Baldwin Labs owner pleads guilty to multi-million dollar COVID fraud

MOBILE, Alabama (WALA) – The owner of a Spanish Fort lab pleaded guilty Wednesday to conspiring to defraud Medicare of millions of dollars through fraudulent billing, including thousands of dead people.

James Matthews Thornton “Bo” Potter pleaded guilty to a single count of conspiracy to violate the federal Anti-Kickback Act. The maximum penalty is five years in prison, although prosecutors agreed to recommend leniency. His sentencing is scheduled for April 30.

Potter’s attorney, Josh Briskman, said he expected sentencing guidelines to call for a prison term in the 2.5-year range and that he hoped for a lighter sentence. He said his client believes a guilty plea would be best for his family.

“It was a difficult decision for Mr. Potter,” he said. “It limits his influence.”

According to Potter’s written plea agreement, he co-owns labs in Spanish Fort and Birmingham. Although the company is listed as Lab-1 and Lab-2 in the guilty plea, the Baldwin County business is identified as Gulf Coast Molecular Laboratories in a related forfeiture lawsuit.

The plea document states that in late 2022 or early 2023, co-conspirator Brian Coutugno introduced Potter to an individual identified as Person-1. Although he never met in person, Potter agreed to pay Coutugno kickbacks for the “packages of lead” the conspirators used to bill Medicare through the two labs. According to court records, he and Individual-1 transferred more than $8 million to a bank account controlled by Coutugno.

The seizure complaint notes that Medicare reimbursements for the test kits totaled more than $13.8 million — 99 percent of all Medicare reimbursements. Federal authorities have launched an investigation into receiving thousands of complaints against Gulf Coast Molecular Laboratories from Medicare recipients who claimed they received COVID-19 testing kits they did not request.

Coutugno, who has a criminal record, pleaded guilty in April to participating in the Baldwin County scheme. He is awaiting sentencing. In 1991, he pleaded guilty to a federal cocaine charge and was sentenced to 10 years and a month in prison, according to court records.

Prosecutors alleged that the defendants took advantage of a federal program to provide free COVID-19 testing kits to Medicare recipients at a cost of $94.08 per kit. But the federal government required beneficiaries to request the kits.

The packages Potter received contained the name and personal information of a Medicare beneficiary, as well as an audio recording purporting to be of a patient requesting a COVID-19 testing kit.

Until last year, neither the Spanish Fort lab nor the Birmingham lab billed children for COVD-19 testing. Still, Potter acknowledged that between February and May of last year, his labs billed Medicare for test kits on behalf of more than 200,000 Medicare beneficiaries, including thousands who had died.

Under the plea agreement, Medicare reimbursed the labs nearly $20 million for the test kits.

According to the guilty plea, no one at either lab contacted Medicare recipients to confirm they had ordered the COVID-19 test kits, and no one even shipped any of the children tested during the date ranges listed in the accused In return, according to the plea agreement, Coutugno received a fee for arranging the distribution of the test children. Some Medicare beneficiaries received them; others do not.

The plea document states that Potter mostly kept employees in the dark, telling them that “Brian” or another person they had never met would handle everything, according to court records.

Potter agreed to wire more than $6.3 million in two bank accounts belonging to Gulf Coast Molecular Laboratories and more than $38,000 in a bank account belonging to the Birmingham laboratory.