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Whistleblowers are key in newly unsealed federal lawsuits against Aaron Rossi and Reditus

Aaron Rossi walking out of courthouse
WCBU
/
File Photo
Former Reditus CEO Aaron Rossi faces pending criminal tax and mail fraud charges that predate the pandemic. He has pleaded not guilty to those charges, with a jury trial tentatively set for Dec. 11.

The government has unsealed two major civil actions against former Reditus CEO Aaron Rossi and his business partners, alleging a multimillion-dollar billing fraud scheme during the COVID pandemic.

The civil lawsuits were filed in federal court a year ago but remained under seal until this week. WGLT and WCBU were able to view the lawsuits – together over 100 pages – for the first time Wednesday. They offer the clearest picture yet of how the federal and state governments believe Rossi “exploited the pandemic for his own personal benefit and gain,” alleging that he used high-tech software changes and low-tech kickback schemes to become a pandemic profiteer.

“Reditus would ultimately ‘earn’ more than $200 million by defrauding the government and its taxpayers. Aaron Rossi flaunted his newfound wealth during this devastating time by spending millions of dollars on airplanes, supercars such as a Porsche, BMWs, Mercedes Benz, $950,000 on custom tailored suits, $85,000 on Louis Vuitton luggage and clothing, $280,981 on watches and jewelry, and siphoning tens of millions of dollars to himself,” one of the lawsuits reads.

The lawsuits were filed by the U.S. government and the state of Illinois. The lawsuits are jointly filed by two whistleblowers who spotted different parts of the alleged wrongdoing: a medical director at Tri-County Pathology, closely linked to Reditus; and a support tech at a company that handled Reditus’ billing software. When false-claims lawsuits like this are successful, the whistleblower (also known as the relator) typically receive a portion of whatever is recovered.

WGLT and WCBU have reached out to Rossi’s attorneys for comment. Rossi’s team has previously called many of those claims “baseless” and accused the former business partners of trying to “litigate via public opinion.”

Pekin-based Reditus made hundreds of millions of dollars from state contracts for COVID-19 testing and brought hundreds of jobs to Pekin. Reditus had testing contracts with the Illinois Department of Public Health and the Illinois Department of Corrections. It ran the COVID testing site at Bloomington’s Interstate Center for much of the pandemic.

In one of its lawsuits, the government alleges that Rossi used his “political connections (fostered by large campaign contributions) to land lucrative contracts with the state of Illinois.” It does not explain how those connections allegedly led to the contracts – which once put Rossi side-by-side with Gov. JB Pritzker at one of his daily COVID press conferences.

The lawsuits allege violations of state and federal false-claims, insurance fraud, and kickback laws. The lawsuits are civil and not criminal, though Rossi and others could face further criminal charges. Rossi faces pending criminal tax and mail fraud charges that predate the pandemic. He has pleaded not guilty to those charges, with a jury trial tentatively set for Dec. 11. He also faces several pending civil lawsuits from former business partners, including in Tazewell County court.

Reditus was put into receivership and went out of business last year.

Lawsuit 1: COVID testing

One of the newly unsealed lawsuits centers on COVID testing. Rossi and Reditus allegedly:

  • Told staff to add a special “COVID exposure” code on all COVID testing orders, to ensure payment and prevent denial of claims, even with no proof of COVID exposure.
  • Rigged billing software to automatically add the “COVID exposure” code on all billings.
  • Failed to bill private insurers first for COVID tests before billing the state. The alleged motive is that sped up payments back to Reditus and that the state paid more than private insurers.
  • Double-billed private insurers and the government for COVID tests.

The lawsuit does not address the fact that people were told they could get tested at Reditus-run sites, including at Bloomington’s Interstate Center, even if they did not show symptoms.

Lawsuit 2: Other fraud claims

The other lawsuit was filed against Rossi and Reditus, plus eight companies and three people they did business with. It alleges three broad fraud schemes, including:

  • Submitting thousands of false claims for payment to Medicare, the state of Illinois, and private insurers for pathology and other services that were not performed.
  • Submitting claims for payment to the government for COVID testing services that were actually covered by the patients’ private insurance.
  • Paid and/or received unlawful kickbacks from MDX, a publicly traded lab company based out of state; Myriad, a molecular diagnostic company based in Utah; and Dr. Joseph Banno from Midwest Urological Group in Peoria. Banno is also named as a defendant in the lawsuit.

The lawsuit largely centers on an allegedly shady relationship between Reditus and Tri-County Pathology. Tri-County is technically a separate business, although Reditus is its only client, it operated out of a Reditus building, and its owner and president is Aaron Rossi’s father, Lawrence, according to the lawsuit. “Reditus’ sole reason for referring to Tri-County was to help keep the money in the Rossi family, i.e, between Reditus, Tri-County and their respective common owners (Lawrence and Aaron Rossi),” the lawsuit said.

“Reditus repeatedly submitted false claims for services to the government that were performed by non-credentialed physicians (working at Tri-County) under billing credentials of pathologists who performed no services whatsoever in connection with the patients and claims,” the lawsuit said.

One of those pathologists was Dr. Lorine LaGatta, who is the “relator” (whistleblower) on the lawsuit. LaGatta, who served as Tri-County’s medical director, claimed she was retaliated against and ultimately fired “in an express attempt to silence and prevent her from reporting Reditus and Aaron Rossi’s fraud schemes to the government.”

She apparently did anyway.

The lawsuit says that while it’s “highly unusual for a physician to submit billing himself, Aaron Rossi would sit at his computer, submit bills, and say words to the effect of ‘cha-ching’ – like he was hitting a cash register or slot machine. He therefore was not interested in whether there was exposure or a medical necessity for the testing but, instead, was submitting claims solely for the financial incentive to fund his lucrative lifestyle.”

The alleged fraud also crossed state lines.

“Reditus/Tri-County accepted cases from New York, Florida, and California (among other states) even though Reditus/Tri-County had no personnel who were licensed to practice medicine in those states. As such, payments submitted for those cases were false because they were performed by unlicensed individuals,” the lawsuit alleged.

“This lawsuit seeks to return the windfall back to where it rightfully belongs: the United States of America and State of Illinois, because taxpayers are the real victims.”

Ryan Denham is the digital content director for WGLT.