Five defendants, including laboratory and hospital executives, were found guilty of conspiring to violate the Anti-Kickback Statute. The verdict was announced by U.S. Attorney Damien M. Diggs after a seven-week trial before U.S. District Judge Jeremy D. Kernodle.
The convicted individuals are:
- Susan L. Hertzberg, 65, of New York, New York
- Matthew John Theiler, 57, of Mars, Pennsylvania
- David Weldon Kraus, 65, of Loudon, Tennessee
- Thomas Gray Hardaway, 51 of San Antonio, Texas
- Jeffrey Paul Madison, 48, Georgetown, Texas
The five were found guilty by a jury on November 30, 2023, following a seven-week-long trial before U.S. District Judge Jeremy D. Kernodle.
They were charged with utilizing an elaborate marketing scheme to facilitate payments to physicians in exchange for laboratory referrals, violating the trust patients place in their physicians.
U.S. Attorney Damien M. Diggs emphasized the importance of trust in healthcare decisions and highlighted that such financial relationships undermine the integrity of federally-funded healthcare programs.
Jason E. Meadows, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), Dallas Region, stated that kickback arrangements remain a top investigative priority for their agency.
The case, which began with indictments on January 12, 2022, involved a total of 20 defendants. The charges included conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute, aiming to influence physician referrals for items or services covered by federal health care programs.
The defendants were part of a conspiracy where physicians were incentivized to make referrals to rural hospitals and an affiliated lab in exchange for kickbacks disguised as investment returns. The scheme involved two Texas hospitals, Little River Healthcare (LRH) and Stamford Memorial Hospital, partnering with Boston Heart Diagnostics (BHD), a clinical laboratory in Massachusetts.
LRH and Stamford billed the tests to insurers as hospital outpatient services, charging significantly higher rates than BHD could receive. Marketers operating through management services organizations (MSOs) facilitated payments to physicians in return for their laboratory referrals. The kickback proceeds were also leveraged by BHD executives and sales force personnel to increase referrals and revenues.
Several defendants had already pleaded guilty prior to trial, including Jeffrey Paul Parnell, Laura Spain Howard, Todd Dean Cook, William Todd Hickman, Christopher Roland Gonzales, Ruben Daniel Marioni, Jordan Joseph Perkins, Elizabeth Ruth Seymour, Linh Ba Nguyen, Thuy Ngoc Nguyen, Joseph Gil Bolin, Heriberto Salinas, and Hong Davis.
Robert O’Neal and Peter J. Bennett, who played roles in the kickback conspiracy, had also pleaded guilty and been convicted, respectively. O’Neal's role involved arranging physician referrals, while Bennett laundered kickback proceeds through sham trusts and shell corporations.
All defendants face a maximum sentence of up to five years in federal prison, with sentencing to be determined by the court based on advisory guidelines and statutory factors. The case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Department of Defense – Defense Criminal Investigative Service (DCIS), with assistance from the U.S. Secret Service and the U.S. Department of Commerce - Export Enforcement.
