Guilty Plea in $57 Million Addiction Center Money Laundering Scheme

Deborah Brauser

July 12, 2019

A Florida owner of a treatment center for substance abuse has pled guilty to money laundering in connection with a lab-test "pass through" billing scheme, the US Department of Justice (DOJ) has announced.

Kyle Ryan Marcotte, owner of the facility in Jacksonville, Florida, pled guilty before a judge in Florida to one count of conspiracy to commit money laundering.

In exchange for 40% of insurance reimbursements, Marcotte sent treatment-center patients' samples for urine drug testing (UDT) to a lab owner in the same state. The lab owner had additional partnerships with managers of two rural hospitals in Florida to have the testing billed to private insurers through the hospitals in order to receive favorable reimbursement rates under their in-network contracts.

The two rural hospitals were Campbellton-Graceville Hospital and Regional General Hospital Williston.

As part of his guilty plea, Marcotte also admitted to brokering additional arrangements with other substance abuse treatment centers. In this scheme, these additional centers also billed the two rural hospitals for their UDTs. This led to 10% of subsequent insurance reimbursements being given to Marcotte and 30% given to the treatment centers.

After the lab owner acquired other rural hospitals, including Chestatee Regional Hospital in Georgia, Marcotte continued supplying urine samples from his facility and other centers to be sent out for testing through the same lab, and then billing through all of the hospitals in order for him to receive a percentage of the reimbursements.

These reimbursements were transferred between the hospitals to the lab and then to two Marcotte-controlled companies, North Florida Labs and KTL Labs. A portion of the reimbursements was funnelled through KTL to provide kickbacks to the various treatment centers' owners and to Marcotte himself in order to purchase real estate and "items of real property," the DOJ said in a press release.

"Marcotte caused $50 million in payments to be made from KTL Lab's bank to at least 88 companies and individuals," the agency added. "The total amount of money that was part of the money laundering scheme was $57.3 million."

The announcement was made by Brian Benczkowski, assistant attorney general in the Justice Department's Criminal Division, and Maria Chapa Lopez, US attorney in the Middle District of Florida, along with agents from the FBI's Jacksonville field office, US Office of Personnel Management-Office of Inspector General, US Department of Labor-Office of Inspector General, and the Amtrak Office of Inspector General.

Marcotte agreed to a forfeiture judgment of more than $10.2 million as part of his guilty plea. Sentencing has not yet been scheduled.

Marcotte, according to the Jacksonville Daily Record, was a principal owner in Beaches Recovery Services. The newspaper noted that he could be sentenced to up to 20 years in prison.

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