In November, federal agents raided a Lawrenceville toxicology lab, serving warrants and taking away boxes of papers.
Two days later, the lab filed Chapter 11 bankruptcy. Next month it heads for the auction block after years of Medicare reimbursements at one of the highest rates in the nation, according to one study.
The firm is Confirmatrix Laboratory, and if that name sounds at all familiar it’s likely because the company was at the center of a campaign donation bundling scandal in 2014 when then-U.S. Rep. Jack Kingston was running for an open Senate seat.
Employees with Confirmatrix and associated companies combined to shower Kingston with more than $80,000 in bundled contributions at a fancy fundraiser at Chateau Elan. At the time, no one had ever heard of Confirmatrix or its sister company, Nue Medical Consulting, a medical billing company. Both firms had only recently been founded by a Palestinian national named Khalid Satary.
The problem for Kingston was that Satary, AKA DJ Rock, was an ex-con under a federal deportation order.
Satary served more than three years in federal prison for running a counterfeit CD operation the feds valued at $50 million. He got out of prison in 2008 and quickly got into the fast-growing and lucrative field of toxicology — testing urine for drugs.
That’s what he was doing when employees in his companies made a big play for Kingston.
Putting it mildly, the Kingston contributions were fishy. First, none of the 26donors had a history of political activism. In fact, most did not appear to be registered voters.
A whistleblower who helped organize the fundraiser said Satary promised bonuses to anyone who contributed to Kingston. That’s called a “straw donor” scheme and is illegal.
Wes Warrington, Confirmatrix’s CEO at the time, said employees were not encouraged to give. That may be the case, but whatever impulse seized them in December 2013 apparently let go just as quickly. None of the employees has contributed since to a federal campaign.
Well, there’s one exception.
Yussuf Abdel-Aleem, a lawyer who served as general counsel for Nue Medical, gave $2,500 to Kingston. Apparently, Abdel-Aleem has broad political tastes, because three years after giving to the Georgia conservative, he donated $500 to Sen. Bernie Sanders’ Democratic presidential bid. Abdel-Aleem said he no longer represents Nue Medical and had no comment.
In short, there is plenty of circumstantial evidence that the bundled donations to Kingston were just an attempt to curry favor with a candidate who, at the time, was considered the front-runner to be the next senator from Georgia.
Political newcomer David Perdue hammered Kingston about the fundraiser in political ads, narrowly defeating the 11-term congressman in a GOP primary runoff election. Perdue went on to win the general election too.
$9.1 million billed to Medicare
All this smoke caught the attention of the FBI and federal prosecutor’s office. But after Kingston lost the primary runoff, the investigation lost steam.
In the interim, Confirmatrix kept billing Medicare for millions in testing fees. In fact, the company was tagged as submitting the highest reimbursement requests in the nation.
Laboratory Economics, a business newsletter, reviewed Medicare Part B payments to labs across the nation for drug testing and found Confirmatrix to be “the biggest outlier” with an average per-patient cost of $2,406. The national average per-patient cost was $751.
The study found Confirmatrix billed Medicare $9.1 million in just one year for the tests, while noting the lab’s felonious founder.
Inflated Medicare billing is a big concern to feds. Last week, the Justice Department announced its largest indictment yet for Medicare fraud, charging 412 defendants in 41 federal districts involving $1.3 billion in false billings.
In 2015, San Diego-based Millennium Health, the largest toxicology lab in the nation, agreed to pay $256 million to settle federal claims of over billing.
In 2016, the federal government clamped down on reimbursement rates for urine tests, sending shock waves through the industry and contributing to Confirmatrix’s bankruptcy, according to court filings.
Why did bank loan money?
Still, the company billed $1 million for the tests in December, a month after the fed raid, court records reveal. And in one of the bankruptcy filings, new CEO Ann Durham listed Confirmatrix’s assets at between $10.6 million and $12.7 million, with up to $7 million in outstanding bills.
SunTrust Bank, which loaned $4 million to the company, complained Confirmatrix blew its deadlines to file a reorganization plan and reneged on a deal to make a $150,000 payment on its debt.
In filings, Confirmatrix claimed it needed more time to come up with a plan and get shareholders to buy into it. Baloney, SunTrust said.
“As an initial matter, the Debtor does not cite any actual progress in formulating a draft plan of reorganization, nor has a potential plan even been discussed with the Bank,” SunTrust said in a brief filed in May.
The bank’s attorneys said Confirmatrix paid SunTrust some money by selling “excess toxicology machines.”
The bank may be getting what it deserves here. SunTrust agreed to extend Confirmatrix a $6 million revolving line of credit in February 2016, when a Google search of the company would have turned up its shady connections.
I guess millions in inflated Medicaid payments for urine tests impresses bankers more than it does the taxpayers who pay for them. A SunTrust spokesman declined comment, citing the pending litigation.
Satary not deported
Satary doesn’t have any legal claim on Confirmatrix and Nue Medical, which changed its name to GNOS Medical and was originally incorporated under his then-teenage son’s name.
According to an order filed this week, Confirmatrix will go up for public auction next month at an amount that is expected to pay off creditors and shareholders. The company’s largest shareholder is a limited liability partnership called Premier Worldwide, whose principals are secret.
Here’s what I was able to find out: Premiere Worldwide’s registered agent is a lawyer named Andrew O’Hara, a board member at Confirmatrix. Until recently, O’Hara was the CEO of GNOS Medical where Satary’s son had been CFO and secretary.
Atlanta defense attorney Steve Sadow represents both Satary and his son, but he said he has received no new information about the federal investigation since December. The FBI and federal prosecutors offered no comment on the case, but it’s apparently ongoing.
The irony is that, while the federal government cracks down on undocumented immigrants, detaining mostly poor recent arrivals from war-torn countries, Satary, a convicted felon apparently under active investigation by the federal government, remains at large.
Why? Federal immigration officials say they would like to kick him out, but Israel won’t take him.
This column has been updated to reflect new information on the executive structure at GNOS.
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 firstname.lastname@example.org.