Plaintiff’s attorney reveals details in Medicare fraud case

Local News

Suzanne and Gerard Dengler pleaded guilty this week to charges of health care fraud conspiracy. The Smith County couple owned Elite Lab Services, a clinical diagnostic laboratory based in Tyler. For plaintiff and former Elite Lab employee, Karen Malcolm, the past two and a half years of this case has been a painful experience. 

While Malcolm said she feels somewhat of a relief now that every part of the case is complete, she never wanted to do what she had to. Her attorney Tonda Curry said Malcolm came forward overwhelmed, but had hopes of changing the system. 

“When she came to see me, she didn’t know the word ‘qui tam,’ she didn’t even know there was a possibility of a whistleblower lawsuit,” said Curry. “She was concerned about the people in the nursing homes who weren’t getting as good of services as they could because so much money is going to fraud.”

According to documents submitted to the government, the Denglers received about $8 million over a four year period in excess of what they should have received. As a Medicare provider, Elite Lab provided services to nursing homes throughout East Texas. 

“Folks in nursing homes need their blood drawn frequently and the Medicare regulations pay a certain amount per mile for a phlebotomist to come and draw that blood to take to the lab. All of the blood drawn that a lab does in a day versus miles that are driven, they factor those two together and it’s pro-rated per draw and that’s how the bills are submitted,” explained Curry. “That regulation says reasonable mileage but never more than actually driven and that is where the problem was.”

Curry said the Denglers and Elite Lab submitted claims indicating that one phlebotomist was driving a number of miles that can’t possibly be driven in a work day. In some locations, she said they would randomly add in thousands of miles to the total number for that day.

While investigating assets, Curry said they found the Denglers own a corporation called Denglebucks, LLC, which is the owner and operator of Bahama Bucks in Tyler.

“We also know that the franchise rights was paid for during the period of time this fraud was going on,” said Curry.

Last year, the U.S. government recovered $3 billion in Medicare fraud and Curry said that’s only what was left over for them to recover. Estimates show around $30 billion in Medicare fraud was actually committed last year.

“Elite Lab provided excellent services, but they stepped over the line into greed. Around 80 of our employees were affected by this.” said Malcolm. “We have to care about the patients more than we care about our wallets.”   

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