Prosecutors in Florida on Tuesday announced 15 arrests related to drug abuse treatment that included individuals tied to a urine-testing lab used by Liberation Way in Pennsylvania.
The announcement by the office of State Attorney Dave Aronberg of Palm Beach County came eight days after Pennsylvania Attorney General Josh Shapiro lodged criminal charges against 11 people tied to alleged kickback and fraud schemes at Liberation Way, a treatment company that had two centers in Montgomery County.
“An empire built on fraud and deceit” is how Assistant U.S. Attorney Nancy Winter of the Eastern District of Pennsylvania described Liberation Way as she spoke at the Florida press conference Tuesday.
The company — sold in late 2017 to a group of investors and renamed — was the focus of several Reading Eagle investigative stories last year. One described questionable arrangements in which the clients’ urine was sent to Florida for testing that was sometimes billed to insurance at the rate of $3,000-plus per sample.
At the same time, the newspaper reported, one lab was sending checks ranging from $20,000 to $170,000 to entities controlled by Liberation Way owners or relatives. Last week, Shapiro described those checks as kickbacks.
That laboratory, Coastal Laboratory LLC, was at the heart of the web of arrests announced Tuesday in Florida.
Aronberg described the alleged scheme as one in which treatment centers sent urine to Coastal, lucrative tests would be billed to insurance and large amounts of money from insurance payments would be sent back to treatment center operators.
According to information distributed at the press conference, Coastal billed insurance companies for more than $141 million for urine testing between February 2015 and February 2017.
That worked out to $542,000 each work day in billings for a company with 10 to 20 employees, according to Aronberg’s office.
Individuals tied to Coastal Laboratory and 10 south Florida treatment centers face a total of 206 felony counts of patient brokering and conspiracy, his office said.
“Everybody is making money on the backs of people with substance-use disorder,” said Aronberg, who heads the Palm Beach County Sober Homes Task Force.
Sober homes are residences where people recovering from drug abuse live together as they attempt to get their lives in order.
Aronberg said the Florida sober home industry has been corrupted and illegal practices — kickbacks, patient brokering and insurance fraud — have spread to other parts of the industry, including state-licensed treatment centers and urine-testing labs.
Winter said Coastal and Liberation Way had a very substantial relationship.
Mark Berey, a detective with the Palm Beach County sheriff’s office, said Liberation Way had ties to Florida labs that were designed to defraud insurance and harm patients.
Most of the 11 people arrested in Pennsylvania face preliminary hearings next week before a district judge in Bucks County.
One of them, lab operator Jesse Peters, also was charged in the Florida sweep.
Others arrested in Pennsylvania include Jason Gerner, a co-founder of Liberation Way, and Michael Armstrong, who was its chief networking officer.
Two of the 11 Pennsylvania defendants — Peters and Dr. Ramesh Sarvaiya — also face federal charges of conspiracy to commit health care fraud.
Shapiro described them as being involved in the alleged Pennsylvania-to-Florida urine test scheme.
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The Office of State Attorney Dave Aronberg in Palm Beach County, Fla., provided the following list of people whose arrests were announced Tuesday. Further information on most of the individuals was not immediately available:
Jesse Peters of Lake Worth, Fla. — a former manager of Coastal Laboratory LLC
Thomas Stanley — a former manager of Coastal Laboratory LLC
Ronald W. Trautman of Wellington, Fla .— a manager of the treatment center Wellington Counseling & Associates
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