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Bellevue CEO Sentenced for Medical Kickback Scheme
Seattle – Jae Lee, 51, of Bellevue, Washington, the former Chief Executive Officer of Northwest Physicians Laboratory (NWPL), was sentenced to two years in prison and $7.6 million in restitution for conspiracy to solicit kickbacks, announced U.S. Attorney Nick Brown.
Between 2013 and 2015, Lee conspired with others to get kickbacks from medical testing labs in exchange for government testing business referred to the labs. The scheme resulted in government payments to two labs of more than $6.5 million.
“Mr. Lee knowingly set up a scheme to profit by referring government health care business to other labs – even more disturbing he tried to play one lab off against another to increase his ill-gotten gain,” said U.S. Attorney Nick Brown. “Such conduct increases healthcare costs for all of us. This case should be a warning to others who may consider such schemes.”
The company, NWPL, pleaded guilty in February 2021 and was sentenced to pay $8,114,417 in restitution joint and several with the other criminal defendants. To date, the labs and individuals involved in this investigation have agreed to pay more than $14 million to settle related civil allegations.
“Mr. Lee’s sentencing culminates his illicit, greed-driven scheme to defraud federal healthcare programs, including the Department of Defense’s TRICARE program,” said Bryan D. Denny, Special Agent in Charge for the Department of Defense Office of Inspector General, Defense Criminal Investigative Service, Western Field Office.
Lee received more than $800,000 in distributions from NWPL’s commingled funds. The crime was based purely on Lee and the others’ greed, as prosecutors wrote in their sentencing memo.
“Individuals who participate in kickback schemes do so at the risk of undermining the integrity of federal health care programs,” said Special Agent in Charge Steven J. Ryan with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to work to prevent such schemes in the future.”
The activities of Bellevue-based Northwest Physicians Laboratory (NWPL) have been the subject of extensive civil and criminal litigation. Lee helped NWPL obtain more than $3.7 million in kickback payments by steering urine drug test specimens to two labs that could bill the government for testing.
“The NWPL business model was profitable. It could afford to pay doctors thousands of dollars a month in dividends. It could afford to pay healthy distributions to its owners. This did not satisfy Mr. Lee. He was determined to maximize profits even if it meant breaking the law,” prosecutors wrote in their sentencing memo.
Jae Lee, the former CEO of Northwest Physicians Laboratory, was sentenced to two years in prison and $7.6 million in restitution for conspiracy to solicit kickbacks, announced U.S. Attorney Nick Brown.
The kickback payments to NWPL were commingled with other company revenue. In order to conceal the payment of the kickbacks, Lee and other co-conspirators involved described the fees as being for marketing services; however, no marketing services were performed.
The scheme was large and clearly illegal, noted U.S. District Judge John C. Coughenour in pronouncing sentence.
The case should serve as a warning to others who may consider similar schemes, as U.S. Attorney Nick Brown emphasized in a statement.
Key Facts
- State: Washington
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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