Lab Executive Charged with Fraud in COVID and Allergy Testing

The president of Arrayit, a publicly traded medical testing company, has been charged with securities fraud and conspiracy to commit healthcare fraud after it was revealed he had directed the company to submit false claims for allergy and COVID-19 tests. These charges include the company allegedly paying kickbacks to doctors who participated in the scheme. The charges are the first in the country against a medical company accused of exploiting the coronavirus crisis for their personal gain.

Arrayit has been accused of submitting millions of dollars in insurance claims that were either fraudulent or tainted by bribes and kickbacks, dating back to 2018. Allegedly, the company was submitting claims to both Medicare and private insurers, asking for compensation for medically unnecessary allergy tests. In some cases, an allergy test was prescribed, but Arrayit would charge for a full allergy panel even when a more limited test was prescribed.

When the coronavirus emerged, the scheme expanded to the company’s new COVID-19 test, with the president of the company making false representations to investors about the reliability of said test. It also used medical information obtained from patients through a request for COVID-19 testing to submit false claims for allergy tests, which were far more profitable for the company. The president charged in the case also made false representations about the reliability of its COVID test, leading to the securities fraud charge.

These charges are the first of their kind in the country, but the Department of Justice has promised that it will not be the last. The conduct of the charged executive, while shocking, is not unique, and the DOJ has already announced enforcement action against other companies for activities such as selling a fake coronavirus vaccine, selling silver as a supposed COVID cure, and other similarly shady actions. With coronavirus cases beginning to rise once more, it is likely that more fraudulent conduct by unethical medical companies will follow.

The business law attorneys at Blodnick, Fazio & Clark are skilled and knowledgeable in the areas of business law and commercial transactions.  With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.

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