United States v. Duz-Mor Diagnostic Laboratory, Inc.

Duz-Mor Diagnostic Laboratory, Inc. was convicted in a nonjury trial of Medicare and Medi-Cal fraud in violation of 42 U.S.C. §§ 1395nn(b)(2)(A) and 1396h(b)(2)(A). On appeal Duz-Mor contends that its conviction must be reversed because the conviction was inconsistent with the trial court’s dismissal of the indictment of Irigene More-head, the corporate officer and only human agent representing the corporation in the challenged transaction. Duz-Mor also questions whether the government proved that an offer of an illegal kickback was made, and that the services which Duz-Mor sought to provide were in fact reimbursable from federal funds.

Duz-Mor is a clinical laboratory certified as a Medicare and Medi-Cal provider. Irigene Morehead, the individual defendant below, was the president and chief technologist of Duz-Mor. She and her husband were the sole shareholders of Duz-Mor.

Posing as the representative of a group of investors planning to purchase a number of nursing homes in the Southern California area, a Federal Bureau of Investigation agent tape-recorded a conversation between the agent and Morehead. They discussed an arrangement under which Duz-Mor would provide clinical…