How a national fraud cost Medicare millions before a Hilton Head doctor exposed it
Dr. Michael Mayes sits in his Hilton Head Island home, ready to tell his story.
But he’s stiff.
His attorney is on speaker phone.
They say they can’t name names.
Mayes, an internal medicine physician, has reason to be uneasy.
Since 2010, he’s worked mostly in secret to gather information, turn it over to the government and help build a federal case to expose national Medicare fraud that affected his own patients on Hilton Head — and those around South Carolina and the nation too.
His work blew the lid on a national scam where physicians ordered panels of lab tests that were not always medically necessary for their patients and received illegal kickbacks. As a result, Medicare, and other government healthcare programs, paid upward of $500 million in fraudulent claims. If Mayes hadn’t risked his career, relationships with fellow physicians and future job prospects, the fraud could still be going on today.
“It’s uncommon for anyone to take the risk (to be a whistleblower),” said Mayes’ attorney, Peter Chatfield. “Dr. Mayes has really put himself out there.”
Mayes’ whistleblower lawsuit, the first of three, was filed under seal in 2011 and later taken over by the federal government. His name was not revealed until 2015 when the first settlement in the case was announced.
He was the only physician to come forward.
Now that the trial has ended, he’s ready to talk openly about blowing the whistle.
How it began
For Mayes, it all began in 2009.
That’s when Berkeley HeartLab approached Hilton Head’s Heritage Medical Partners — a medical practice where Mayes was a co-owner and worked until 2014.
Company representatives offered Mayes and other physicians $11.50 per test to order advanced lipid profiles through their company. The test would look at the particle sizes of good and bad cholesterol.
The science was new, Mayes said, but it assumed that larger particle sizes of good cholesterol were more likely to remove plaque in the arteries, and that smaller particle sizes of bad cholesterol were more likely to build up plaque, increasing a person’s risk for heart disease.
The science would later prove the tests weren’t useful, but at the time, he thought the information could help patients.
Physicians at Heritage ordered tests from Berkeley — and later other companies — that billed Medicare, other government health care programs and private insurance companies.
Often, these tests were ordered in bundles that included some medically unnecessary tests, Mayes said. The panel of tests could also change without physicians knowing, he said.
The companies were then paid and typically distributed around $10 to $17 to physicians who ordered the tests, according to a news release from the South Carolina U.S. Attorney’s Office. Some physicians were receiving up to $30 per patient, Mayes said. Doctors were repeatedly assured the payments were legal, Mayes said.
That’s why Mayes doesn’t blame any physicians and won’t name them — they may not have known they were participating in fraud.
But something about being paid for ordering blood work didn’t sit well with Mayes from the start, he said.
The company claimed the payments were processing and handling fees for drawing and storing the blood.
The government, however, would later say they were kickbacks, and a violation of the federal anti-kickback statute, which prohibits laboratories from “offering or paying any renumeration, in cash or kind, directly or indirectly, to induce or influence physicians” to order tests that “may be paid for by federal health care programs,” according to the federal complaint.
If a private insurance company was billed, and a patient had a copay or deductible, often these laboratories weren’t “balance billing” patients, Mayes said, and therefore, weren’t charging patients for the tests, even if they should have been.
That way, Mayes believes, patients wouldn’t object to the tests, which ranged from about $30 to a couple hundred dollars or more, with the entire panel of tests totaling nearly $1,000.
‘I had a dilemma’
Mayes never planned to go into medicine.
In fact, up until the end of his junior year of college in 1988, he was on a fast track to Wall Street.
The marketing, accounting and finance student of the Wharton School at the University of Pennsylvania had always been good with statistics and math.
As a kid, he’d memorize sports stats. He took every math course his small town high school in New Holland, Pennsylvania, offered, and then opted to take Calculus 1 and 2 at a local college in the evenings.
As a junior in high school, he became fascinated with the stock market, and decided he wanted to be an investment banker. At the end of his junior year in college, that dream changed when his grandfather died suddenly.
Clair Armstrong was in his early 80s when he was hospitalized for a hip fracture. While in the hospital, he fell and fractured the other hip. Then he got a blood clot in his leg that traveled to his lungs.
That’s what killed him.
Mayes was close to his grandfather and was shocked by his death.
The triple major said it startled him enough to reevaluate the course of his life.
“I thought, at the end of my life, do I want to have contributed to moving around a lot of money and investing a lot of money for other people?” Mayes said in a recent interview. “Or would I rather say I contributed to someone’s health and helped them to live longer, and things like that?”
He dropped his marketing and accounting majors and picked up pre-medicine. He’d attend the Temple University School of Medicine in Pennsylvania, and would finish first in his residency class in 1997.
He made his way to Hilton Head Island in 1999, when he began his second job at Heritage Medical Partners, which has since disbanded. Mayes had never been to Hilton Head himself, but his parents, who now live in Bluffton, had traveled to the island before and talked about how beautiful it was, he said.
He met his wife Lori, a registered nurse, on the island, and the two now live with their 15-year-old Maltese, Sammie.
Being a doctor, he said, requires analysis and other skills that transferred from his mathematical background. Patients presented him with problems, and it was his job to figure out what those problems were, whether they were related and find the best solution.
His priority is the well being of his patients, he says.
He gives out his cell phone, home phone and email to his patients, just in case they need to reach him. Getting text messages throughout the day is common.
And in mid-2010, a patient came to Mayes asking for an explanation.
He and his wife had several tests done with recent blood work, and he didn’t quite understand them.
When Mayes looked over the couple’s explanation of benefits, he learned the bundle of tests was costing Medicare close to $1,000.
Among the panel was a Vitamin D level test and a genetic test looking at how the patients metabolized the blood thinner, Plavix.
But Mayes had never ordered these tests.
Neither patient was on Plavix, nor would they be.
Mayes made sure no one else had accidentally added those test orders. No one had.
But two cases didn’t make a pattern, he said. So he asked other patients to bring in their explanation of benefits after blood work. He found these tests continued to be performed on patients without his knowledge by Berkeley.
He asked a representative for the company about the tests, who assured him not to worry about it. After all, the patients weren’t being charged, and Mayes was being paid for it.
But Mayes knew Medicare was footing the bill. And with his business background, he couldn’t help but dwell on the fact that the solvency of Medicare was at risk if these claims and payments continued. And he assumed — correctly — this was going on across the country. At one point, several thousand physicians were involved, Mayes said.
With research, Mayes found Medicare only allowed for a $3 payment to physicians, and anything beyond that could be perceived as an inducement to order the tests, he said.
He went back to Berkeley with that information, and was reassured it was a legal payment.
He asked them what these tests were costing Medicare, and the representative — whom he won’t name — didn’t know.
“At that point I had a dilemma,” Mayes said. “Do I do nothing with this information?”
He decided he would stop ordering the tests and urged his partners to do the same.
Michele Gaudette, who joined Heritage as the office manager in 2012, later saw the checks being sent to the practice from other labs, and said the physicians were taking in thousands of dollars a month for ordering tests.
Before filing suit in 2011, Mayes would return all the money he received — around $15,000 — to an escrow account set up by his attorney, where it remains today.
‘I’m not the whistleblower’
In December 2010, Mayes took his concerns to Chatfield, a D.C. attorney with Phillips and Cohen who had experience in whistleblower lawsuits.
Then in May 2011, Mayes and Chatfield laid out their case to the U.S. Attorneys office in Charleston.
By June 2011, they had filed a lawsuit, alleging Berkeley, BlueWave Healthcare Consultants and LipoScience “routinely” paid kickbacks to physicians to convince them to order tests. LipoScience was later dropped from the suit, because what it had done was “significantly less egregious” than the others, Chatfield said.
Later, Health Diagnostic Laboratory, Singulex and Quest Diagnostics — a company that purchased Berkeley in 2011 — were added to the suit.
In January 2012, Quest Diagnostics decided to stop offering the payments to physicians.
When the payments stopped, Mayes noticed physicians stopped ordering the tests.
“Once they stopped paying for the tests, the number of tests ordered was drastically reduced,” Gaudette said. “In my opinion, money had a lot to do with it.”
According to the federal complaint, Quest then tried to get doctors to continue ordering the tests by offering to pay phlebotomists’ salaries and leasing office space from the practices, among other things.
Orders continued to dwindle.
But that changed when Mayes’ colleague was approached by a cardiologist at a luncheon in July 2012. The cardiologist claimed two labs — Health Diagnostic Laboratory and Singulex — were paying him $30 to order tests through BlueWave, a marketing company founded by two ex-Berkeley employees, Mayes said.
The cardiologist said his practice was bringing in $17,000 a month by ordering the tests, or about $200,000 a year.
One of Mayes’ partners then contacted BlueWave and signed on to order from the two labs, Mayes said. But Mayes didn’t.
Mayes’ name was still under seal, but coworkers became suspicious of him after they were issued a subpoena by the government in May 2013 regarding the tests.
It didn’t help that Mayes continually urged them to stop ordering tests — or at least not accept the payments — because he told them he believed they were illegal.
Mayes’ partners retained an attorney, and became more suspicious when he refused to use the same one, he said.
One morning, before work, Mayes was in the break room when a partner walked in and asked him directly if he was the whistleblower, he said.
No, Mayes answered, he wasn’t.
“I hope not,” Mayes remembers his partner saying. “Because things never turn out well for those that tell on others.”
Calls to Mayes’ former partners seeking comment were not returned.
In June 2014, the Office of Inspector General issued a special fraud alert about these payments to physicians.
A month later, Mayes left Heritage to start a solo practice on Bill Fries Drive on the island’s north end, where he continues to work today.
He knew when his name was made public he’d have a hard time getting into a practice with other physicians again — an expected consequence of coming forward.
Not many people would take a chance on hiring a whistleblower, he said.
In 2015, Health Diagnostic Laboratory and Singulex agreed to pay $48.5 million to settle claims that they violated the False Claims Act.
And in 2016, Quest Diagnostics agreed to pay $6 million to settle the same allegations.
Mayes testified as a witness for the government — the only whistleblower to do so — in January 2018 in Charleston. Three individuals associated with Health Diagnostic Laboratory and BlueWave chose not to settle and were tried by jury. The jury sided with the government after the two-week trial. In May, a $114 million judgment against the three was announced.
Making patients aware
Mayes and the other whistleblowers are entitled to share 15 to 25 percent of the government’s $114 million judgment, Chatfield said. Because the case went to trial, it will likely be on the higher end.
But Mayes isn’t totally sure the government will collect it all.
He’s received some of the money owed to him from the previous settlements, but has yet to receive any from the judgment. Mayes would not say how much he’s collected.
Health Diagnostic Laboratory filed for bankruptcy, and trustees have since filed suit against individual physicians who received a “significant” amount of money from the kickbacks, Mayes said.
Mayes fears he may be subpoenaed to testify against physicians.
He doesn’t want to — he still doesn’t blame them.
When asked if it was all worth it, Mayes paused, but said it was.
And the judgment and settlements the government is receiving is “only a small piece of the savings,” Chatfield said. Had these companies not been stopped, the government would have continued to lose “hundreds of millions a year.”
Mayes, and the other whistleblowers, helped put an end to the scheme.
“Dr. Mayes is extremely ethical and honest,” Gaudette said. “And he’s an extremely good physician.”
Part of choosing to talk about the case, Mayes said, is because he believes patients should be aware of fraud, and those who commit it should be held responsible.
He encourages people to ask their doctors questions about tests they don’t understand, or about tests that seem to be unnecessarily expensive.
“I think one of the penalties for those that commit these crimes should be the public notification of their crime,” Mayes said. “It’s not always publicized for people to know. The more that gets publicized, the more that patients are informed decision-makers.”
Tips for spotting fraud
According to Medicare.gov, here are a few precautions patients can take to protect themselves from fraud:
▪ Save dates, receipts and statements for healthcare services you receive.
▪ Compare your records with statements from Medicare to make sure the services and dates match up. If those records don’t match, it’s possible Medicare was billed for services you didn’t receive.
▪ If a charge seems incorrect, call the provider’s office to inquire about it.
▪ If you suspect there is Medicare fraud, report it online or by calling 1-800-633-4227.