Corporate Greed Case Study: Arrayit & Its Impact on American Healthcare

TL;DR: At the height of a global pandemic, medical testing company Arrayit executed a calculated scheme to defraud America’s healthcare system. The company pushed medically dubious allergy tests and an inferior COVID-19 test on patients by misleading doctors, all driven by what court documents call an “obsession” with maximizing insurance billing.

This case reveals a business model built on exploiting trust and prioritizing profit over patient well-being, a striking example of corporate greed operating within a system ripe for abuse. Read on to understand the full anatomy of the fraud and the systemic failures that allowed it to flourish.

Introduction: A System Primed for Predation

A patient, seeking only a test for COVID-19, explicitly wrote “COVID test only” on their medical form. Yet the laboratory, Arrayit, proceeded to run a full panel of allergy tests on their blood sample anyway, billing their insurance for nearly $5,300. This single incident is the core of a business model that systematically prioritized profits over patients, a story of corporate misconduct laid bare in federal court.

The case of Arrayit and its operator, Mark Schena, offers a chilling look into the dark underbelly of American healthcare, where profit incentives can eclipse medical ethics.

It reveals how easily the system can be manipulated by those who see patients not as people in need of care, but as vehicles for generating revenue from insurance companies. This is a story a critical our neoliberal capitalist framework that enables and even encourages such predatory behavior.

Inside the Allegations: An Anatomy of a Healthcare Fraud

The foundation of Arrayit’s business was a scheme to generate a massive flow of patient samples for expensive and often medically unnecessary tests. Mark Schena, the company’s operator, transitioned Arrayit from selling lab equipment to conducting its own diagnostics with a clear goal: to make large sums of money from medical billing codes. The company’s primary offering was a blood test for 120 different allergens.

This number was not chosen based on medical necessity. It was chosen because it was the maximum number of allergens the company’s machine could process in a single run. For most patients, testing on such a broad scale was completely unwarranted, but for Arrayit, it represented a way to bill insurance providers up to $10,000 for a single suite of tests that cost the company only a fraction of that amount to perform.

To secure a steady stream of referrals, Schena hired a series of marketers. These individuals were not paid a salary or given written contracts; instead, they were compensated with a percentage of the revenue they generated.

Their mission was to pitch Arrayit’s services to medical professionals, specifically targeting doctors who were “naïve” and lacked deep experience in allergy treatment, such as chiropractors and naturopaths. Experienced allergists, who typically favor skin tests, were deliberately avoided because, as court testimony revealed, they “didn’t believe in the tests.”

These marketers were instructed to mislead doctors, falsely claiming Arrayit’s blood tests were “highly accurate” and “far superior” to standard skin tests. This was a critical deception, as the company’s tests could not definitively determine if a patient had an allergy; they could only show if a patient had been exposed to an allergen at some point. One marketer, who later pleaded guilty, testified that they effectively “controlled” which laboratory received patient samples, ensuring a lucrative pipeline for Arrayit.

Timeline of Corporate Misconduct

When the COVID-19 pandemic struck in 2020 and the volume of allergy testing declined, Schena pivoted his operation. Arrayit began offering a blood test for COVID-19 antibodies, which was inferior to the “gold standard” PCR test for detecting active infections. Despite this, marketers were directed to promote the test as equal or better than PCR tests and to lie about how quickly results would be available.

To prop up the more lucrative allergy testing business, Schena instructed marketers to bundle the two tests together.

They falsely claimed, for instance, that Dr. Anthony Fauci had warned that COVID-19 and allergies could be confused, justifying the need for both tests. In cases where doctors only ordered a COVID test, Arrayit employees were directed to run the expensive allergy panel anyway, leading to the massive, unwanted bill for the patient who had requested a COVID test only.

Regulatory Loopholes and Neoliberal Failures

Arrayit’s scheme thrived in the gaps and gray areas of American healthcare regulation. The very existence of the Eliminating Kickbacks in Recovery Act (EKRA)—the 2018 law Schena was convicted of violating—highlights a pre-existing weakness in the system. While the older Anti-Kickback Statute protected federal programs like Medicare, EKRA was created specifically to address kickback schemes involving patients with private insurance, a loophole that companies could exploit.

Schena’s legal defense was built on exploiting a perceived ambiguity in this new law. He argued that paying kickbacks to marketers was not illegal because the marketers were not the ones formally referring patients; the doctors were. This is a classic tactic in the neoliberal playbook: treating laws not as ethical guardrails but as technical puzzles to be solved or circumvented. The company’s actions demonstrate a compliance culture focused on plausible deniability rather than the actual intent of the law, which is to prevent medical decisions from being corrupted by financial incentives.

The court ultimately rejected this argument, ruling that paying a third party to “induce a referral” through deceit is illegal. This legal battle, however, shows how corporations can weaponize legal complexity to shield their operations. For years, Arrayit operated under a model that was ethically bankrupt but, in Schena’s view, legally defensible. This reliance on technicalities over substance is a hallmark of a system where regulatory oversight often lags behind corporate innovation in finding new ways to profit.

Profit-Maximization at All Costs

Every facet of Arrayit’s operation was engineered for a single purpose: maximizing revenue. The decision-making process described in court filings was completely detached from any concern for patient health or medical necessity. It was a pure-play exercise in profit extraction, a business strategy that reflects the most corrosive incentives of late-stage capitalism when applied to a public good like healthcare.

Schena’s “obsession” with billing codes was the driving force behind the entire enterprise. The 120-allergen test was not a medical innovation; it was a billing innovation. The choice to target “naïve” doctors was not a marketing quirk; it was a calculated risk-management strategy to avoid scrutiny from experts who would recognize the tests as dubious.

The company’s response to the COVID-19 pandemic is perhaps the most damning evidence of its priorities. Faced with a drop in revenue, Arrayit did not pivot to provide the most effective public health tools available. Instead, it retrofitted its existing fraudulent model to the crisis, pushing an inferior test and bundling it with unnecessary services to keep the money flowing. This monetized a public health emergency, turning a global crisis into a business opportunity built on misinformation.

The Economic Fallout: Draining the System

The financial consequences of Arrayit’s scheme extend far beyond the company’s own balance sheet. Between October 2018 and June 2020, the company billed public and private insurers for more than $77 million. Though insurers ultimately paid out only a fraction of that amount—around $2.7 million—the initial bills represent a massive attempted drain on the nation’s healthcare resources.

Every fraudulent claim submitted requires time and money to investigate, process, and deny. This administrative burden contributes to the bloating of healthcare costs, which are ultimately passed down to everyone in the form of higher premiums, taxes, and out-of-pocket expenses. The federal court’s order for Schena to pay over $24 million in restitution underscores the scale of the financial harm caused by the scheme.

Furthermore, an analysis of Medicare data revealed that Arrayit billed, on average, $5,200 more per patient than any other laboratory in the United States. This staggering figure illustrates a business model designed to be an outlier, an extractor of extreme value from a system intended to provide care. This is a parasitic relationship with the American healthcare economy.

Public Health at Risk

The harm caused by Arrayit was not merely financial; it posed a direct threat to public health. By providing doctors and patients with misleading and medically questionable information, the company corrupted the very foundation of medical decision-making. Patients may have undergone unnecessary dietary changes or treatments based on allergy tests that could not even confirm an actual allergy.

During the COVID-19 pandemic, the risks escalated dramatically. Marketing an inferior antibody test as a reliable alternative to the “gold standard” PCR test could have had severe consequences. Patients may have received a false sense of security from a negative antibody test, leading them to unknowingly spread the virus. The promotion of misinformation during a public health crisis is a dangerous disruption of efforts to protect community health.

The practice of running unwanted tests is a fundamental violation of patient consent and bodily autonomy. It treated patients as little more than sources for billable samples, disregarding their health, their wishes, and their right to make informed decisions. This disregard for the patient is the inevitable outcome of a system where the incentive for profit is allowed to run unchecked.

Exploitation of Workers as Cogs in the Machine

While Mark Schena was the architect of the scheme, it was carried out by marketers who were themselves placed in a precarious and exploitative position. These individuals worked without the security of a salary or even a written contract. Their compensation was based entirely on a percentage of the revenue they could generate, a structure that created a powerful incentive to engage in the very misconduct the government prosecuted.

This commission-based system is a common tool in industries where aggressive sales tactics are prioritized. It effectively outsources the company’s ethical compromises to its workforce, pressuring them to mislead and deceive in order to earn a living. The fact that at least one of Arrayit’s marketers pleaded guilty to conspiracy charges demonstrates how this corporate structure pushed its workers into legal jeopardy.

By creating a system that rewarded deception, Arrayit exploited its workers as instruments of its fraudulent enterprise. They were essential components in a machine designed to deceive doctors and exploit patients. This model diffuses responsibility while funneling profits to the top, leaving those on the front lines to face the consequences.

Wealth Disparity & Corporate Greed Incarnate

At its heart, the Arrayit case is a story of corporate greed and its role in widening economic disparity. The scheme was designed to transfer wealth from the collective pool of insurance funds—paid into by millions of working Americans and taxpayers—into the pockets of one man and his small, family-staffed company. The attempted billing of $77 million represents a direct effort to hoard resources from a system already under immense financial strain.

This narrative is a microcosm of a larger trend in neoliberal capitalism, where vital public sectors like healthcare become frontiers for aggressive wealth extraction. When a single laboratory can bill the public an average of $5,200 more per patient than any competitor, it is not a sign of superior service. It is a sign of a system that has been successfully manipulated for personal enrichment.

The prison sentence and multimillion-dollar restitution order are forms of accountability. Yet they do little to address the underlying economic structures that make such schemes so tempting and so possible in the first place.

As long as healthcare is treated as a market for generating extreme profits rather than a system for delivering human care, stories like Arrayit’s will continue to be written.

The Department of Justice has a press release about this: https://www.justice.gov/archives/opa/pr/medical-technology-company-president-convicted-77-million-covid-19-and-allergy-testing-scheme

Here is another press release from the DOJ about bro’s sentencing: https://www.justice.gov/archives/opa/pr/silicon-valley-executive-sentenced-defrauding-investors-and-participating-covid-19-and

The failing New York Times even wrote an article about this!: https://www.nytimes.com/2022/09/02/business/mark-schena-arrayit-fraud-theranos.html