DOJ Sues Executives Over Alleged Medicare Fraud
ATLANTA — The U.S. Department of Justice has filed a lawsuit against two former executives of an Atlanta-based clinical laboratory. They are accused of exploiting church events, religious conferences, and senior living communities to amass millions from Medicare through tests that were not medically necessary.
The civil complaint claims that Jay Johnson, the former CEO and COO of Capstone Diagnostics, and Austin Whiles, the ex-Chief Sales Officer and Vice President of Business Development, were responsible for approximately $13.7 million in unjustifiable payments for genetic and respiratory pathogen tests from 2019 to 2021.
Separately, Johnson faces criminal charges associated with this alleged misconduct.
According to the DOJ, the executives are said to have employed two primary strategies to boost testing volume and obtain Medicare reimbursements.
At health fairs and religious conferences sponsored by churches, Johnson and Whiles are accused of instructing Capstone employees to perform genetic testing swabs on attendees—even when their doctors hadn’t requested them.
The complaint asserts that they misused doctors’ names, signatures, and other documentation without authorization. This was done to make the tests seem properly ordered and necessary.
The second alleged scheme targeted senior living communities.
The DOJ claims that Johnson and Whiles would add unnecessary respiratory pathogen panels to COVID-19 tests requested by these communities, thereby increasing the reimbursement amounts from Medicare.
The defendants are said to have improperly utilized standing orders across communities, copied physician signatures, used standardized diagnosis codes, and allowed sales staff to enter orders instead of the treating physicians.
The lawsuit also allegations of unlawful remuneration that infringed upon the federal Anti-Kickback Statute.
U.S. Attorney Theodore S. Hertzberg criticized the executives, indicating they took advantage of vulnerable individuals at religious gatherings and senior facilities, enriching themselves while draining funds from the Medicare system.
Furthermore, the DOJ alleges Johnson transferred millions from these schemes to his ex-wife, Sarah Haslock, while Whiles reportedly funneled about $4.75 million in commissions to himself through independent marketers.
As part of the fallout, the government reached settlements with Capstone and its owner, Andrew Maloney, amounting to $14.3 million, and with Capstone’s billing company, VitalAxis Inc., for $300,479 to address possible civil liabilities under the False Claims Act.
This case originated from a whistleblower lawsuit filed by Jesse Allen, a former lab manager at Capstone. On September 4, 2026, the U.S. intervened in that case, which was lodged in the U.S. District Court for the Northern District of Georgia.
The False Claims Act allows private citizens to pursue lawsuits on behalf of the government, with the potential for sharing in the recovery obtained by the United States.
Johnson was indicted by a federal grand jury on December 10, 2025, facing charges that include conspiracy to commit healthcare and wire fraud, as well as kickbacks involving a federal healthcare program. These criminal charges are still pending.
