California DOJ Issues Statement of Interest in Battle Against Sterling Pathology for Covid-19 Healthcare Billing Fraud-GJLaw

FRESNO, Calif., April 02, 2026 (GLOBE NEWSWIRE) -- The California Department of Justice formally lodged the “Statement of Interest” in federal court in connection with the $40 million lawsuit against Sterling Pathology Medical Group and its owner Dr. Changgao Yang for alleged laboratory billing fraud and phantom COVID-19 test billing.

The lawsuit alleges that Sterling and Dr. Yang fraudulently billed for COVID-19 tests which were never performed, expired, or reported far after permissible test reporting deadlines, thereby misusing more than $16.7 million of taxpayer healthcare funds. The lawsuit seeks to hold Sterling and its owners and doctors accountable for how public funds were allegedly overbilled during the COVID-19 public health emergency.

The Complaint alleges that Sterling and its associates began their healthcare fraud scheme on or about 2013 whereby they exploited a known loophole in self-ordering of certain lab tests which could double and triple their revenues. The suit alleges that doctors Chang Yang and his biller Jenny Chang “upcoded and unbundled” lab services resulting in hundreds of thousands of unlawful health insurance claims for these fraudulent services. It also alleges that Sterling and its associates completely disregarded numerous red flags identifying these widespread coding failures and the resulting overpayments that followed. The Complaint further alleges that Sterling, including through its contracts with third-party companies, fraudulently collected patient information and double and triple billed for phantom COVID-19 tests.

In a related action, a Los Angeles Superior Court judge rejected multiple attempts by Sterling, its owner Dr. Yang, and their billers Jenny Chang and Elite Medical Billing to conceal their financial records in a high-profile COVID-19 fraud lawsuit brought on behalf of the State of California. On February 5, 2026, the Honorable Maureen Duffy-Lewis ruled that Sterling and Dr. Yang may not use patient privacy as a pretext to hide their own billing records, revenues, and financial transactions arising from COVID-19 testing and emergency relief programs. The Court made clear that while patient identifiers must be redacted, Sterling’s own financial conduct and practices are not secret.

The Court denied Sterling’s and Dr. Yang’s repeat requests for a broad protective order that would have allowed them to redact their own financial information. In a clarifying order, the Court confirmed that redactions are limited solely to patient personal identifiers and do not extend to defendants’ financial records.

The government’s interests in the action are prosecuted through a whistleblower represented by the Law Offices of Gloria Juarez. The DOJ’s Statement of Interest and recent Superior Court ruling underscore a clear message: laboratories that received substantial public funds during the COVID-19 pandemic must be held accountable and cannot expect to retain fraudulent funds.

The case captioned United States et al. v. Sterling Pathology Medical Group, et al., remains pending in the United States District Court for the Eastern District.

Media Contact:
Law Offices of Gloria Juarez
Gloria Juarez, Esq.
Email: gloria@thegjlaw.com

Telephone: 949-288-3402

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