Lynn woman indicted in alleged urine test fraud ring

BOSTON – A Lynn woman is among four persons indicted by the state attorney general’s office for allegedly running a multi-million-dollar scam that gave kickbacks to sober houses in return for using their Woburn-based drug-screening services.A Middlesex grand jury returned 42 indictments Friday against Callow Laboratories, also known as Calloway, two of its principals and two employees of a sober house. The charges resulted from a Medicaid fraud investigation.The indictments alleged that Calloway Chief Executive Officer Arthur Levitan, 38, of Weston, and Chief Operating Officer Patrick Cavanaugh, 46, of Gloucester, “engaged in a pervasive kickback scheme involving two straw companies that funneled kickbacks to sober houses, as well as paid middlemen and a medical office to illegally obtain a urine drug-screening business paid by MassHealth, the state’s Medicaid program,” according to Jill Butterworth, spokesman for Attorney General Martha Coakley.The other defendants are Kelli Ann Cavanaugh, 41, of Lynn, and William Maragioglio, 41, of Malden.Both were charged with Medicaid fraud and accepting kickbacks.The state has alleged that MassHealth paid in excess of $10.6 million for urine drug screenings obtained by Calloway through the kickbacks.Other indictments in the case alleged the defendants submitted false claims to MassHealth, larceny over $250 and corruption of a witness. Sixteen kickback allegations were leveled against Calloway. The scam was carried out between 2005 and 2007, when Calloway set up two corporations, JAC Resources, Inc. and MJK & Associates, along with a bank account for the purpose of carrying out the kickbacks, Butterworth said.Calloway “made inappropriate payments to Maragioglio, owner and manager of New England Transitions, and to Cavanaugh, the sister of Patrick Cavanaugh and a former manager of New England Transitions – a group of sober houses – in return for ordering, arranging for or recommending that urine drug screens for the residents of the sober houses be performed by Calloway,” according to the indictment.The indictments further allege that Calloway paid an office manager and the salaries of office staff of a Brighton medical office to induce the ordering of drug screens from Calloway. The company purportedly falsified laboratory records and submitting claims to MassHealth for urine drug screens that were not ordered by an authorized prescriber for a medically necessary purpose, a requirement of the MassHealth program.