19 testing fraud schemes like this $227 million case expose weaknesses in Medicare's oversight systems and the need for stronger verification processes. Healthcare organizations must implement compliance programs to prevent similar schemes and protect themselves from the devastating legal and financial consequences of healthcare fraud. The severity of potential 40-year sentences sends a clear message that exploiting public health emergencies for personal gain will face aggressive federal prosecution.
FAQs
How did the defendants obtain access to Medicare beneficiary information?
They allegedly paid a marketing company that specialized in selling personal data for use in fraudulent claims.
What safeguards failed to detect these false claims earlier?
The article implies a lack of timely verification and oversight in Medicare's reimbursement process during the pandemic.
Were any of the fraudulent payments actually disbursed?
While not detailed, many large fraud schemes like this result in partial payments before investigations halt the process.
Why were foreign nationals used as nominee owners?
Using foreign nationals helps obscure the true operators and makes it harder for U.S. authorities to prosecute all involved parties.
What kind of marketing company sells Medicare data?
These are often data brokers that operate in legal gray areas or use deceptive means to collect personal information.
Farah Amod
