Dykema Secures Full Dismissal in Federal Healthcare Case
Dykema Gossett PLLC Secures Full Dismissal for Client After Government Corrects Key Allegation and Moves to Dismiss in Federal Healthcare Case
Dallas, Texas — October 21, 2025 — Dykema’s DSO Industry Group announced today that a federal court dismissed all charges against client Israel Navarro, who had interests in two long-term care hospitals in the El Paso area. Prosecutors had charged Mr. Navarro with three felony fraud offenses tied to alleged “pass-through billing” of lab tests to Blue Cross Blue Shield of Texas (BCBSTX). The United States moved to dismiss on October 20 and the Court granted dismissal on October 21.
The result caps a rapid defense mounted by Dykema’s DSO Industry Group’s Government Investigations Program. The team dismantled the Government’s statute of limitations theory and exposed factual gaps in its billing narrative, culminating in the Government’s formal retreat from a centerpiece allegation about an August 14, 2018 claim. Four days before dismissal, the Government filed a Notice of Correction acknowledging that the claim it had tied to August 14, 2018 was not submitted on that date.
On October 17, the Court stated that if a 2020 BCBSTX payment was not tied to a 2018 claim, the prosecution faced serious viability issues on statute of limitations grounds and ordered the Government to clarify its core allegations by noon on October 21. A day before the deadline, on October 20, the Government moved to dismiss the case.
What Happened
On June 25, 2025, prosecutors returned an indictment alleging a pass-through billing scheme for urine drug tests and charged conspiracy, wire fraud, and mail fraud. To overcome the five-year statute of limitations, the Government tied a single July 20, 2020 reimbursement to conduct it linked to an August 14, 2018 claim.
Dykema, with co-counsel Ryan Downton of Texas Trial Group and Sean McKenna of Nelson Mullins, showed that the hospitals’ billing process was lawful and that the dispute with BCBSTX sounded in a civil billing dispute, not a criminal proceeding. The team also argued that limitations had already run, pressed for the Government’s communications with BCBSTX, and demanded records from the proposed expert who had also consulted for the FBI during its investigation. Prosecutors then informed the Court that the expert would not testify—leaving the Government without any expert—and the original prosecutor on the case was replaced by new lead counsel.
Defense filings also established that in 2018 BCBSTX placed the hospital on prepayment review while instructing it to continue submitting claims using the same process, undercutting any theory that the hospital had submitted fraudulent claims around that period when it was simply following the same process that BCBSTX instructed it to use.
The team also challenged the month-long sealing of the indictment, noting that, after obtaining the indictment and successfully moving to seal it, the prosecution met with Mr. Navarro’s counsel so that counsel could present arguments, evidence, and information demonstrating that Mr. Navarro was innocent and should not be charged with any crimes. The prosecution also asked for materials that Mr. Navarro’s counsel had discussed during their presentation—all without revealing to Mr. Navarro’s counsel that he had already been indicted. The prosecution finally disclosed the charges to Mr. Navarro’s counsel on July 18 and unsealed the indictment on July 22, two days after the Government’s own asserted limitations date. The team argued that the sealing was improper and that it prejudiced Mr. Navarro because it allowed the prosecution to engage in this meeting with his attorneys without the attorneys knowing he was already charged, and it asked the Court to dismiss the case because the unsealing occurred after the Government’s asserted limitations deadline expired.
On October 16, the Government filed a Notice of Correction confirming the anchor claim was not submitted on August 14, 2018. On October 17, the Court warned that if the 2020 payment was not tied to a 2018 claim the prosecution faced serious statute-of-limitations problems and ordered clarification by October 21. On October 20, the Government moved to dismiss after “learning additional information,” and on October 21 the Court dismissed the case in full.
Defense Team
The Dykema team was led by Tiffany H. Eggers, Leigha Simonton, Scott Hogan, and Sarah Douglas, all former federal prosecutors, working with co-counsel Ryan Downton of Texas Trial Group and Sean McKenna of Nelson Mullins. Associates Cooper Barling, Darren Chen, and David Ko contributed, along with DSO Industry Group member Dean Gould.
Brian Colao, Director of Dykema’s DSO Industry Group, said:
“From day one we focused the Court on what mattered most. The facts did not support the Government’s timeline, the law did not support the charges, and our client deserved to have this case ended. This dismissal validates a disciplined defense, precise motion practice, and the strength of our white collar and DSO investigations bench.”
About Dykema’s Government Investigations Program for Dental and Healthcare
The program is led by Leigha Simonton, former presidentially appointed, Senate-confirmed U.S. Attorney for the Northern District of Texas, and powered by a deep roster of former senior DOJ leaders, including Scott Hogan, Tiffany H. Eggers, and Sarah Douglas. Collectively the team brings more than 60 years of DOJ experience, over 200 jury trials, and nearly 400 appeals, representing clients nationwide in criminal and civil healthcare investigations and prosecutions.