HAMMOND | A federal grand jury has charged a Merrillville doctor and a Chicago diagnostic lab manager with conspiring to scam the Medicare and Medicaid programs with unnecessary blood tests.

Dr. Adolph Yaniz, who has worked from an office at 5940 Broadway, is accused of coordinating medically unnecessary blood tests through Medway Diagnostic Laboratories, 3138 W. Cermak Ave., Chicago, between January 2008 and February 2009. In exchange, Medway operator Munir Chaudhry, paid Yaniz's clinic's $1,000 monthly rent, federal prosecutors claim.

Yaniz's lawyer, Bryan Truitt, declined to discuss the accusations specifically, but he said he will fight the charges against his client.

"We deny that Dr. Yaniz committed any crime," Truitt said.

Yaniz, 49, of Merrillville, and Chaudhry, 63, of Oakbrook Terrace, Ill., are charged in Hammond federal court with conspiracy to defraud Medicare and Medicaid. In the indictment unsealed Friday, both also face charges related to the alleged kickbacks, and Chaudhry is charged with lying to a federal agent during the investigation. They both also are charged with several specific counts accusing them of defrauding the government programs and the Blue Cross Blue Shield insurance company.

Yaniz also is charged with illegally dispensing powerful painkillers and anti-anxiety drugs such as Hyrdocodone, the key ingredient in Vicodin, and Xanax. He also is charged with possessing more than 20,000 Vicodin pills with intent to distribute.

Both men were arrested Friday, and they appeared in court later that day in their street clothes. Magistrate Judge Paul R. Cherry ordered Yaniz jailed until a hearing Wednesday. Chaudhry was set to be released late Friday on a $20,000 bond he won't have to pay unless he misses a court date.

Chaudhry had no lawyer Friday. He told Cherry he could not afford a lawyer, and he asked the judge to appoint an attorney. But Chaudhry admitted under questioning he owns several properties and has about $50,000 in corporate stocks. Cherry denied the request.

"Your honor, I do not have any assets that are liquid assets," Chaudhry said.

The indictment claims Yaniz sent blood samples to Chaudhry for unnecessary screenings for medical conditions including ulcers, chlamydia, gonorrhea, hepatitis and HIV.

A call to Medway's listed phone number was routed to Chaudhry's cell phone voicemail.

The indictment was the result of an "extensive" investigation between several federal agencies and the Indiana attorney general's office's Medicaid Fraud Control Unit, according to a news release from the Hammond-based U.S. attorney's office. That group effort made the investigation a success, said Tim McClure, deputy director of the fraud control unit, in the release.

"I truly believe we serve the taxpayers best when we pool our resources and fight fraud head-on," he said.