MOBILE, Alabama (WALA) – The owner of a Spanish Fort lab pleaded guilty Wednesday to conspiring to defraud Medicare out of millions of dollars through fraudulent billing, including killing thousands of people.

James Matthews Thornton “Bo” Potter pleaded guilty to a single count of conspiracy to violate the federal anti-kickback statute. The maximum penalty is five years in prison, although prosecutors agreed to recommend leniency. His sentencing is set for April 30.

Potter’s attorney, Josh Briskman, said he expects sentencing guidelines to call for a prison sentence in the range of two and a half years and that he expects a lighter punishment. He said his client believes admitting guilt was in the best interest of his family.

“It was a difficult decision for Mr. Potter,” he said. “This limits your exposure.”

According to Potter’s written agreement, he co-owns laboratories in Spanish Fort and Birmingham. Although the disclosure document lists the companies as Lab-1 and Lab-2, a related forfeiture complaint identifies the Baldwin County company as Gulf Coast Molecular Laboratories.

The declaration document states that in late 2022 or early 2023, co-conspirator Brian Cotugno introduced Potter to a person identified as Individual-1. Despite never meeting in person, Potter agreed to pay Cotugno kickbacks for “lead packets” that the conspirators used to bill Medicare through the two labs. He and Individual-1 transferred more than $8 million to a bank account that Cotugno controlled, according to court records.

The forfeiture complaint puts Medicare reimbursements for the test kits at more than $13.8 million, 99 percent of all Medicare reimbursements to the company. Federal authorities began investigating the receipt of thousands of complaints against Gulf Coast Molecular Laboratories from Medicare beneficiaries who said they received COVID-19 test kits they had not requested.

Cotugno, who has a criminal history, pleaded guilty in April to participating in the Baldwin County scheme. He is awaiting sentencing. According to court records, he pleaded guilty in 1991 to a federal cocaine charge and a judge sentenced him to 10 years and one month in prison.

Prosecutors alleged that the defendants took advantage of a federal program to provide free COVID-19 test kits (at a cost to taxpayers of $94.08 per kit) to Medicare beneficiaries. But the federal government required those recipients to apply for the kits.

Each of the lead packages Potter received contained the name and personal information of a Medicare beneficiary, along with an audio recording purporting to be the patient requesting a COVID-19 test kit.

Neither the Spanish Fort nor the Birmingham lab had billed for any COVD-19 tests on children before last year. However, Potter admitted that from February to May of last year, his labs billed Medicare for testing kits on behalf of more than 200,000 Medicare beneficiaries, including thousands of people who had died.

Under the plea agreement, Medicare reimbursed the labs nearly $20 million for the testing kits.

No one at any of the labs contacted any of the Medicare beneficiaries to confirm that they had ordered COVID-19 test kits, and no one even sent any of the children tested during the date ranges set out in the indictment, according to the declaration document. Instead, under the plea agreement, Cotugno received a fee to arrange the distribution of the trial children. Some Medicare beneficiaries received them; others did not.

The deposition document states that Potter largely kept employees in the dark, telling them that “Brian” or another person they had never met would handle everything, according to court records.

Potter agreed to hand over more than $6.3 million in two bank accounts belonging to Gulf Coast Molecular Laboratories and more than $38,000 in a bank account belonging to the Birmingham laboratory.

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