Arrayit charged with fraud over COVID testing
Arrayit seemed to have turned things around. Five years ago, an auditor for the Sunnyvale medical technology company told investors it needed cash and might not be able to get it. But by late 2018, the company had completed a pilot program for allergy testing with a retail chain and signed contracts with 178 medical clinics.
The coronavirus pandemic seemed like a fresh opportunity for Arrayit’s bloodtest technology. President Mark Schena reportedly compared adding tests for the virus to a pastry chef switching from making “strawberry pies” to “rhubarb and strawberry pies.”
Instead, Schena has found himself and his company a test subject for law enforcement, as the Department of Justice pursued its first securitiesfraud prosecution in relation to the health crisis. Schena was taken into federal custody in
June.
The government charges, as well as other court documents and company communications reviewed by The Chronicle, show a company seeking many sources of revenue — and willing to pursue payment for tests even after they had figured into fraud accusations.
In the government’s version of events, Schena misled investors and inflated the company’s stock price with false claims about the company’s coronavirus and allergy testing capabilities.
He allegedly bribed doctors and others to unnecessarily bundle the tests and generate fraudulent payments from the federal Medicare program and insurance companies.
Prosecutors say Schena and others submitted $69 million in fraudulent charges for allergy and coronavirus testing, including $5.9 million in claims submitted to Medicare.
The company has not responded to emailed requests for comment, and company executives including Schena could not be reached for comment.
The charges are not the company’s first brush with the courts. In February, the Universidad Nacional Autónoma de México sued Arrayit in federal court, accusing it of playing a shell game with research equipment the university said it paid tens of thousands of dollars for but never received, alleging the company ultimately resold it elsewhere and kept the money.
The company has denied the allegations in court papers filed on behalf of Mark Schena and his wife, Rene Schena, who is Arrayit’s CEO. The Schenas said the university repeatedly canceled the order for more than $126,000 in equipment. That case is ongoing.
So apparently is the company’s effort to receive payments for coronavirus and allergy tests similar to those described in the federal criminal complaint.
After the criminal charges were brought in June, Rene Schena asked Wendy Woodward of Snowflake, Ariz. to pay up for an unpaid balance for a coronavirus and allergy test administered by another company but processed by Arrayit.
Woodward went to a local site in Arizona in May to get a coronavirus antibody test that was supposed to be free through her husband’s employer, a local school district.
She said she specifically asked not to have an allergy test done on a blood sample she provided, after getting the impression the two tests had to be done together.
She received a call notifying her that she had tested negative for coronavirus antibodies and separately received a report on her allergies.
On July 20 she received a “settlement offer” from Rene Schena requesting $869.09 to settle the balance not covered by her insurance, which had been billed thousands of dollars.
Woodward eventually emailed Rene Schena informing her she would not pay for the testing.
Schena sought to distance her company from the process.
“Arrayit Corporation did not advertise anything. Arrayit Corporation did not charge for SARSCoV2 antibody testing,” Rene Schena wrote, referring to the virus by its scientific name.
Schena continued, “We do not see patients. We process tests and provide the information to doctors. Doctors determine medical necessity. Your tests were ordered by a doctor, we reported the results to the doctor, and we billed your insurance for services rendered.”
Schena did not address the allegations against her husband.
She said it was standard for patients to pay deductibles and copays for laboratory services, adding, “We (do) not intend to pursue hard collections on the amount due.”
The company that administered the test, Advanced Health & Wellness AZ, told Woodward in an email that only insurance was supposed to be billed for the testing and that “balance billing” of patients was not supposed to happen.
The company declined to make anyone available for comment.
Advanced Health & Wellness AZ told Woodward that allergy tests are sometimes done in tandem with coronavirus tests to rule out allergies as a cause of virus symptoms.
“From a medical standpoint, the reason we believe allergy testing is good along with a COVID test, is there can be similar symptoms (that) occur with allergies that make people think they have COVID19,” the company wrote to Woodward. “(It’s) beneficial from a medical standpoint to rule that out,” it added. “Again we are not condoning what (Arrayit) has done.”
The U.S. Attorney’s Office in San Francisco declined to comment on a pending case. Federal authorities spoke with Woodward as part of their investigation.
A preliminary hearing in the case has been set for next month.