Department of Justice – Ronald Coburn and Erica Baker—the owner-CEO and the compliance officer of Kentucky toxicology lab LabTox—have pleaded guilt to a scheme in which they fraudulently billed Medicare and Medicaid for medically unnecessary drug tests.
Baker recruited a company called Blue Waters Assessment and Testing Services to refer court-ordered drug testing to LabTox. As these tests were performed purely for judicial purposes, they were not medically necessary, but from 2019 to 2021, Coburn’s company nonetheless billed Kentucky Medicaid and Medicare for them, for over $1.86 million. Meanwhile, Baker and Coburn paid kickbacks to non-medical substance abuse recovery programs—typically faith-based residential programs or homeless shelters—to use LabTox for tests to monitor their clients’ drug use, which likewise did not qualify as medically necessary. The company received over $930,000 in additional reimbursement for these. Coburn also pleaded guilty to tax evasion charges.
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