Federal prosecutors say three Chicago-area labs billed Medicare for over-the-counter COVID-19 tests that beneficiaries never ordered and never received.
Written: Dawson Briggs Wilder
Medical/Wellness Journalist for VBNRADIO
An Illinois man pleaded guilty on Oct. 30 to two counts of health care fraud in a scheme that, according to the Justice Department, billed Medicare $227 million for over-the-counter COVID-19 test kits that beneficiaries never requested and never received [1]. Medicare paid approximately $136 million on those claims, prosecutors said [1].
The defendant, Syed Murtuza Kablazada, 36, an Indian national living in Des Plaines, Illinois, agreed as part of his plea to forfeit more than $46 million in fraud proceeds that law enforcement had seized from ten bank accounts [1].
Background
At-home COVID-19 tests were an unusual item on a Medicare claim. Medicare generally does not cover or pay for over-the-counter products, but a temporary federal demonstration allowed it to cover these tests at no cost to patients [2]. A Centers for Medicare & Medicaid Services (CMS) fact sheet from April 2023 said people with health insurance could get up to eight over-the-counter tests per month with no out-of-pocket costs, and that the demonstration would end on May 11, 2023 [2]. Medicare's regional contractor told providers that, effective May 12, 2023, the tests were no longer a covered Medicare benefit [3].
A benefit designed to put free tests in people's hands also created a billing code that could be exploited by anyone willing to claim tests were shipped when they were not. That, prosecutors say, is what happened here.
The Allegations
The Justice Department's account, which it says is based on court documents and statements made in court, describes the scheme in four steps [1]:
Over six months beginning in January 2023, Kablazada and unnamed co-schemers acquired three Chicago-area laboratories: Chicago Care, V Care and Al-Ameer.
Kablazada paid approximately $11 million to a purported telemarketing company based in Pakistan to obtain personally identifiable information for hundreds of thousands of Medicare beneficiaries.
Using that information, he caused the laboratories to submit $227 million in false and fraudulent claims for test kits that he knew had never been requested by or shipped to the beneficiaries.
To conceal their involvement, he and his co-schemers paid themselves through overseas money transfers and unlicensed money transmitters, and used part of the proceeds to buy luxury vehicles.
The test kits never moved. The money, according to prosecutors, moved quite a lot.
The release does not identify the co-schemers or say whether anyone else has been charged [1].
The Plea and the Response
Kablazada pleaded guilty to two counts of health care fraud and faces a maximum penalty of 20 years in prison [1]. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors [1]. The forfeiture he agreed to, more than $46 million, is roughly a third of the approximately $136 million Medicare paid out [1].
The Justice Department's release does not include a statement from Kablazada or his attorney [1].
The plea was announced by Assistant Attorney General Colin M. McDonald of the Justice Department's National Fraud Enforcement Division, Special Agent in Charge Ryan Whalen of the FBI Chicago Field Office and Special Agent in Charge Thomas Ethridge of the HHS Office of Inspector General (HHS-OIG) [1]. The FBI and HHS-OIG investigated the case. Trial attorneys from the Fraud Division's Health Care Fraud Section are prosecuting it, with help from the U.S. Attorney's Office for the Northern District of Illinois [1].
What Comes Next
No sentencing date was given in the release; it says only that Kablazada will be sentenced at a later date [1].
The case is part of the Justice Department's Health Care Fraud Strike Force Program, which now has nine strike forces in federal districts across the country [1]. Since 2007, according to the department, the program has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion [1]. The department also says CMS and HHS-OIG are taking steps to hold providers accountable for their involvement in fraud schemes [1].
This article is for informational purposes only and is not medical or legal advice. Readers should consult their clinician with questions about their care.
References
U.S. Department of Justice, Office of Public Affairs. "Indian National Pleads Guilty to $227M Medicare Fraud." Press release 26-1302. Oct. 30, 2026. https://www.justice.gov/opa/pr/indian-national-pleads-guilty-227m-medicare-fraud
Centers for Medicare & Medicaid Services. "Coverage for COVID-19 Tests: What You Need to Know." April 2023. https://www.cms.gov/files/document/covid-over-counter-test-coverage.pdf
Noridian Healthcare Solutions (Medicare Administrative Contractor). "COVID-19 Over the Counter (OTC) Test Coverage Ends May 11, 2023." Last updated Apr. 5, 2023. https://med.noridianmedicare.com/web/jea/article-detail/-/view/10521/covid-19-over-the-counter-otc-test-coverage-ends-may-11-2023
