TEXARKANA, Texas – A Temecula, California man has pleaded guilty to federal violations related to a health care kickback scheme in the Eastern District of Texas, U.S. Attorney Damien M. Diggs announced today.
Steven Donofrio, 49, was found guilty by a jury on May 5, 2023, following a two-week trial before U.S. District Judge Robert W. Schroeder, III.
“This is the latest of many defendants in this case who have abused our health care system in the name of stealing taxpayer dollars and caused unnecessary medical procedures in the process,” said U.S. Attorney Damien M. Diggs. “Protecting citizens from physical and financial harm is always a top priority for law enforcement, and vermin like Donofrio who prey on vulnerable citizens will be brought to justice.”
“HHS/OIG’s reach is far and wide. Our agents and law enforcement partners will not be deterred by the scope of a health care fraud investigation or the location of its defendants,” said Jason E. Meadows, Special Agent in Charge of the US Department of Health and Human Services, Office of the Attorney General Inspector, Dallas Region. “Donofrio and others stole millions from the American taxpayer for medically unnecessary services, all to line the pockets of greedy people across the country. HHS/OIG and our partners remain laser-focused in our pursuit of those who use the Medicare trust fund as their piggy bank.”
“Illegal bribery schemes corrupt the healthcare system, causing billions of dollars in losses each year. They also directly affect patients who expect to receive quality care and be billed for legitimate services by their health care providers,” said FBI Dallas Special Agent in Charge Chad Yarbrough. “We will continue to work tirelessly with our law enforcement partners to hold those who commit healthcare fraud accountable and seek justice for patients who are harmed as a result of these schemes.”
According to information presented in court, Donofrio conspired with others to pay and receive kickbacks in exchange for referring and arranging health care, specifically pharmacogenetic (PGx) testing. Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that affect how an individual patient metabolizes certain drugs. The illegal agreement related to the routing of PGx tests to clinical laboratories in Fountain Valley, California; Irvine, California; and San Diego, California. More than $28 million in illegal bribes were exchanged by those involved in the conspiracy.
In December 2019, twelve individuals from three states were indicted for their roles in the bribery conspiracy. A federal grand jury in the Eastern District of Texas returned an indictment against Philip Lamb, 48, of Eagle, Colo.; Nicolas Arroyo, 41, of Tempe, Arizona; Vincent Marchetti, Jr., 58, of Coronado, Calif.; William Flowers, 58, of Houston, Texas; Steven Donofrio; James J. Walker, Jr., aka Jimmy Walker, 49, of Frisco, Texas; Timothy Armstrong, deceased, formerly of Frisco, Texas; Virginia Blake Herrin, 57, of Frisco, Texas; Patrick Ridgway, 53, of Jackson, Mississippi; Chismere Mallard, 42, of McAllen, Texas; Dr. Ray W. Ng, 65, of Dallas, Texas; and Ashley Kretzschmar, 37, of Aledo, Texas; for conspiracy to commit illegal embezzlement in violation of the Anti-Kickback Act.
Philip Lamb, Nicolas Arroyo, Jimmy Walker, Timothy Armstrong, Virginia Blake Herrin, Patrick Ridgway, Chismere Mallard and Ashley Kretschmar pleaded guilty before trial. Kimberly Willett, 61, of Friendswood, Texas, and Edwin Chad Isbell, 50, of Atascocita, Texas, also pleaded guilty to related charges.
Vincent Marchetti Jr. was found guilty by a jury on December 16, 2021, after a month-long trial. He was sentenced to 48 months in federal prison on August 30, 2022.
On April 25, 2022, Nicolas Arroyo was sentenced to 21 months in federal prison. On August 23, 2022, Kimberly Willett was sentenced to one year and one day in federal prison, and Patrick Ridgway was sentenced to three years of probation and ordered to pay a $100,000 fine.
The anti-kickback statute prohibits offering, paying, soliciting, or receiving gratuities in exchange for a referral or arranging or recommending the ordering of items or services payable under federal health care programs. Under federal law, violations of the anti-kickback statute are punishable by up to five years in federal prison.
This case was investigated by the US Department of Health and Human Services, the Office of the Inspector General and the Dallas-Frisco Field Office of the FBI. It was prosecuted by Assistant U.S. Attorneys Nathaniel S. Kummerfeld, Lukas Macicek and Adrian Garcia with the assistance of Assistant U.S. Attorneys Stefan E. Ostreicher, Jr., Brent Andrus and L. Frank Coan, Jr., and Special Assistant U.S. Attorney Laurel EP Simmons.