Jacksonville Beach facility owner pleads guilty in $57M laundering scheme
As part of plea, owner agreed to forfeit $10M, including Atlantic Beach home
JACKSONVILLE, Fla. – The owner of a Jacksonville Beach substance abuse treatment center pleaded guilty Tuesday for his role in a $57 million money laundering scheme involving rural hospitals and urine testing, the U.S. Department of Justice announced Tuesday.
Kyle Ryan Marcotte, 36, of Jacksonville Beach, pleaded guilty to one count of conspiracy to commit money laundering. As part of the plea, Marcotte agreed to forfeit $10.2 million, including an Atlantic Beach home just blocks away from the ocean that he bought for $1.6 million in 2016.
According to admissions made as part of his guilty plea, in 2015, Marcotte, as owner of a substance abuse treatment facility in Jacksonville Beach, entered into an arrangement with a laboratory owner to send urine samples from Beaches Recovery patients to the owner’s lab for urine drug testing in exchange for receiving 40% of the insurance reimbursements.
Prosecutors said the lab owner, in turn, arranged with the managers of Campbellton-Graceville Hospital and Regional General Hospital Williston, two rural hospitals in Florida, to have the testing billed to private insurers and reimbursed at favorable rates under the hospitals’ in-network contracts with insurers.
According to prosecutors, Marcotte also admitted that he brokered deals with other substance abuse treatment centers to have their tests billed through the two hospitals in exchange for Marcotte receiving 10% of the insurance reimbursements, while the other substance abuse facilities would receive 30% of the insurance reimbursements.
The lab owner subsequently acquired Chestatee Hospital, in Dahlonega, Georgia, and other rural hospitals. Prosecutors said Marcotte admitted that he continued to supply samples from his substance abuse treatment facility and continued to broker deals with other substance abuse treatment centers to have urine drug testing at the lab and billed to insurers through Chestatee and the other hospitals, all in exchange for a percentage of the insurance reimbursements.
The reimbursements were transmitted from the hospitals to the lab, which then transmitted them to two companies Marcotte controlled -- North Florida Labs and KTL Labs -- using financial transactions and bank accounts that Marcotte had established to facilitate the payments, the Department of Justice said.
Prosecutors said Marcotte arranged to transfer a portion of the reimbursements from KTL Labs as kickbacks to the individuals and companies that controlled the substance abuse treatment centers in order to further the fraudulent scheme. According to the Department of Justice, Marcotte also admitted he transferred a portion of the reimbursements to himself and used the money to purchase real estate and other items.
The Department of Justice said Marcotte caused $50 million in payments to be made from KTL Labs’ bank accounts to at least 88 companies and individuals associated with substance abuse treatment centers that supplied urine samples for testing. According to prosecutors, Marcotte admitted the total amount of money launched through the scheme was $57.3 million.
To date, Amtrak’s health care plan has been billed in excess of $300,000 by Marcotte’s facility, according to Amtrak's Office of Inspector General, which assisted in the investigation that also involved the FBI. The Amtrak OIG also said Amtrak’s health care plan was billed in excess of $900,000 through Campbellton-Graceville Hospital, related laboratories and other rural hospitals.
Marcotte's plea agreement includes a section on cooperation, so it is anticipated he will be cooperating with prosecutors in the investigation and prosecution of other people in connection with the case and other matters.
News4Jax has also been in contact with Marcotte’s defense attorney, Hank Coxe, who is one of the best-known defense attorneys in Jacksonville. But he has not released a statement at this time.
Sentencing before U.S. District Judge Timothy Corrigan of the Middle District of Florida has not yet been scheduled.
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