Three plead guilty in Calloway Lab case, sentenced to four years probation

By Chelsea Conaboy, Globe Staff

Two former executives of Calloway Laboratories and an associate were sentenced Friday to four years of probation for a kickback scheme that cost the state Medicaid program millions of dollars.

Arthur Levitan of Barnstable and Patrick Cavanaugh of Gloucester, chief executive and chief operating officers of the Woburn lab, were accused of funneling money to sober homes in exchange for providing excessive urine screens to residents that were billed to Medicaid. The sober homes were owned and managed by William Maragioglio of Everett.

The three men pleaded guilty in Middlesex Superior Court. They are prohibited from being involved in any state health care program, other than as a patient, during their probation period.

Kelli Ann Cavanaugh, Patrick’s sister and a former manager for Maragioglio’s company who also faces charges, did not appear at the sentencing hearing, a spokeswoman from the attorney general’s office said.

Calloway agreed in March to pay the state $20 million. Martha Coakley in a press release said the settlement is one of the largest Medicaid restitution payments in the state’s history. The case was one of several in recent years in which sober homes and labs were accused of using recovering drug and alcohol users to defraud Medicaid.

Wellesley-based Ampersand Capital Partners plans to purchase Calloway from Levitan and expects the deal to close before the end of the year, according to a press release. Gail Marcus, who became chief executive of the lab last month, said Levitan and Cavanaugh resigned their positions more than six months ago.

“They really have had no further involvement in the management of the company since then,” she said.