By Debbie Burke
Did you ever think pee could lead to riches? Me neither.
However, the owners of Northwest Physicians Laboratory (NWPL) of Bellevue, OR, figured out a way that earned them millions of dollars before the feds caught them.
In April, 2022, Richard Reid, 53, of Astoria, OR, was convicted of five federal felonies resulting from his and his co-conspirators’ scheme to receive illegal kickbacks for lab tests on urine specimens.
According to U.S. Attorney Nick Brown, NWPL officers and Reid knew:
“…it was illegal to profit on tests conducted by his toxicology lab that were paid for by government insurance. The web of referrals and kick-backs increased profits for Reid and his co-conspirators, while inflating medical costs for the rest of us. This is essentially theft from taxpayers.”
The Anti-Kickback Statute prohibits physician-owned labs from profiting for services billed to Medicare, Medicaid, and TRICARE. A statement from the Department of Justice says:
“Paying remuneration to medical providers or provider-owned laboratories in exchange for referrals encourages providers to order medically unnecessary services.”
How did NWPL’s scheme work?
Reid, VP of Sales, and his cohorts steered urine tests to other labs, resulting in payments from Medicare, Medicaid, and TRICARE of more than $6.5 million. Those labs then turned around and shared the ill-gotten gains with NWPL by paying them more than $3.7 million disguised as “marketing services.”
The scheme lasted from 2013 to 2015 until investigators uncovered it. In February, 2021, NWPL pled guilty and was sentenced to pay more than $8 million in restitution. The lab is now out of business.
NWPL’s CEO Jae Lee and Executive Director Kevin Puls pled guilty, along with Steve Verschoor, the head of a lab that paid kickbacks. In July, 2022, the co-conspirators will be sentenced and face up to five years in prison for each count.
Pee for profit sounded like a good idea at the time. After conviction, though, I suspect the conspirators might say, “Aw, p*iss on it!”
TKZers: Any thoughts on this scheme? Bad jokes welcome.
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I can hear it now… The lawyers telling these guys, “Urine trouble…”
Sorry – not sorry…
A standing ‘O’ for George Smith!
Thank you, thank you very much… I’m here all week… tip your waiters… try the veal… y’all’ve been great… thank you again… and good night everybody… 😆
George, you win this morning’s coffee snort award!
Good one, George!
That’s quite a story, Debbie. I am amazed at the manner in which people will work harder to make a dishonest dollar than they will to make an honest one.
Bad jokes? I’m reminded of the angry fly on the toilet seat who got pissed off…
Hope you’re having a great week!
I knew I could count on you, Joe!
This is the first time someone was prosecuted for trickle-down economics.
Uh-oh, I fear I’ve started a pissing contest. Thanks for your contribution, Mike.
Wow. Just…wow. Scumbags like this really piss me off. 😉
Me, too, Sue.
Didja hear about the guy who stayed up all night studying for his urine test? Flunked anyway.
Only five years in prison? And may get time off for ‘good behavior’? Also known as not giving the authorities too much trouble, and pretending to be sorry?
These schemes that enrich individuals who cheat literally take money and needed services from the poor. Who have it bad enough. Maybe they should be punished by the scope of the damage they do to millions. They’d never get out of prison. That would make a proper object lesson.
Good points, Alicia. Fraudsters cause billions of dollars of damage each year to honest everyday people. I often wonder how much restitution is actually collected–likely never enough to make fraud victims whole.
The sorry facts are that white collar crime rarely gets the punishment it deserves, and the people convicted rarely do any kind of hard time. The term “Club Fed” comes to mind. I have heard it described as a federally funded gated community for the gentry, people like the aptly named Pharma Bro Martin Shkreli.
Now, if this was a black kid in Louisiana who’d stolen a clapped out Ford Taurus he’d be spending the rest of his life in Angola doing field work on the prison farm.
Back in the ’70s, a former neighbor (high-level drug dealer) spent a couple of years at Club Fed-Lompoc, CA. He went in flabby, pasty, and out of shape. He came out buff, tan, and healthy thanks to playing tennis with Watergate burglars who were also incarcerated there at the time. Steak and lobster was regularly delivered to the country club–I mean, prison. Sheesh.
Good morning, Debbie. Interesting topic. Unfortunately this is just the tip of the pee-for-profit iceberg, The real money being made is by “legal” large commercial labs and hospitals that have increased their volume by lobbying congress and governmental regulatory groups to require small office labs to jump huge monetary hurdles to be allowed to even do urinalyses. The price is so high for certification, inspection, and quality control measures, that small practices (not owned by hospitals) are not even doing simple urinalyses (dip stick, chemical testing), because they don’t get paid for it. Those who choose to run the obstacle course of regulations so that they can perform full urinalyses (including microscopy) or special urine tests such as toxicology, pay huge sums for registration with the federal government, for inspections by the states or other inspection groups, for proficiency testing, and for quality control. A small bottle of urine with supposedly known results (used for quality controls) which would last about one year, cost us over $500. And many times it was junk, with incorrect values. Someone was making big bucks for selling pee gold. And that someone was “certified” by our government. The other costs of inspection and registration cost thousands.
In reality, the large business-swamp collusion is the real cause for ever-escalating medical costs.
And on that happy note, I hope you have a wonderful remainder of the week.
Steve, thanks for your insider’s look at the underbelly of medical costs. Wow, that’s astonishing but sadly not surprising.
Sometimes the difference between theft that’s legal or illegal is proper paperwork.
Steve, this sounds like quite the “legitimate” racket. I’ll have to mention it to my pediatrician brother-in-law when next I see him. I’m sure he’s very familiar, too, with this.
And prepare for him to unload.
Thanks for this information, Steve. Most of us don’t understand all the bureaucracy involved in the medical field. It’s scary.
In my day job, we’re always concerned by actual fake pee. When someone has an accident in our company, they need to do a Drug and Alcohol test which involves giving a urine sample. Some addicts can hide the obvious, and actually carry around fake or clean pee for testing.
The give away – the temperature is less than ninety degrees when the sample gets turned in. If they were smart, they’d microwave it first before handing it in. Might change the flavour of the microwave popcorn at snack time.
Thanks for that interesting fact about temperature, Ben. But you have now ensured I’ll never eat microwaved popcorn again.
Hope you don’t have many “accidents.”
I have been drug tested for several jobs or job situations. I asked the lab tech one day. “Do people really try to use fake pee?”
“Every damn day.”
Or they strap the bag of pee to their body and snake out a tube to fill the specimen cup. That way it stays at the right temp. Many, many, many years ago a male acquaintance of mine bought a sample from this girl (side gig for her, selling “clean” samples) and the testing revealed HE was pregnant. Hahaha. Busted!
I knew of a pro boxer who used a condom.
Great story, Sue! Poetic justice.
Talk about pissing away someone else’s money 🙂
But seriously, the ingenuity of some people in their larceny, Debbie, never fails to amaze me.
This is also interesting to me because a my brother-in-law is a long-time doctor in Yamhill county, and probably has heard of this crime. I had to look up Bellevue, Oregon, and was reminded that it’s actually an unincorporated rural community near Highway 18 that runs from McMinnville to the Oregon coast. I’ve driven through there numerous times. A place of rolling, forested hills surrounding a broad valley. Doesn’t seem like a place for a medical lab, which strikes me as oddly suspicious in and of itself.
The Confederated Tribes of Grand Ronde have a large casino and hotel west of there, while McMinnville, population nearly thirty five thousand, is several miles to the east. That is where my relative’s medical clinic is located, near the hospital.
This post gave me a much-needed smile this morning and a chuckle. Thank you!
You’re so welcome, Dale. Thanks for adding that extra research about the lab’s remote location. Wonder if that’s what tipped the feds off.
“P” is for Penitentiary.
Great title for a story if it hasn’t been used already!
Excellent, Kay! Sue Grafton would have appreciated that title for her Kinsey Milhone alphabet series.
The porn industry is a first user of technology involving entertainment. Still photos, movies, the Internet, Facebook, etc., etc. Now that technology has such a big hold on medicine, it’s not surprising crooks have moved into that, too.
I’d also add stage magic as a first user. Many of the mind-reading tricks now involve electronic ink which has never really taken off as expected.
Crooks always go where the money is. Thanks for chiming in, Marilynn.
I’m with Joe. It’s so sad that people work so hard to defraud others. Just think of how the world could be different if they used their talents the right way! Love your True Crimes days. 🙂
Remember the classic TV show Get Smart, Patricia? Maxwell Smart used to say, “If only he used his powers for good and not evil.”
Glad you enjoy TC Thursdays. Most stories are tragic and depressing so now and then I try to throw in a little levity to counteract the sadness.