AJC Watchdog: Gwinnett urine lab implicated in bribery scandal

A federal indictment filed in Tennessee claims a Gwinnett County urinalysis lab paid bribes and filed fraudulent Medicare and Medicaid reimbursement requests.

The charges add to Lawrenceville-based Confirmatrix Labs’ increasingly shady reputation and that of its founder, a Palestinian foreign national with a criminal past.

The indictment filed in East Tennessee stems from an alleged network of “pill mills” in and around Knoxville that federal prosecutors say dispensed opioid pain medication to people who didn’t need it and stuck taxpayers with the bill for mandatory urine tests.

As part of the scheme, the indictment claims Confirmatrix Labs in Lawrenceville paid bribes and kickbacks to two of the Tennessee pill mill operators, Clyde Christopher Tipton and Maynard Alvarez. In return, Tipton and Alvarez sent their Medicare and Medicaid patients to Confirmatrix for urine tests, which were billed back to the federal government and TennCare, Tennessee’s state-run Medicaid program, for reimbursement.

Tipton and Alverez allegedly laundered the bribes through shell companies that were supposedly doing marketing work for Confirmatrix.

Prosecutors say Confirmatrix submitted $562,202 in fraudulent reimbursements to Medicare and TennCare as part of the scheme and paid $210,200 in the spring of 2015 to a company owned by Tipton and Alverez, who in turn transferred that money to their private bank accounts.

A lawyer for Confirmatrix had no comment on the indictment. The attorney for Khalid Satary and his son, Jordan, also declined to comment, noting that his clients are not named in the indictment.

Neither Confirmatrix nor its corporate officers have been charged in the alleged scheme, but it’s the latest in a string of bad news for the company and its founder, Khalid Satary, who began a north metro empire of medical businesses shortly after he emerged from a three-year federal prison sentence in 2008.

Satary served time after the FBI busted him for running a

massive music counterfeiting operation under the street name “DJ Rock.” After completing his sentence, Satary hooked up with businessman and consultant Bobby Ferraro who showed Satary the ropes of the fast-growing pain management sector.

Corporate filings show Satary quickly built a vertically integrated opioid empire of pain management clinics, urine testing labs and medical billing businesses.

"He grew his business to hundreds of millions of dollars, so he knew how to do business," Ferraro said.

He describes Satary as a businessman with sharp elbows but ultimately honest. If someone was paying kickbacks, it was without Satary’s knowledge, he said.

“Honestly, he’s a very serious business person. He’s very aggressive, but he does things the right way and doesn’t do business the wrong way,” he said.

‘He’s the decision-maker’

Over the years, Satary has removed himself from company ownership positions, often in favor of his young son, Jordan, who was listed as CEO of affiliate business Gnos Medical right after his high school graduation. Ferraro said Satary set himself up as a consultant. “He gets paid for consulting,” he said, adding, “He’s the decision-maker.”

The FBI raided Confirmatrix's corporate headquarters last November. The company filed for Chapter 11 bankruptcy two days later and apparently is moving toward public auction.

It’s unclear what, exactly, federal investigators were seeking in November, but the company has invited scrutiny in extraordinary ways.

Almost three years ago, employees for Confirmatrix and Gnos (then called Nue Medical) contributed more than $80,000 to former U.S. Rep. Jack Kingston's Senate campaign in a fancy and weird fundraiser. It was fancy because it was at Chateau Elan. It was weird because the employees gave thousands to Kingston despite the fact almost none of them had ever been active in politics or had even registered to vote.

Ferraro said the Kingston fundraiser was a rare business misstep by Satary.

“I understand the reason behind it,” he said. Satary and Confirmatrix wanted expanded drug testing for federal entitlement programs, he said.

"They wanted it where if you wanted to get Medicaid, you have to get a drug test," he said.

When I broke the donation bundling story, Kingston denied knowing about Satary’s past and returned the money, pledging to cooperate with a federal investigation that never went anywhere.

$9.1 million billed to Medicare

There’s a reason the feds might be interested in Confirmatrix’s billing practices. The company has one of the highest per-patient costs in the nation.

A study done by Laboratory Economics, a business newsletter, named Confirmatrix as “the biggest outlier” among firms reviewed for Medicare Part B payments. While the average per-patient cost was $751, Confirmatrix was billing $2,406.

The study found Confirmatrix billed Medicare $9.1 million in just one year for the tests. Now comes the allegation that the company paid kickbacks as part of this Tennessee fraud and money laundering scheme.

In the meantime, creditors are trying to get their money from the company before it winks out of existence. Filings in U.S. Bankruptcy Court in Atlanta show an effort to collect on old debts from clients who didn’t pay for their tests. An Aug. 29 filing explained Confirmatrix had hired NYX Health Group, another Gwinnett County business, to “pursue collections of certain of (Confirmatrix’s) aged accounts receivable.”

One of those accounts belong to Clarence Washington of Brooklyn, N.Y., who recently received a $1,000 bill from NYX Health Group for a drug test in April 2016. That struck Washington as unlikely because at the time he was a Medicaid beneficiary and that program covered the costs of his tests.

Washington called me because he was getting no answers from either Confirmatrix or NYX. He said he called the drug treatment program he was in at the time for help.

“They know about the cases against these guys and have long stop dealing with them,” he said.

As AJC Watchdog, I’ll be writing about public officials, good governance and the way your tax dollars are spent. Help me out. What needs exposing in your community? Contact me at cjoyner@ajc.com.