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Law360 (March 30, 2020, 6:30 PM EDT) -- A Georgia man charged with taking kickbacks to gather Medicare patients for unnecessary COVID-19 testing was ordered detained on Monday pending proof that he owns the $1.3 million home that could be used for bail.
Erik Santos was remanded into federal custody on Monday after a judge rejected a bid to use his luxury home in the Château Élan gated community in Braselton, Georgia, to avoid detention on conspiracy charges. Federal prosecutors in New Jersey allege that Santos had been taking kickbacks to refer patients for pricey cancer screenings, but that he viewed the pandemic as an opportunity.
According to the complaint, Santos had been dealing with a government cooperator since November on a scheme to refer candidates for genetic testing, a recent enforcement focus for the Department of Justice. Santos allegedly made a $1,750 kickback per patient referred, in violation of Medicare rules.
The cooperator registered a company in New Jersey for use in the scheme, and some of the Medicare beneficiaries who were tested live in the state, prosecutors say.
In mid-March, prosecutors allege that Santos turned to coronavirus testing, allegedly telling the cooperator that he had put other work on hold because "everybody has been chasing the COVID dollar bird."
"While there are people going through what they are going through, you can either go bankrupt or you can prosper," Santos allegedly said on a recorded call.
Prosecutors say Santos specifically sought to recruit asymptomatic patients who were likely to test negative for the novel coronavirus so that the laboratory he worked with would then run a full test for other respiratory ailments.
Santos operated on the assumption that while the coronavirus test only carried around a $35 reimbursement from Medicare, the respiratory tests would cost the government more. A lab could bill Medicare $650 for the full array of respiratory tests run on patients who tested negative for COVID-19, whereas the limited tests that would be run if a patient tested positive for COVID-19 were reimbursed at around $300, according to the complaint. Patients who tested negative therefore net a bigger kickback to Santos, prosecutors said.
At a detention hearing in Atlanta on Monday, Assistant U.S. Attorney Jennifer Keen told Magistrate Judge Alan J. Baverman that prosecutors in New Jersey wanted Santos detained pending trial given the seriousness of the crime.
"Even people who are actually symptomatic are having a hard time getting these precious tests, and yet Mr. Santos has conspired to submit tests where he believes that the patients are asymptomatic and likely not to test positive in order to get a bigger payout," Keen said.
As an alternative, prosecutors sought home incarceration and the removal of all phone and internet access from Santos' home.
Federal defender Kimberly Sharkey, who was appointed to represent Santos during the hearing, said that to remove phone and internet from the home would harm Santos' wife and children who rely on those communication channels while following the social distancing protocols put in place to slow the spread of the coronavirus.
Sharkey argued that Santos was not a flight risk and urged the judge to impose $50,000 unsecured bond and a condition that he cannot continue billing Medicare, as recommended by the pretrial services office.
"The biggest reason he is not a flight risk is his family," Sharkey said.
Judge Baverman said he would be willing to release Santos to house arrest after receiving proof that that he owned the house and it could be seized if he jumped bail. The judge said Santos would also be prohibited from billing any insurer or possessing any medical records other than those of his family.
Law enforcement announcing the case on Monday had strong words for those who would profit from the pandemic. Gregory W. Ehrie, FBI Special Agent-in-Charge in Newark, said in a statement that Santos' case "takes things to a new low."
"His profiteering is akin to receiving blood money," Ehrie said.
Sharkey did not immediately return a request for comment on Monday afternoon.
The government is represented by Sean M. Sherman of the U.S. Attorney's Office for the District of New Jersey and Jennifer Keen the U.S. Attorney's Office for the Northern District of Georgia.
Santos is represented by Kimberly Lynn Sharkey of the Federal Defender Program for the Northern District of Georgia.
The case is U.S. v. Santos, case number 2:20-mj-9096, in U.S. District Court for the District of New Jersey.
--Editing by Michael Watanabe.
For a reprint of this article, please contact reprints@law360.com.
