DOJ Sues Former Georgia Lab Executives for $13.7 Million Medicare Fraud Targeting Faith-Based Communities and Seniors

The Department of Justice has filed a False Claims Act complaint against Jay Johnson and Austin Whiles, former executives at Atlanta-based clinical laboratory Capstone Diagnostics, alleging they orchestrated two schemes that caused Medicare to pay approximately $13.7 million for medically unnecessary genetic and respiratory pathogen testing between 2019 and 2021.

According to the complaint, Johnson and Whiles first targeted church-sponsored health fairs and religious conferences, directing Capstone personnel to swab attendees at mass events and then using physicians’ names and signatures without permission to make the testing appear properly ordered.

They allegedly paid kickbacks to conference organizers and independent marketers to generate testing volume. In the second scheme, they exploited senior living communities’ demand for COVID-19 testing by adding unnecessary respiratory pathogen panels, using community-wide standing orders, copied physician signatures, and having sales personnel—rather than treating providers—enter orders.

Whiles secretly routed approximately $4.75 million in volume-based commissions to himself through a company he owned. Johnson transferred millions to his now-former wife, Sarah Haslock, who is also named in the complaint.

Capstone and its owner previously settled related civil liability for $14.3 million, and Capstone’s billing company settled for $300,479. Johnson also faces criminal health care and wire fraud charges arising from the scheme. The case was brought under the False Claims Act, which permits the government to recover treble damages and civil penalties. Individuals with knowledge of similar healthcare fraud—including illegal kickback arrangements or billing for services not medically necessary—can pursue remedies through qui tam whistleblower actions. Consulting experienced whistleblower attorneys can help clarify available options and protections.