Miami entrepreneur, others indicted in alleged $1.4 billion scheme to route lab tests to rural hospitals for higher pay

Miami entrepreneur Jorge Perez and nine others have been indicted for allegedly scamming insurers by fraudulently routing lab services bills through rural hospitals that are allowed to charge higher rates. Perez owned, co-owned, had a financial stake in, or helped manage over a dozen hospitals, but most have since declared bankruptcy or closed.

"The indictment, filed in U.S. District Court in Jacksonville, Florida, alleges Perez and the other defendants sought out struggling rural hospitals and then contracted with outside labs, in far-off cities and states, to process blood and urine tests for people who never set foot in the hospitals. Insurers were billed using the higher rates allowed for the rural hospitals," Lauren Weber and Barbara Ostrov report for Kaiser Health News. "Perez and the other defendants took in $400 million since 2015, according to the indictment. Many of the hospitals run or managed by Perez’s Empower companies have since failed as they ran out of money when insurers refused to pay for the suspect billing. Half of the nation’s rural hospital bankruptcies in 2019 were affiliated with his empire."

The insurers may not be the only possible victims. A former employee at one of Perez's hospitals told KHN that "money was so tight under Perez’s management of her former hospital that the electricity was shut off at least twice and staffers had to bring in their own supplies," Weber and Ostrov report. "She said she is owed about $12,000 in back pay, as well as money for uncovered dental expenses and a workplace injury that would have been covered had employees’ insurance or workers’ compensation premiums been paid."