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Oregon Man Sentenced To Prison For Role In Kickback Scheme

Kickbacks refer to the practice of giving or receiving money or other incentives in exchange for a business advantage or advantage in a transaction. This can take the form of a payment made to an individual or business in return for a referral, a contract or a purchase. Kickbacks are illegal because they corrupt the integrity of the marketplace and can lead to fraud, waste and abuse of public resources.

In the United States, kickbacks are prohibited by the Federal Anti-Kickback Statute (AKS). It is illegal for any person or entity to offer, pay, solicit or receive any remuneration in exchange for referrals for items or services that are payable by a federal healthcare program. Violation of the AKS can result in criminal fines and imprisonment, as well as civil monetary penalties and exclusion from federal healthcare programs.

Richard Reid has been sentenced to two years in prison.

The 53 year-old resident of Astoria, Oregon received his sentence this past Tuesday. As reported by the Western District of Washington branch of the United States Department of Justice, Reid was originally convicted in March 2022 after a six-day jury trial. Evidence showed that he had committed five federal felonies connected to a scheme to profit from illegal kickbacks in the medical testing industry.

Reid was part owner of and Vice President of Sales for Northwest Physicians Laboratory (NWPL). Based in Bellevue, the lab was used by Reid to obtain over $3.7 million in kickback payments. He sent urine drug test specimens to two labs that could bill the government for testing. It resulted in government payments to those two labs of more than $6.5 million.

NWPL received payments in exchange for referrals.

According to the DoJ report, the two labs made numerous kickback payments to NWPL between January 2013 and July 2015. The payments were sent in exchange for referrals of Medicare and TRICARE program business. They were all in violation of the Anti-Kickback Statute. This is because paying remuneration to medical providers or provider-owned laboratories in exchange for referrals encourages providers to order medically unnecessary services.

“The Anti-Kickback Statute functions, in part, to discourage such behavior,” informs the DoJ, “NWPL was physician-owned, and for that reason could not test urine samples for patients covered by government health programs such as Medicare, Medicaid, and TRICARE. In order to conceal the payment of the kickbacks, Reid and other co-conspirators involved described the fees as being for marketing services; however, no marketing services were performed.”

Reid was convicted of all five counts against him.

They included one count of conspiracy to solicit and receive kickbacks involving health care programs and four counts of receipt of kickbacks. NWPL, as a company, had pleaded guilty in February 2021 and was sentenced to pay $8,114,417 in restitution. The company was then dissolved. To date, the DoJ reveals, the labs and individuals involved in this investigation have paid more than $14 million to settle related civil allegations.

“Former NWPL CEO Jae Lee was sentenced to two years in prison in May 2022,” the report details, “Kevin Puls, the former Executive Director of NWPL was sentenced to 90 days in prison and a year of supervised release.”

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