Texas Doctor Convicted in $36 Million Tricare Fraud Scheme

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Pipetting technique is used to prepare patient DNA for testing.
A multi-channel pipetting technique is used to prepare patient DNA for testing. (U.S. Air Force photo by Kemberly Groue)

A doctor in Texas was convicted this week of defrauding Tricare in a scheme that involved luring patients into taking unnecessary medical tests in exchange for gift cards.

Sekhar Rao, 51, who was the medical director of an outpatient toxicology testing facility called ADAR Group LLC, was convicted by a federal jury of two counts of health care fraud, the Justice Department said in a news release Tuesday.

Rao and others charged in the scheme were accused of filing roughly $36 million in false and fraudulent claims to Tricare between May 2014 and June 2016, according to the indictment against them.

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He was found not guilty on a third charge of conspiracy to commit health care fraud, according to court documents.

Rao is scheduled to be sentenced in March and faces a maximum 20 years in prison, according to the news release.

The owner and operator of ADAR Group, who were sentenced for their roles in the scheme in 2018, ran the facility "solely to achieve the objective of their scheme to defraud: to unlawfully enrich themselves by submitting false and fraudulent claims for health care benefits," the Justice Department said in Rao's indictment.

Rao specifically was accused of authorizing toxicology and genetic testing, including cancer genetic testing, for Tricare beneficiaries without seeing, speaking to or otherwise treating patients, and without incorporating the test results into ongoing treatment.

Tricare beneficiaries were enticed into giving urine or saliva samples for the tests in exchange for $50 Walmart gift cards and, in some cases, patients did not know what they were being tested for, according to the Justice Department.

To ensure Tricare would pay out, false diagnosis codes were placed on claims forms, such as writing "malignant neoplasm of lip" and "alcohol abuse, uncomplicated" for beneficiaries who had neither a history of cancer nor alcoholism, the Justice Department said in the indictment.

Rao and another doctor were paid "kickbacks" of $6,000 to $8,000 per month to order the unnecessary tests, according to the indictment.

Even though Rao and the other doctor were hired as medical directors, they "never visited ADAR Group and had no contact with patients," their indictment said.

The other doctor, Vinay Parameswara, pleaded guilty to health care fraud last year, according to court documents.

Rao and Parameswara were among 35 people from several different laboratories and telehealth companies the Justice Department charged in 2019 on allegations of ordering fraudulent cancer genetic testing in what the agency described as "one of the largest health care fraud schemes ever charged."

-- Rebecca Kheel can be reached at rebecca.kheel@military.com. Follow her on Twitter @reporterkheel.

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