Health Care Fraud Blog

On May 18, 2007, the US Attorney's Office reported that Jafet Garcia, a defendant in a massive South Florida Medicare fraud scheme, was sentenced in West Palm Beach Federal court to ten (10) years’ imprisonment.

According to the court file, the defendant and his partners purchased four medical equipment companies located in Miami-Dade and Palm Beach Counties, between February 2004 and December 2004. The defendant and his partners recruited individuals to pose as the owners of these companies. After setting up the companies, the defendant and his partners obtained patient and physician information which they used to prepare bogus prescriptions and/or certificates of medical necessity. The bogus prescriptions and certificates purported to authorize the provision of various types of medical equipment for the named Medicare beneficiaries; in truth, the prescriptions and certificates were prepared by the defendant and/or his accomplices and contained forged physicians’ signatures.

The defendant and/or his partners provided the bogus prescriptions and certificates to a Miami billing company for submission to Medicare. The billing company prepared Medicare claims which sought reimbursement for the cost of the equipment listed in the bogus prescriptions and certificates, even though such equipment was never authorized by a physician or provided to the beneficiaries. Medicare processed the fraudulent claims and issued reimbursement checks which the defendant and/or his accomplices cashed at a Miami check cashing store. The defendant and his partners would submit claims through a particular medical equipment company for only two to three months, close it and then begin billing through another company to avoid getting caught.

The four companies used by the defendant and his partners to defraud Medicare were Sunset Medical Corporation, King Medical Service and Supplies Corporation, Travelango Services Corp. and Clear Choice Home Health, Inc. During the course of the scheme, the defendant and his partners submitted more than $9 million in bogus Medicare claims.

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On May 11, the US 11th Circuit Court of Appeals, issued an opinion reversing the of convictions, all convictions of one defendant for Medicare Health Care Fraud and money laundering, and vacated the sentence for incorrect loss calculations.

The scheme involved transporting patients to the defendants’ pharmacies in exchange for illegal kickbacks for patients and doctors. However, no evidence indicated that Medicare was billed for unnecessary medical procedures. A confidential informant met with the defendants to exchange, for a fee, their checks for cash, admitted on cross-examination that one defendant, Medina, a secretary, was always sent out of the room to avoid her hearing them talk about the kickback scheme.

The Court also vacated the money laundering counts which related to the fraud counts it had set aside, since money laundering involves the proceeds of activity known by the defendants to be illegal.

The Court upheld the convictions of two defendants as to the general conspiracy charge, under 18 U.S.C. § 371, but vacated the secretary’s conviction, finding that her lack of awareness of the kickback conspiracy, and of the conspiracy’s other objectives, left insufficient evidence to
convict.

The Court remanded the case for resentencing and noted that the district court failed to make a sufficient loss calculation, and instead sentenced the defendants for the entire amount Medicare was billed in the period, without explanation. However, in the absence of evidence of Medicare’s payment of unnecessary medical claims, or that the patient kickback scheme resulted in any actual loss to Medicare, this calculation was inadequate.

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The Centers for Medicare & Medicaid Services Program Integrity Group at recently opened a field office in Santa Ana, California, aimed at preventing and prosecuting health care fraud.

"In the two years since the office has been up and running, we have been able to stop almost $2billion in inappropriate or improper payments from going out the door," program director Kimberly Brandt said.

Like the Medicare Fraud Strike Force office in South Florida that arrested 38 people for defrauding the federal program out of more than $142million, the Santa Ana office uses "data mining" technology to target fraudulent Medicare and Medicaid billings.

According to Assistant U.S. Attorney Consuelo Woodhead, who coordinates federal health care fraud prosecutions in Los Angeles, officials could double the number of law enforcement personnel fighting the problem and still fall short of having enough people to make a significant difference.

Woodhead thinks, that "to really effectively deal with the problem, we're going to have to take a multidisciplinary approach where you look at licensing and certification, how claims are processed, as well as strong criminal and civil enforcement after claims are paid."

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On May 9, investigators said the arrests of 38 people are the result of an operation conducted by a strike force made up of a team of federal, state and local investigators who have been concentrating on Medicare fraud -- ''especially prevalent'' in South Florida -- since early March.

According to remarks made by Attorney General Alberto R. Gonzales at a press conference with Michael Leavitt, Secretary of Health and Human Services, "the indictments outline various types of fraudulent schemes. Those schemes included compounded aerosol medications -- a process where a pharmacist makes medicine to meet a special medical need for a patient, rather than dispensing less expensive commercial pharmaceuticals. The indictments allege that the homemade medications were not necessary and that they were only prescribed to defraud Medicare.

"In one example, Eduardo Moreno, the owner of multiple DME companies, was arrested on April 7 after being named in a six-count indictment on fraud charges. Two of Moreno's companies - Brenda Medical Supply Inc., and Faster Medical Equipment Inc. - allegedly billed Medicare for more than $1.9 million for services that were not medically necessary. The FBI has seized of some of Moreno's assets, including a new Rolls Royce Phantom worth approximately $200,000.

Gonzales said that some of the 38 defendants allegedly paid Medicare recipients for use of their Medicare card numbers so that the defendants could submit fraudulent claims.

''We believe scores of shell companies have opened and obtained Medicare supplier numbers in Miami-Dade County alone,'' Gonzales said.

“The landscape for fraud in south Florida has changed dramatically over the past two years. CMS has taken aggressive action to curb infusion therapy fraud and other organized fraud actions,” said Leslie Norwalk, acting administrator of the Centers for Medicare and Medicaid Services. “We have opened two satellite offices that are dedicated to combating fraud in high-risk areas and we will soon be opening a third. We are sending a strong message to those who seek to defraud the programs that if they engage in fraudulent activity, they will be caught and no longer able to take advantage of the programs to their own gain.”

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Iyad Abu El Hawa, who had pleaded guilty to charges of healthcare fraud, was sentenced last Monday to 46 months in federal prison for Medicare fraud and misbranding drugs stemming from an October 2005 health fair at Exxon Mobil, at which 1,100 employees and contractors received what they thought to be flu vaccines.

El Hawa,36, and several assistants filled the syringes with sterile water at the request of Martha Denise Gonzales, an unlicensed nurse who signed a field services contract with Exxon Mobil to deliver the flu vaccines, which at the time were extremely rare. Gonzales had already administered fake vaccines to 14 residents of a Houston-area senior care facility.

El Hawa's attorney had pressed for a lighter sentence — the charges carry a maximum of 10 years in prison and a $250,000 fine — because of El Hawa’s cooperation with federal prosecutors and investigators. However, the Government's motion for downward departure for a sentence below the recommended sentencing guideline range was also denied. The total amount of fine and restitution will be determined on May 14, 2007, the same date that sentencing is set for Gonzales.

Arguing that El Hawa should also bear the cost of the oil company's expenses incurred to screen those who received the bogus flu shots for possible infections, Assistant U.S. Attorney Suzanne Bradley Bradley said “The court has to abide by and embrace relevant conduct.” However, Judge Kenneth Hoyt did not verbally express agreement or disagreement, but he refused to officially take the incurred expenses off the sentencing table. “There has to be some accountability,” Hoyt said.

El Hawa, who carries both Israeli and Jordanian passports and is of Palestinian descent, will not be allowed to live in the United States once he is released from prison.

El Hawa’s wife, brother-in-law and a coworker were at Monday’s sentencing. When the sentence was read, El Hawa’s wife broke into tears, holding her face in her hands. Outside the courthouse, her grief turned to anger at the media, the FBI and Gonzales.

“My husband is a good man,” she said, echoing her husband's attorney's remarks that one episode of misconduct was not representative of El Hawa. Right now “It’s Arabs’ turn to be persecuted. It was just a big rush to judgment. The media reported all these things about me being unlicensed and me not being a citizen, when neither of those things are true. He made a mistake — he just got caught up with the wrong person.”

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In Ft. Lauderdale, U.S. District Court Judge James I. Cohn sentenced Fernando Ferrer Jr. and Isis Machado for conspiracy, identity theft, computer fraud and wrongful disclosure of individually identifiable health information (HIPAA violation) for activities that impacted patients at Cleveland Clinic and Health Management Associates.

Fernando Ferrer, Jr. and Isis Machado were convicted of conspiracy to commit computer fraud, conspiracy to commit identity theft and conspiracy to wrongfully disclose individually identifiable health information, in violation of 18 U.S.C. § 371.

Ferrer was also convicted of a substantive count of fraud in connection with computers in violation of 18 U.S.C. § 1030, a substantive count of violating the Health Insurance Portability and Accountability Act (HIPAA) involving the wrongful disclosure of individually identifiable health information, in violation of 42 U.S.C § 1320d-6(a)(2), and five separate counts of aggravated identity theft, in violation 18 U.S.C. § 1028A.

Ferrer pled not guilty and proceeded to trial. He was convicted by a jury of all 8 counts of the Superseding Indictment. Machado pled guilty to conspiracy and testified at trial against Ferrer.

Machado was employed at the Cleveland Clinic when she and her cousin Ferrer stole the personal information of Cleveland Clinic and MHA patients. That information included, among other things, the patients' names, dates of birth, Social Security numbers, Medicare numbers and addresses.

The patients' information was then used to make fraudulent claims for Medicare reimbursement, allegedly more than $2.5 million on behalf of more than 1,100 victims.

According to government officials, Ferrer advised Machado of an 'opportunity' whereby Machado could sell stolen personal identification information to her co-conspirators. Machado exceeded her authorized access to the Cleveland Clinic's computer system to obtain and print out personal information of Cleveland Clinic and HMA patients. Ferrer paid Machado for the personal information she stole. Ferrer then caused the personal information obtained by Machado to be used to file fraudulent claims for Medicare reimbursement upon the United States.

Ferrer is to serve 7 years, 3 months in prison and three years of supervised release, as well as to pay $2.5 million in restitution.

Machado is to serve 3 years of probation, including six months of home confinement, as well as to pay the same restitution as Ferrer.

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The Florida House and Senate have passed an important piece of legislation which, when signed into law by Governor Charlie Crist, will mirror the Federal False Claims Act. The False Claims Act allows the Attorney General's Medicaid Fraud Control Unit to recover triple damages in civil lawsuits against those who commit Medicaid Fraud.

Under Federal law, all states that participate in the Medicaid program must also have a Medicaid Fraud Control Unit. Florida’s Medicaid Fraud Control Unit is operated by the Office of the Attorney General and is a joint Federal-State funded law enforcement agency. The unit, working with the Agency of Health Care Administration’s (AHCA) Bureau of Medicaid Program Integrity, investigates and seeks prosecution for criminal fraud and is empowered to “seek any civil remedy provided by law.”

This legislation will increase the recovery for Florida by 10 percent on all civil actions. In 2005, the Medicaid Fraud Control Unit secured over $76 million in settlements for Florida’s consumers. Nearly the entire amount was recovered through the use of the False Claims Act.

"Those who exploit and defraud our Medicaid program steal critical health care dollars from those who desperately need these services. Once signed into law, this legislation will not only strengthen our enforcement tools but more importantly, will return millions of dollars in Medicaid resources to the elderly, the disadvantaged and others in need," said Attorney General Bill McCollum. "I commend the Legislature for passing this important legislation which will assist our state combat Medicaid fraud and punish those who selfishly cheat the system."

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Federal prosecutors in Indiana have charged Dr. Jihad Kasim, a Valparaiso pediatrician with health care fraud, accusing him of submitting more than $1 million in fraudulent Medicaid claims for medical services he didn't provide.

Kasim's accused of pilfering protected information from patient files who gave birth at hospitals he worked at and then using the information to submit fraudulent bills.

Kasim claimed most of the women were treated for blood infections, though the patients denied to investigators that they were ever diagnosed or treated for such conditions.

Prosecutors say Kasim has 14 bank accounts, three cars, two homes and a 20-foot speedboat.

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A Miami-Dade husband and wife, both licensed occupational therapists, were arrested on charges they defrauded the Florida Medicaid program out of more than $200,000.

Investigators with the Attorney General’s Medicaid Fraud Control Unit after receiving information from the Agency for Health Care Administration.

The investigation discovered that the Sanfords allegedly billed Medicaid for providing two or three different types of services during the same 15 minutes of face-to-face therapy, although Medicaid can only reimburse for one treatment. A number of the children who were subjected to these therapies were under the age of ten and several of them are disabled. The Sanfords’ facility, also known as Fit for Kids, is located in North Miami Beach.

The Sanfords are each charged with grand theft and organized scheme to defraud, both first-degree felonies. The charges each carry a maximum penalty of 30 years in prison and a $10,000 fine. Additionally, the Attorney General’s Medicaid Fraud Control Unit seized funds from several bank accounts controlled by the Sanfords pursuant to the Florida Contraband Forfeiture Act. The Miami-Dade County State Attorney’s Office will prosecute the case.

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Posted In: Medicaid Fraud

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