Allegations of Lab Test Fraud Involve Multiple Defendants

Dissecting the UnitedHealthcare vs. Next Health lawsuit

CEO SUMMARY: UnitedHealth made national news when it filed a $100 million lawsuit against Next Health and other defendants in Dallas in January 2017. The insurer alleged fraud involving clinical laboratory tests. That lawsuit is just the latest chapter in an almost decade-long string of legal proceedings involving the healthcare businesses some of the defendants have organized. Following months of investigation, THE DARK REPORT explains the serial nature of other lawsuits, federal indictments, and whistleblower cases involving some of these same defendants over the years.

WHEN A MAJOR HEALTH INSURER filed a lawsuit alleging healthcare fraud involving $100 million of clinical laboratory test claims in Dallas in 2017, it became national news. In court documents, UnitedHealthcare alleged fraud against Next Health, LLC, and multiple defendants involving how these defendants submitted claims for healthcare services, including clinical laboratory tests. UnitedHealth seeks $100 million in damages. (See TDR, Feb. 21, 2017.)

UnitedHealthcare (UHC) filed this lawsuit on January 26, 2017, but this case is just one chapter in a highly-complex story involving several of the defendants named in this lawsuit. Prior to this lawsuit, certain of the defendant companies and their owners or officers were involved in other lawsuits that alleged fraudulent behavior. Also, certain of these defendants were named in earlier actions federal regulators and federal healthcare prosecutors initiated.

Thus, the UnitedHealthcare vs. Next Health lawsuit is one significant event in a series of lawsuits and regulatory actions insurers, government officials, and whistleblowers have initiated in Texas over multiple years.

In its investigation of the UHC lawsuit, THE DARK REPORT has learned that, since 2010, certain companies and individuals in Texas have repeatedly been the subject of lawsuits, criminal investigations, and regulatory actions. Allegations of fraud are a common theme in some of these lawsuits and criminal investigations.

The UnitedHealthcare lawsuit is the visible tip of a large iceberg; that iceberg being how certain individuals and their various companies are alleged to have repeatedly developed different ways to scam health insurers.

Stated differently, the allegations in the multiple civil lawsuits and federal indictments cumulatively portray these individuals as serial fraudsters. The documents filed in these cases claim to show evidence of numerous cases of fraud involving multiple companies over many years.

As one group of healthcare companies they operate becomes enmeshed in lawsuits and regulatory actions, these individuals seem to be able to create a new group of cross-linked healthcare companies to continue inducing referrals from physicians, thereby allowing them to submit bills to federal and private payers for what are often described in lawsuits and federal indictments as “over-priced” and “medically-unnecessary” procedures.

These schemes frequently include clinical laboratory tests, particularly in toxicology and pain management. But various court records describe these individuals as ready to provide other clinical services they see as lucrative.

The influence these types of allegedly-fraudulent arrangements have in the clinical laboratory testing market makes this a story worth telling in detail. For example, long-established medical laboratories are forced to compete against ever-greater numbers of newly-created lab companies organized to offer pharmacogenomic, pain management, and toxicology testing.

Competition from these allegedly fraudulent arrangements often frustrates established, well-run, and honest labs. In an effort to win lab test referrals, disreputable labs may offer their client physicians benefits and inducements that might possibly violate state and federal laws.

Since UnitedHealthcare filed its lawsuit in 2017, new chapters in this particular story about alleged fraud have been written. For example, in July 2017, Next Health and several of the other defendants in the UnitedHealthcare case were sued in Dallas by the insurance company that sold them executive liability policies. The insurer asked the court to void those policies, among other remedies.

Lawsuit Against HHS

Just a month later, on August 18, 2017, Next Health and one of the toxicology lab companies (Medicus Laboratories) named as a defendant in the UnitedHealth case filed their own lawsuit against the federal Secretary of Health and Human Services. The defendants challenged pending regulatory actions that would revoke the CLIA license of one of the toxicology lab subsidiaries.

Next Health’s Countersuit

The next interesting chapter in this story happened on Oct. 5, 2017, when Next Health and other defendants countersued UnitedHealthcare. In coverage of Next Health’s countersuit, Dallas Morning News reporter Kevin Krause wrote:

Insurance giant UnitedHealthcare alleges that Next Health, a Dallas lab testing company, paid bribes and kickbacks to doctors and other providers between 2011 and 2016 for ordering overpriced and unnecessary drug and genetic tests under the guise of a wellness study.

Next Health has now struck back with its own allegations, calling the [UHC] lawsuit a “shakedown” and a “corporate bullying tactic” by United to get out of paying for legitimate lab tests.

Next Health also said United is trying to put it out of business, and the lab company noted various large sums United has paid to the government over the years for allegedly defrauding health care providers. Next Health has not been accused of any criminal wrongdoing.

United responded by asking a judge to strike Next Health’s filing, which it said is full of “immaterial, impertinent and scandalous allegations” intended to “smear” the insurance company.

The best starting point for describing a pattern of alleged fraud and abuse in the Dallas area that goes back almost 10 years is to understand the claims that UnitedHealthcare Services made in a lawsuit filed in January 2017 against multiple defendants in the U.S. District Court for the Northern District of Texas.

Named as defendants in the case are:

NextHealth, LLC, and its subsidiaries:

United Toxicology, LLC,
◆ Medicus Laboratories, LLC,
◆ US Toxicology, LLC, and,
◆ American Laboratories Group, LLC

• Erik Bugen
• Kirk Zajac

Multiple Defendants

The lawsuit collectively refers to these lab entities as “Next Health Labs,” which will be used in this story.

In the lawsuit, UnitedHealth alleged that Next Health and its subsidiaries “engaged in unlawful conduct and inappropriate business practices. These included:

a)“payment of bribes and kickbacks to test referral sources, including physicians, sober homes, and sales consultants, in exchange for [lab] test orders;

b)“inappropriate utilization of standing test protocols;

c)“performance and billing for testing services not ordered by physicians;

d)“improper billing for services they did not perform; and,

e) “routinely ignoring patients’ payment responsibilities in order to avoid drawing attention to their scheme.”

Multiple Counts In Lawsuit

Specific counts in the lawsuit included fraud, conspiracy to commit fraud, sham to perpetrate fraud, theft, and unjust enrichment.

In Count 11 of the complaint, UnitedHealth alleged that Next Health and its subsidiary United Toxicology intentionally used a name for the subsidiary that was confusingly similar to the insurer’s. In court papers, the plaintiffs said the purpose was to mislead UHC plan members into thinking that documents—such as explanations of benefits reflecting United Toxicology’s “grossly over-priced and unnecessary services”—were associated with the insurance company.

Court papers describe the relief UHC sought: including enjoining defendants from submitting fraudulent claims based on unlawful conduct and inappropriate business practices; an award of actual, consequential, and exemplary damages; and attorneys’ fees and court costs.

The lawsuit described substantial damages. In court documents, UnitedHealthcare stated that between 2011 and mid-2016, Next Health and its subsidiaries submitted claims to the insurer totaling more than $400 million for out-of-network drug and pharmacogenetic laboratory testing services. In the lawsuit, UnitedHealthcare said it made payments totaling $101.5 million to Next Health Labs, as follows:

• United Toxicology:            $54.7 million
• US Toxicology:                   $23.9 million
• American Lab Group:       $14.3 million
• Medicus Laboratories:      $8.6 million

How Next Health’s U.S. Toxicology Division Filed Claims for Tox, PGx Tests with UnitedHealth

HOW DOES A REGIONAL COMPANY like Next Health of Dallas generate clinical laboratory test claims totaling $400 million over six years (2011 through 2016) to just one health insurer— UnitedHealthcare?

In the lawsuit filed by UnitedHealthcare against Next Health and Next Health Labs, the health insurer provides specific examples of how it alleges the defendant companies billed it for “unnecessary drug and PG testing, pursuant to blanket, non-specific testing profiles.”

Reproduced below is a section of the UHC lawsuit. It shows how the defendants billed $18,400.89 for testing provided on three dates of service for each of three different patients, as noted below.

Excerpt from page 48 of the UnitedHealthcare vs. Next Health Lawsuit

In the lawsuit, after this table, UnitedHealthcare wrote, “181. Utilizing ‘custom’ profiles to justify the performance of unnecessary drug testing is not a new concept. The Office of the Inspector General warned about the potential for fraud posed by custom profiles almost 20 years ago: ‘customized profile[s] may result in the ordering of tests which are not covered, reasonable, or necessary and… the OIG takes the position that an individual who knowingly causes a false claim to be submitted may be subject to sanctions or remedies available under civil, criminal, and administrative law.’ See Dept. of Health and Human Servs., Office of Inspector General, Compliance Program Guidance for Clinical Laboratories, reprinted in 63 Fed. Reg. 163 (Aug. 1998).”

Federal Criminal Case

One important fact is that Semyon Narosov and Andrew Jonathan Hillman—principals of defendant companies in the UnitedHealthcare lawsuit—were named as defendants in a criminal healthcare fraud case filed on Nov. 16, 2016, in Dallas by U.S. attorney John R. Parker. In its complaint against Next Health, UHC described what it saw as the connections and similarities between the schemes of which it accuses Next Health and the Next Health labs and the alleged illegal kickback conspiracy at Forest Park Medical Center in Dallas (FPMC), as described in the federal criminal case.

The FPMC scheme resulted in the November 2016 federal indictment of 21 individuals, including executives, surgeons, physicians, sales and marketing consultants, and others. To date, four defendants in the FPMC case pled guilty to criminal felonies, including one physician. A trial involving 17 defendants is ongoing.

‘Illegal Scheme’

According to UHC’s lawsuit, two of those indicted in the FPMC case—Semyon Narosov and Andrew Jonathan Hillman—are also key figures in the Next Health network of companies.

In its lawsuit, UnitedHealthcare described how—in the FPMC federal indictment—the two men are alleged to have collectively controlled a hospital consulting company and “received bribe and kickback payments in exchange for referring patients to FPMC or to surgeons who performed medical procedures at the hospital.”

Key Figures

“Narosov and Hillman held (and may still hold) ownership and/or management positions with Next Health and/or one or more of its subsidiaries,” stated UHC in its complaint. “Through those ownership and management positions, Narosov and Hillman made sure that Next Health and its subsidiaries employed an illegal scheme that was similar to the one in place at Forrest [sic] Park.”

Statements in both the federal indictment and in the UHC lawsuit describe how the defendants allegedly engaged in serial fraud by creating a series of companies and business groups. UnitedHealthcare stated that Next Health was a “rebrand” of U.S. Health Group Inc.

Name Reserved In 2004

According to records at the Texas Secretary of State, a New Jersey corporate services company filed a name reservation certificate in 2004 in Texas for “U.S. Health Group, Inc. ”

Also, on May 17, 2010, Texas Secretary of State records show that Pioneer Laboratories, LLC, was formed in Texas, with Jeffrey L. Wasserman, MD, listed as its registered agent. Public records show that Wasserman is an anesthesiologist at Pinnacle Partners In Medicine in Dallas.

Three months later, on August 23, 2010, Medicus Laboratories, LLC (a defendant in the UnitedHealthcare suit), was formed as a Texas corporation, with Jeffrey Wasserman, MD, shown as its organizer. Its governing persons were listed as Pioneer Laboratories, LLC (Wasserman’s company), and Hospital Business Concepts, Inc. Texas Secretary of State records show this company was formed in 2006 and list Andrew Hillman, Semyon Narosov, and Yan Narosov as officers or directors.

The federal indictment in the Forest Park Medical Center case of November 2016 identifies Andrew Hillman and Semyon Narosov as defendants, and states, “Andrew Jonathan Hillman and Semyon Narosov—who collectively controlled a hospital consulting company—received bribe and kickback payments in exchange for referring patients to FPMC or to surgeons who performed medical procedures, including surgeries, at the hospital.”

The federal indictment further describes the alleged fraud, stating that, “As a result of the bribes, kickbacks, and other inducements, FPMC billed patients’ insurance plans and programs well over half-billion dollars and collected over two hundred million dollars in paid claims between approximately 2009 to 2013.” (Italics by THE DARK REPORT.)

Timeline of Companies, Individuals Named in UnitedHealthcare vs. Next Health Lawsuit

IT IS DIFFICULT AND COMPLEX to investigate the business activities of the companies and individuals named or associated with the multiple defendants identified in the UnitedHealthcare vs. Next Health, et al lawsuit filed in Dallas in January, 2017.

The timeline that follows was developed from public information that includes lawsuits filed in federal and state courts, press releases by the Department of Justice and certain companies involved in these matters, and newspaper/media news stories.

To confirm the accuracy of this information, THE DARK REPORT has attempted to contact the attorneys representing parties named in the lawsuits, as well as the companies and individuals named in lawsuits, press releases, and news stories. We were not able to locate contact information for some parties and received no responses from others.

  • 2004: New Jersey company files name reservation certificate in Texas for “U.S. Health Group, Inc.”
  • 2006 Oct. 4: Hospital Business Concepts, Inc., formed in Texas. Public records show Andrew Hillman, Semyon Narosov, and Yan Narosov as officers/directors.
  • 2010 May 1: Pioneer Laboratories formed in Texas; anesthesiologist Jeffrey Wasserman, MD, is registered agent.
  • 2010 Aug. 23: Medicus Laboratories formed in Texas involving Dr. Wasserman and Andrew Jonathan Hillman.
  • 2011 to mid-2016: Next Health/subsidiaries submit $400+ million in claims to UHC per UHC v NH et al.
  • 2011 Oct. 13: U.S. Health Group, Inc. formed in Wyoming. In its 2012 annual report filing, Semyon Narsov signs as president.
  • 2012 Aug.: HHS OIG sends letter to Medicus Laboratories, LLC (owned by Next Health) advising possible liability under federal law.
  • 2012 Dec. 21: U.S. Health Group, Inc. registers as foreign corporation in Texas. Address: 13601 Preston Road (an address associated with Hillman and Semyon Narosov).
  • 2013 Feb. 12: Whistleblower suit against U.S. Health Group and 38 subsidiaries, including defendants: Semyon Narosov, Andrew Hillman, Mike Austin, Jeffrey Wasserman, MD, Nick Oberheiden, Esq.
  • 2014 Feb. 20: Medicus settles with OIG for $5 million, 5-year Corporate Integrity Agreement, admits no guilt.
  • 2014 Jun. 23: Next Health LLC formed in Texas. Mike Austin, Narosov, and Hillman. Registered agent: Oberheiden Law Group. 2015 and 2016: Narosov and Hillman still associated with U.S. Health Group (Public Information Reports, Texas Secretary of State).
  • 2016 Nov.: U.S. Attorney indicts Semyon Narosov and Andrew Jonathan Hillman in the case involving Forest Park Medical Center and an alleged kickback scheme. 2017 Jan. 26: UnitedHealthcare sues Next Health, LLC, et al.
  • 2017 Mar. 24: Next Health files Certificate of Assumed Business Name as “Total Life Sciences.”
  • 2017 Apr. 25: The Oberheiden Law Group resigns as registered agent for Next Health and several subsidiaries.
  • 2017 Jul. 13: Berkley Insurance Co. sues Next Health and Next Health Labs, Hillman, Narosov, Mike Austin to revoke officers and directors errors & omissions insurance policies, and alleging misrepresentations on the insurance applications.
  • 2017 Aug. 18: Next Health and Medicus sue state/federal officials/agencies to stop suspension/revocation of CLIA lab licenses.
  • 2017 Nov. 13: Court dismisses Next Health/Medicus suit against state/feds to stop suspension or revocation of laboratory license(s).

Officers In Several Firms

Court and Texas Secretary of State records link Andrew Jonathan Hillman and Semyon Narsov as officers or directors in businesses named in the FPMC indictment and also in the UnitedHealth vs. Next Health lawsuit.

The next court case involving these businesses was filed on July 13, 2017. On that date, Connecticut-based Berkley Insurance Company filed a lawsuit in Dallas. Berkley is the company that provided E&O insurance to the defendant companies. It brought suit against:

• Next Health, LLC,
• United Toxicology, LLC,
• Medicus Laboratories, LLC,
• U.S. Toxicology, LLC,
• American Laboratories Group, LLC, and,
• various other Next Health entities.

In this lawsuit, Berkley named these individual as defendants:

• Andrew Hillman,
• Semyon Narosov, and,
• Michael Austin.

Berkley’s court case was brought to resolve controversy among the parties with respect to three insurance contracts (covering time periods 2014-2015, 2015- 2016, and 2016-2017) and specific underlying lawsuits. Berkley said it seeks to rescind certain executive liability policies based on claims of material misrepresentations in the applications because of the failure to reveal the existence of the underlying lawsuits.

Court Declaration Sought

Court documents also say Berkley seeks a court declaration that the policies do not provide coverage for various lawsuits the defendants are involved in, including the FPMC criminal proceedings, a previous qui tam suit, the lawsuit brought by UnitedHealthcare, and others.

Notably, in addition to the allegations Berkley asserts, its court documents describe a regulatory problem some of the defendants have with the federal government. Berkley alleges that in August 2012, the Office of Inspector General of the federal Department of Health and Human Services (OIG) sent a letter to Medicus Laboratories—a named defendant in the UHC vs. Next Health et al lawsuit—advising that it may be “liable for civil monetary penalties and assessments under the Civil Monetary Penalties Law.

THE DARK REPORT’S research into Medicus Laboratories uncovered several developments possibly related to the OIG’s notice of pending regulatory action. First, only four months after this OIG notice, on December 21, 2012, U.S. Health Group, Inc., registered with the Texas Secretary of State as a foreign (Wyoming) corporation. It showed its address as 13601 Preston Road (one of the addresses associated with the Next Health organization, Hillman, and Narosov), Suite 220E, Dallas, Texas 75240.

However, Wyoming public records show that this U.S. Health Group, Inc., corporate entity was itself incorporated in Wyoming only as a domestic (Wyoming) company just 14 months earlier, on Oct. 13, 2011. On Aug. 24, 2012, Semyon Narasov signed this company’s annual report as the company’s president.

The qui tam suit alleged that the defendants set up a business scheme that provided illegal kickbacks and profit-sharing arrangements with referring physicians for them to refer patients who use products and services provided through companies the defendants and physicians owned.

Multiple Business Entities

An attorney familiar with these types of legal cases in healthcare and the clinical laboratory industry, commenting generally, suggested that this sequence of events is common in which individuals involved in healthcare fraud need to establish multiple business entities to facilitate their conduct.

The next legal action involved Medicus Laboratories and 46 other defendants. It was a whistleblower case filed in Texas Northern District Court on Feb. 12, 2013, by unnamed relators (plaintiffs).

Whistleblower Lawsuit

The case was United States of America et al v. U.S. Health Group, Inc et al; 3:13-cv- 00701. This qui tam, or whistleblower, suit named U.S. Health Group, Inc., 38 of its subsidiary or related companies, and five individuals.

Among the corporate defendants were these companies:

• United Toxicology,
• U.S. Toxicology, and,
• Medicus Laboratories.

Among the individual defendants named in the qui tam lawsuit were:

• Semyon Narosov,
• Andrew Hillman,
• Mike Austin,
• Jeffrey Wasserman, MD, and,
• Nick Oberheiden, attorney and namesake of The Oberheiden Law Group, PLLC.

The relators claimed that U.S. Health Group, Inc. is “a parent company owned and controlled by…Hillman and others or entities that [they] own or control.”

Multiple Allegations

The qui tam suit alleged that the defendants set up a business scheme that provided illegal kickbacks and profit-sharing arrangements with referring physicians for them to refer patients who use products and services provided through companies the defendants and physicians owned.

It is important to call attention the specific allegation of the use of “companies the defendants and physicians owned” as a vehicle for “profit-sharing” to be paid to referring physicians. Pathologists and clinical laboratory managers need to know about these arrangements. The whistleblower lawsuit appears to describe “medical service organizations (MSOs).”

In simplest terms, the MSO organizers sell stock in an MSO—typically registered with the state as a limited liability corporation (LLC)—to physicians. The stockholder-physicians are then paid revenue-sharing or dividends proportional to the revenue generated from their patient referrals.

It is common for the MSO organizers to create multiple MSOs and limit the number of stockholding physicians in each MSO to just 10 to 25. In recent years, MSOs have become ubiquitous in Texas and many other states.

The risk to the organizers and the stockholding-physicians in an MSO is that the arrangement might be challenged by federal prosecutors as a violation of the Stark Law and the Anti-kickback statute.

The qui tam suit claimed the defendants used various business practices and billing, management, and administrative service companies owned by the same defendants to conceal their scheme. That may be why the number of defendants named in the lawsuit totaled 38, of which 33 were business entities.

The scheme resulted in the submission of millions of dollars of claims to federal healthcare plans in violation of the federal Anti-Kickback Statute, Stark Law, and state and federal false claims acts, the relators claimed.

Qui Tam Lawsuit Dismissed

This qui tam lawsuit was dismissed on Jan. 26, 2015. THE DARK REPORT has been unable to determine why this case was dismissed nor whether the settlement with Medicus Laboratories mentioned below is related to the qui tam case.

For Medicus Laboratories, the next chapter in its story happened on Feb. 20, 2014. On that date, the OIG announced that Medicus Laboratories, LLC, had agreed to pay $5 million and had entered into a five-year Corporate Integrity Agreement.

The DOJ stated that this settlement with Medicus Laboratories reflected efforts to combat fraud in the urine drug testing industry through a “unique combination of audits, investigations, and legal remedies.” In accepting the settlement, Medicus denied any liability and no judgment or finding of liability was made against it.

In the midst of these developments, Next Health, LLC, was formed as a Texas corporation on June 23, 2014. That is just 120 days after the settlement between Medicus and the DOJ.

Public records for Next Health, LLC, list Michael A. Austin, 5710 LBJ Freeway, Suite 300, Dallas, Texas 75240, as its “governing person.” (The Berkley suit alleges that Next Health was formed by Mike Austin and co-defendants Hillman and Narosov.) Next Health’s initial registered agent was The Oberheiden Law Group, PLLC, also located at 5710 LBJ Freeway, Dallas, Texas 75240, in suite 120.

The primary addresses associated with Next Health or its subsidiaries are:

• 5710 LBJ Freeway, Suite 300, Dallas, Texas 75240;

• 13601 Preston Road, Dallas, Texas 75240; and,

• P. O. Box 797604, Dallas, TX 75379.

According to the UnitedHealthcare complaint, Next Health is the “hub of more than 160 entities registered as doing business out of 5710 LBJ Freeway, Suite 300, Dallas, Texas 75240, which overlap to create a complicated and opaque web of ancillary service providers.”

Public records filed in Texas by U.S. Health Group, Inc., for 2015 and 2016 showed Narosov and Hillman as being associated with that company.

New Filings With The State

Since the filing of the UnitedHealth lawsuit against Next Health and the Next Health labs, the company made changes in its filings. According to Texas Secretary of State records, on March 24, 2017, Next Health filed a Certificate of Assumed Business Name, indicating “Total Life Sciences” as the name under which the business is, or is to be, operated.

On April 25, 2017, public records show that The Oberheiden Law Group resigned as registered agent of Next Health and a number of its subsidiaries.

Public records indicate that, despite its 2014 settlement with the OIG, Medicus Laboratories had additional and different regulatory or compliance issues. On Aug. 8, 2017, Next Health and Medicus Laboratories filed suit in Dallas against state and federal officials and agencies. In its lawsuit, the plaintiffs said they sought to stop these government agencies “from suspending or revoking their federal laboratory licenses.”

In a news story about the lawsuit, the Dallas News wrote that the plaintiffs claimed that such a move—loss of the lab’s CLIA certification—would effectively put them out of business.

The court dismissed the Next Health and Medicus Laboratories lawsuit against state and federal regulators on Nov. 13, 2017. A recent search for the Medicus Laboratories website at www.medicuslabs.com shows that this URL is currently not active.

Similarly, Next Health’s website, when searched in November 2017, stated that the account had been suspended. There is an active LinkedIn page for “Next Health USA” of Dallas Texas. Also, as of late November 2017, U.S. Health Group, Inc. was listed in the Texas Secretary of State records as still active.

At this time, it is not known if there are other lawsuits, whistleblower cases, or government regulatory actions that involve the defendant companies and the owners and officers of those companies named in the UnitedHealthcare vs. Next Health, LLC and Next Health Labs lawsuit.

Complex Schemes

What is significant about the information and the timeline presented in this story is that it provides clinical lab managers and pathologists with a fuller understanding of how complex and sophisticated these healthcare schemes and business activities can be.

This information also documents an almost 10-year pattern of actions by selected individuals that have caught the attention of health insurers, government healthcare prosecutors, and whistleblowers. During this time—and in different lawsuits and regulatory actions during these same years—these individuals are alleged to have committed different types of healthcare fraud and abuse.

THE DARK REPORT has contacted the attorneys of record for the defendants in these cases to ask for comment. The outcomes from these efforts are reported on the sidebar on page 21. As additional comments are provided by these sources to tell their side of the story, that information will be presented to update this report.

Doctors’ Role Is Untold

What remains untold about the events of the past decade in Dallas is the role of office-based physicians in sustaining the schemes alleged and described in various lawsuits. For example, it takes a huge number of lab test referrals from physicians to allow Next Health—as alleged by UnitedHealthcare in court documents—to submit $400 million in lab test claims.

Another insight from the activities of the defendants in the UnitedHealthcare lawsuit is the complexity of the business relationships they establish. In the court documents, UHC said, “Next Health is the hub of more than 160 entities registered as doing business out of 5710 LBJ Freeway, Suite 300, Dallas, Texas 75240, which overlap to create a complicated and opaque web of ancillary service providers.”

Finally, this is but one example in one city of an alleged healthcare fraud involving lab testing that caused a health insurer to file a civil lawsuit. Across the United States, there are federal cases and payer lawsuits alleging similar fraud, typically involving tens of millions or hundreds of millions of dollars in lab test claims.

The large scale of this fraud and abuse involving lab testing has another consequence. As payers put in strict guidelines to curb different forms of fraud, it hurts those clinical labs that operate honestly.

Contacting Defendants and Their Attorneys For Comments on UHC and Other Lawsuits

TO PROVIDE THE DEFENDANTS in these lawsuits and the companies involved in regulatory actions the opportunity to respond to the allegations that appear in the lawsuits, press releases, and news accounts presented in this story, THE DARK REPORT contacted the individual defendants and their attorneys. THE DARK REPORT was not able to locate contact information for some and received no responses from others. Below is a description of:

Attorney James S. Bell (James S. Bell PC); currently or formerly representing Next Health, LLC: Mr. Bell was contacted and made no comment, but provided copies of court documents in connection with the Next Health et al. counterclaim against UnitedHealthcare. Information from the counterclaim will be presented in a future issue of THE DARK REPORT.

Attorney Nick Oberheiden (Oberheiden and McMurrey LLP; formerly The Oberheiden Law Group, The Oberheiden Law Firm PLLC, which served as registered agent for various Next Health-related companies; named defendant in 2013 qui tam case against US Health Group et al). When reached, Mr. Oberheiden declined to comment, except to say that he failed to see the relevance of the qui tam suit that was federally dismissed with prejudice many years ago. (According to uslegal.com, a “…dismissal with prejudice is dismissal of a case on merits after adjudication. The plaintiff is barred from bringing an action on the same claim. Dismissal with prejudice is a final judgment and the case becomes res judicata on the claims that were or could have been brought in it.”)

Attorneys Erica Bright and Noah Nadler (Wick Phillips Gould & Martin LLP); currently or formerly representing Advanced Total Management, American Laboratories Group LLC, Athena Surgical Products LLC, L2 Surgical LLC, Medicus Laboratories LLC, Next Health LLC, Ortho InMotion LLC, Principal Spine LLC, Total Surgical Management LLC, US Toxicology LLC, United Toxicology LLC, Vertelogic LLC, Andrew Hillman, Michael Austin, Semyon Narosov). No response was received from Ms. Bright or Mr. Nadler.

Attorneys Lisa Henderson and L. Kimberly Steele (Sedgwick LLP); currently or formerly representing Berkley Insurance Company). No response was received from Ms. Henderson or Ms. Steele.

Attorneys Andrew G. Jubinsky and Raymond Earl Walker (Figari & Davenport LLP); currently or formerly representing United Healthcare Services Inc. and UnitedHealthcare Insurance Company). No response was received from Mr. Jubinsky or Mr. Walker.

Attorneys Ernest Martin, Jr., Christopher A. Rogers, Micah Ethan Skidmore, Nicole Summerville (Haynes & Boone LLP); currently or formerly representing American Laboratories Group LLC, Medicus Laboratories LLC, Next Health LLC, US Toxicology LLC, United Toxicology LLC). Mr. Martin was reached by telephone and deferred any comments to Mr. James S. Bell for any comments. No comments were received from Mr. Rogers, Mr. Skidmore, or Ms. Summerville.

No response from:

Attorneys Stephen W. Mooney and Adam Joseph Sinton (Weinberg, Wheeler, Hudgins, Gunn & Dial); currently or formerly representing United Healthcare Services, Inc. and UnitedHealthcare Insurance Company, UnitedHealth Group, Inc.).

Jeffrey Wasserman, MD, of Dallas, Texas: Messages were left at his current listed medical practice.

Eric Bugen: Messages were left at a phone number that public records list in his name.

Kirk Zajac: Messages were left at a phone number that public records list in his name.

Semyon Narosov: Messages were left at a phone number that public records list in his name.

Andrew Jonathan Hillman: Messages were left at a phone number that public records list in his name.

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