Atlanta lab executives accused in $13.7M Medicare scheme
ATLANTA - The federal government is suing two former executives of an Atlanta clinical laboratory, accusing them of using church events and senior living communities to generate millions of dollars in improper Medicare payments.
What we know:
The False Claims Act lawsuit names Jay Johnson, the former CEO and chief operating officer of Capstone Diagnostics, and Austin Whiles, the company’s former chief sales officer and vice president of business development. Several related businesses are also named.
Prosecutors allege the defendants caused Medicare to pay approximately $13.7 million for genetic and respiratory pathogen tests that were not medically necessary between 2019 and 2021.
Testing at churches and religious events
The backstory:
The first alleged scheme involved church health fairs and religious conferences.
According to the complaint, Johnson and Whiles arranged for people attending the events to be swabbed for large genetic testing panels that had not been requested by their doctors.
Prosecutors allege Johnson directed Capstone employees to use doctors’ names, signatures and standing orders without permission to make the tests appear properly ordered and medically necessary.
The complaint also alleges kickbacks were paid to conference organizers and independent marketers who generated testing business for Capstone.
Extra tests added to COVID-19 screenings
The second alleged scheme involved COVID-19 testing at senior living communities.
Prosecutors said Capstone added broad respiratory pathogen panels to the COVID-19 tests requested by the facilities, increasing the amount Medicare paid.
The lawsuit alleges the company improperly relied on community-wide standing orders, copied doctors’ signatures, used standardized diagnosis codes and allowed sales employees to enter medical orders instead of treating providers.
Federal officials said laboratory testing should be based on a patient’s medical needs, not the amount of money a company can collect.
Millions allegedly routed to others
Johnson allegedly transferred millions of dollars from the schemes to his now former wife, Haslock, according to the complaint. The government’s claims against Haslock seek the return of those funds under unjust enrichment and payment-by-mistake theories; she is not accused of participating in or knowing about the alleged scheme.
Whiles is accused of secretly routing about $4.75 million in volume-based sales commissions from independent marketers to himself.
The federal government previously reached a $14.3 million settlement with Capstone and its owner, Andrew Maloney. Capstone’s billing company, VitalAxis Inc., separately agreed to pay $300,479.
Whistleblower filed original lawsuit
Dig deeper:
Former Capstone laboratory manager Jesse Allen initially filed the case under the False Claims Act’s whistleblower provisions. Those rules allow private citizens to sue on behalf of the government and receive part of any money recovered.
The federal government intervened in the lawsuit Sept. 4.
Johnson also faces pending criminal charges stemming from the alleged scheme. A federal grand jury indicted him in December 2025 on charges including health care fraud, wire fraud and conspiracy to pay and receive kickbacks.
The civil allegations and criminal charges have not been proven in court.
What they're saying:
Federal prosecutors condemned the alleged million-dollar scheme during a review of the civil complaint.
Describing Johnson and Whiles’s alleged scheme, Assistant U.S. Attorney Neeli Ben-David stated, "I would say it was pretty brazen."
"They took advantage of the government and they took advantage of the taxpayers," Ben-David noted that the executives used event access to gather swabs from attendees as a basis for fraudulent billing.
According to federal prosecutors, the scheme continued despite clear legal boundaries.
"There’s a lot of evidence that they knew that their scheme was illegal but went forward anyway," Ben-David added concerning Johnson and Whiles’s knowledge. "They were eager to bring in the amount of money this type of scheme would bring in."
Attempts to reach attorneys for Johnson and Haslock were not immediately successful. A phone call to Whiles was disconnected by an individual who stated he was unavailable.
Dig deeper:
Sarah Haslock is not alleged to have been involved in any health care fraud scheme or to have had any knowledge of it. The government’s claims against her seek only the return of funds received from Johnson, her then-husband, under unjust enrichment and payment-by-mistake theories.