Twelve individuals from three states – three from Frisco – have been charged in a federal indictment returned in the Eastern District of Texas, announced U.S. Attorney Joseph D. Brown on Wednesday.
Nicolas Arroyo, 38, of Newport Coast, California, pleaded guilty to conspiracy to defraud the United States on Jan. 14, 2020 before U.S. Magistrate Judge Caroline Craven.
According to information presented in court, Arroyo was the CEO of a clinical laboratory when he conspired with others to pay and receive kickbacks in exchange for the referral of and arranging for health care business, specifically pharmacogenetic (PGx) tests. Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that effect how an individual patient metabolizes certain drugs. The illegal arrangement concerned the referral of PGx tests to clinical laboratories in Fountain Valley, California, Irvine, California, and San Diego, California.
More than $28 million in illegal kickback payments were exchanged by the defendants and others during the conspiracy. On Dec. 11, 2019, a federal grand jury returned an indictment in which Philip Lamb, 44, of Scottsdale, Arizona; Nicolas Arroyo, 38, of Newport Coast, California; Vincent Marchetti, Jr., 55, of Coronado, California; William Flowers, 55, of Houston, Texas; Steven Donofrio, 45, of Temecula, California; James J. Walker, Jr. a/k/a Jimmy Walker, 46, of Frisco; Timothy Armstrong, 62, of Frisco; Virginia Blake Herrin, 54, of Frisco; Patrick Ridgeway, 50, of Jackson, Mississippi; Chismere Mallard, 39, of McAllen, Texas; Ray W. Ng, 61, of Dallas, Texas; and Ashley Kretzschmar, 34, of Aledo, Texas; were indicted for conspiracy to commit illegal remunerations in violation of the Anti-Kickback Statute. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remunerations in exchange for the referral of or arranging for items or services payable under federal health care programs.
“We continue to see individuals in the healthcare industry creating illegal kickback arrangements, trying to cheat the system and turn healthcare decisions into financial decisions instead of what is best for the patient,” said United States Attorney Joseph D. Brown. “This must stop, and doctors should be aware of the emphasis that is being put on stopping these practices.”
Under federal statutes, Arroyo faces up to five years in federal prison at sentencing. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the FBI Dallas – Frisco Resident Agency, and the U.S. Department of Homeland Security, Homeland Security Investigations. It was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and L. Frank Coan, Jr.