Seattle — A shocking tale of corruption and greed has come to an end with the sentencing of Richard Reid, 53, a former co-owner and sales manager of defunct medical testing lab Northwest Physicians Laboratory (NWPL).
Reid was sentenced to two years in prison for five federal felonies connected to his scheme to profit from illegal kickbacks in the medical testing industry. He was convicted in March 2022, following a six-day jury trial.
According to prosecutors, Reid was the architect of a scheme to illegally profit on toxicology tests that were paid for by government insurance. The web of referrals and kickbacks led to significant profits for NWPL and its owners. Such illegal kick-backs simply inflate medical costs for the rest of us, said U.S. Attorney Nick Brown.
The activities of Bellevue-based Northwest Physicians Laboratory (NWPL) have been the subject of extensive civil and criminal litigation. Richard Reid was one of the owners and the Vice President of Sales for NWPL. Reid 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. This resulted in government payments to those two labs of more than $6.5 million.
According to records filed in the case between January 2013 and July 2015, two labs, that were not physician owned, made payments to NWPL in exchange for referrals of Medicare and TRICARE program business, in violation of the Anti-Kickback Statute. Paying remuneration to medical providers or provider-owned laboratories in exchange for referrals encourages providers to order medically unnecessary services. The Anti-Kickback Statute functions, in part, to discourage such behavior. NWPL was physician-owned, and for that reason could not test urine samples for patients covered by government health programs such as Medicare, Medicaid, and TRICARE.
Reid’s role was to hide the truth and keep the cover story in place by lying to his sales force, lying to providers, and sharing fraudulent opinion letters from attorneys. NWPL grew and the money – including illegal kickbacks – rolled in. The kickbacks increased as time went on, and totaled almost $5 million. As the proceeds of the crime rose, so did Reid’s monthly distributions — from $10,000 in 2013 to $50,000 in 2015.
Reid was convicted of one count of conspiracy to solicit and receive kickbacks involving health care programs and four counts of receipt of kickbacks. 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. NWPL has dissolved. To date, the labs and individuals involved in this investigation have paid more than $14 million to settle related civil allegations.
Reid’s sentencing culminates his part in a years-long investigation wherein he was convicted last year for actively orchestrating and personally benefiting from a scheme to corrupt and defraud the healthcare system, including the Department of Defense’s TRICARE program, said Bryan D. Denny, the Special Agent in Charge of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office.
DCIS will continue to work with its partners to root out fraudulent activities, like those in this particular investigation, Denny said. In addition to Reid, three other defendants have pleaded guilty and await sentencing. Former NWPL CEO Jae Lee was sentenced to two years in prison in May 2022. Kevin Puls, the former Executive Director of NWPL was sentenced to 90 days in prison and a year of supervised release.
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Key Facts
- State: Washington
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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