A Baton Rouge clinic owner was part of a scheme to push patients to take cancer tests they didn't need, defrauding taxpayers of more than $127 million, prosecutors said.
Now, after pleading guilty, he will serve two years and eight months in federal prison, a federal judge ruled Tuesday.
Kevin Bradley Hanley, 47, was one of six men indicted for facilitating a Medicare scam to designed to infuse money into his Sherwood Forest testing center, Acadian Diagnostic Laboratories.
Hanley pleaded guilty in January 2020 to a federal conspiracy charge, acknowledging he paid kickbacks to at least three other companies that recruited Medicare beneficiaries and referred them to his lab for testing as part of the fraudulent operation.
Between March 2018 and 2019, the companies conspired to submit $127.4 million worth of bills and invoices to Medicare. They managed to receive $21.3 million in reimbursements through the federal health care program, prosecutors said.
Authorities were only able to recover about $1.5 million.
During a hearing Tuesday morning inside the U.S. Middle District Courthouse in Baton Rouge, U.S. District Judge Brian Jackson imposed the 32-month prison sentence. He fined Hanley, a Prairieville man, $20,000 and gave him two years of supervised released after finishes his stint behind bars.
Jackson also ordered Hanley to pay more than $21.3 million in restitution to the Centers for Medicare and Medicaid Services, the government agency that administers the Medicare program.
“Somebody’s got to be accountable to the taxpayers for this crime,” the judge said. “It is shameful what you did, $20 million is a significant sum of money for taxpayers. Can you imagine the number of schoolchildren — even in your home parish Ascension — that could’ve been fed by $20 million?”
Jackson ordered Hanley to turn himself in to federal prison officials by Oct. 7.
Judge Jackson said the case illustrated a “gross inadequacy” in federal sentencing guidelines, which did not account for the impact the fraud had on elderly and disabled patients being lied to about their health prognoses.
“This is not a victimless crime. Not just the government agencies involved, but there were a lot of individuals who suffered because of your greed,” he told Hanley. For someone to be told, because of a scheme like this, that you may have cancer or you may have a life-threatening disease. The psychological and emotional toll that that places on people, is just unconscionable.”
How the scam worked
According to court documents, Hanley was a co-owner and the chief financial officer of Acadian Diagnostics. His brother-in-law, Terry Steven Wilks Jr., was the CEO.
Wilks pleaded guilty to conspiracy to defraud the United States in April 2023 and a federal judge in September sentenced him the three years in prison. Wilks was also ordered to pay just over $5 million in restitution, according to court records.
Prosecutors said Hanley signed several documents to enroll Acadian Diagnostics into the Medicare program. In doing so, he agreed to abide by the feds' anti-kickback statutes.
But he and two men who owned health care businesses in other states worked in tandem to carry out the scam, prosecutors said.
Mark Thomas Allen — owner of Archer Diagnostics, a marketing company in South Carolina — found Medicare recipients and sold them on the cancer genetic tests Hanley’s lab offered, investigators said.
The tests use DNA sequencing to detect mutations in genes, which can serve as an indicator for patients at risk of developing cancer in the future. Prosecutors said Allen, Hanley and a third co-conspirator who wasn’t named in the indictments told patients who weren’t at risk that they needed to take the diagnostic test so Hanley could submit Medicare bills that were unnecessary.
Allen pleaded guilty to a count of conspiracy to commit health care fraud in November 2021. Assistant U.S. Attorney Justin Woodard on Tuesday said he’s yet to be sentenced for his role in the operation.
“The fraud itself was just egregious. It was such a waste of taxpayer dollars for medical services that could’ve gone to people who really needed them,” Woodard said.
The prosecutor said Hanley has cooperated with the feds since he was indicted and was repentant for his actions. Hanley apologized to the judge and said the past five years living under the cloud of federal prosecution have been a struggle for him and his family.
“I’m humbled and ashamed. Obviously, I’m very apologetic,” Hanley said. “I want to ask for leniency. I want the opportunity to make amends, not only to my family but to society as a whole. I have a lot to offer. I have a lot of opportunity in front of me. I just want the chance to make things right. And I apologize to be standing in front of you today, your honor.”