Texas hospital CEO pleads guilty to role in multimillion-dollar pass-through payment scheme

The former CEO of a small Texas Hospital has pleaded guilty to fraud. (AndreyPopov/iStock)

The former CEO of a small Texas hospital pleaded guilty to defrauding three of the state’s largest payers out of millions through a laboratory billing scheme.

The Department of Justice announced that Harris Brooks, former CEO of Palo Pinto General Hospital in Mineral Wells, Texas, will face a prison sentence of up to five years and restitution payments for his role in the scheme.

Brooks and co-conspirators took advantage of the hospital’s in-network deals with Cigna Texas, BlueCross BlueShield of Texas and UnitedHealthcare to use pass-through billing for laboratory services.


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Brooks and other participants and the scheme submitted billing for allergy and genetic tests they said were performed on-site at PPGH, according to DOJ. However, the hospital did not actually own the equipment for such tests, and patients were provided these services elsewhere.

RELATED: Vanguard to pay $18M to settle allegations it defrauded Medicare, Tennessee Medicaid

All told, Brooks and others submitted claims for $55 million worth of these tests, the majority of which were fraudulent, DOJ said. PPGH earned $9 million in improper payments. Fraudulent charges were submitted between September 2017 and June 2018.

Patients at the hospital were not aware of the claims, according to DOJ.

The case echoes a similar fraud ruling, also in Texas, from late February, in which a physician at and the former owner of the now-defunct Red Oak hospital conspired to submit fraudulent claims for tests that weren’t medically necessary.

Harcharan Narang, M.D., an internal medicine physician at the closed hospital, and Dayakar Moparty, its former CEO, were found guilty by a federal jury on multiple counts of fraud, conspiracy to commit fraud and money laundering as part of the $20 million billing scheme.

The two men face up to 10 years in prison for each of 17 fraud counts and up to 20 years for each of the three money laundering counts.

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