‘Increased costs and abusive practices.’ Two sentenced in scam using KY laboratory.
The owner of a Lexington drug-testing laboratory who bribed a doctor to get work has been sentenced to two years in prison.
Uday R. Shah, 66, must also pay $325,739 in restitution to Medicaid, according to the sentencing order.
Shah was involved in a kickback scheme with a man who worked for him, Timothy B. Andrews, and a doctor named Ghyasuddin Syed, who worked at Southeast Texas Institute-Pain Management in Baytown, in the Houston area.
Shah owned Pinnacle Laboratories LLC in Lexington, as well as labs in Houston, Las Vegas and Ohio, according to court records.
All three men are from Texas, but authorities prosecuted the case in federal court in Kentucky because one of the labs involved in the scam was in Lexington.
Shah paid Syed more than $475,000 between November 2014 and August 2017 in return for Syed sending thousands of urine samples from patients to be tested at Shah’s labs, according to court documents. Shah then billed Medicare and insurance companies for testing the samples, according to court records.
Federal law bars doctors from taking kickbacks in order to send providers work covered by Medicare or Medicaid.
The law is designed to protect those health programs from “increased costs and abusive practices” that can happen if a doctor bases medical decisions on self-interest rather than the quality of care or the needs of patients, Assistant U.S. Attorney Paul McCaffrey said in a sentencing memorandum.
It’s also aimed at protecting patients from doctors whose medical judgment might be clouded by improper financial considerations, McCaffrey said.
Shah’s case illustrated how kickbacks corrupted Shah’s medical decisions, the memo said.
Syed didn’t send samples to Shah’s labs before the scam started, but in 2015, when Shah paid Syed $325,482, Syed referred 2,513 tests to Shah’s labs, according to the memo.
In 2016, when the payments dropped to $98,115, Shah only sent 453 samples to Shah’s labs, the memo said.
“It is clear that the motive behind Syed’s referrals was money, not quality of care,” McCaffrey said in the memo. “The scheme unfairly enriched Syed and Shah, as compared to physicians unwilling to accept kickbacks or competitor labs unwilling to pay them.”
Some of the kickbacks to Syed were disguised as rent payments from Shah, according to court documents.
When authorities went to talk to Syed in June 2017, he had some lab equipment placed in an office to make it appear it was rented to Shah
Shah and Andrews, who acted as the middleman in some payments, pleaded guilty.
Chief U.S. District Judge Danny C. Reeves sentenced both on Monday.
Reeves sentenced Andrews to 15 months in prison. He also is liable with Shah for the restitution to Medicare.
Syed pleaded guilty in the conspiracy Dec. 1. He is scheduled to be sentenced in March.
Syed’s wide, Shazana Begum, who helped him manage a commercial property called Baytown Primary Medical Tower, was charged with him, but prosecution and defense attorneys are discussing a plan to divert the charge against her, according to a court record.
This story was originally published December 9, 2020 at 10:12 AM.
