Cape testing lab, manager not guilty in fraud trial

June 27--BOSTON -- A Mashpee drug-screening lab and its vice president were found not guilty Thursday in Suffolk Superior Court of all charges related to an alleged scheme to pay the salaries of another lab's employees in exchange for more drug-screening business.

Kathleen Franey-Lopes, the vice president of Franey Medical Lab Inc., and Robert Franey, the lab's president and Franey-Lopes' father, hugged after Judge Joseph Walker announced his ruling. Robert Franey had appeared in court throughout the trial on behalf of the lab.

Both Franey-Lopes and the lab had been charged with one count of Medi-caid kickback, one count of making a false Medicaid claim and three counts of private health insurance kickbacks.

Throughout the five-day trial, the state attorney general's office sought to establish that Franey-Lopes had made an agreement with Renee Andrews, who was then office manager of Brighton-based lab Caritas, to pay some of Andrews' employees in exchange for additional drug-screening business. The prosecution alleged that the Franey lab had received more than $590,000 worth of business from Andrews, who pleaded guilty in February to a scheme in which she referred patients to drug-testing laboratories in exchange for kickbacks from the labs.

Assistant Attorney General Brendan O'Shea had argued that the lab was not busy enough to justify the hiring of three full-time specimen collectors and that they were being paid to perform duties outside their scope.

But in court Wednesday, Franey-Lopes testified that Andrews approached her in February 2007 about establishing an on-site lab at Caritas, which was increasingly busy, and that she had hired employees for the lab based on the volume of business Andrews had estimated, which was 300-500 samples per week.

During her closing argument Thursday, defense attorney Linda Wagner said the staffing was appropriate based on an analysis Franey-Lopes had done before establishing the on-site lab.

In his ruling, the judge agreed, pointing out that Caritas was "extraordinarily busy" and that Franey would have needed to "staff up" based on the anticipated volume of business and the time involved in specimen collection.

"The mere employment of three collectors alone does not constitute a kickback," Walker said. There was also no evidence that Franey-Lopes knew two of the employees she hired were relatives of Andrews, Walker said.

Both Franey-Lopes and her father held back tears as they hugged.

"We're very happy," Franey-Lopes said after the trial. She agreed with her attorney, Augustus Wagner, that justice had been served. But Wagner said the damage done to the Franeys' reputation would be "difficult to repair."

As a result of the indictments, more than $1 million owed by health insurance companies to Franey Medical Lab for services rendered has been withheld, according to Franey-Lopes and Wagner.

"The money that was withheld far exceeds any claim in this case," Wagner said.

Wagner said the case was "completely devoid of culpability" on the part of the Franeys, and he accused the prosecution of being unfair.

The attorney general's office declined to comment on the trial.

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