Health Care Fraud Blog

Yesterday, U.S. District Court Judge Patricia A. Seitz sentenced Ariel Delgado, a Miami DME owner, to 30 months in prison, to be followed by three years of supervised release. The defendant was also ordered to forfeit $474,609 and pay restitution in the amount of $170,709.

According to the Indictment and the factual proffer read in open court at the time of the plea, on January 10, 2008, defendant Delgado became the president and registered agent of Caballero De Paris Inc. (hereinafter “Caballero”), a pharmacy purportedly doing business in Miami-Dade County. From January 10, 2008 through March 5, 2008, Caballero billed Medicare $1,388,051. Medicare paid Caballero $645,318 on these claims. Delgado was the sole signatory on the account into which all of the Medicare fraud proceeds were deposited.

The two doctors who appeared to have signed 80% of the prescriptions upon which Caballero’s false billings were based. Both doctors reviewed a list of the patients on whose behalf Caballero had billed and denied treating or prescribing medicine to any of the patients on the list.

Delgado's attorney argued urged the court make a determination that the calculation for loss suffered under the advisory sentencing guidelines was equal to or less than the amount of money actually paid by Medicare - $170,709 - minus 2 levels for a role adjustment for acting as minor participant less 3 levels for acceptance of responsibility resulting on a level 11 (8-14 months) in Zone C of the guidelines.

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MIAMI, FL (August 28, 2008) - Defendants Mabel and Abner Diaz, of Miami Lakes, FL were each sentenced today to fourteen years’ incarceration for conspiracy to commit health care fraud and health care fraud. Defendant Suleidy Cano, of Hialeah, FL was sentenced to eleven years’ incarceration for conspiracy to commit health care fraud and aggravated identity theft.

According to the parties' joint factual statement in support of the plea, the fraud involved durable medical equipment (DME), which is equipment that can be used in the home on a repeated basis for a medical purpose. Where DME is prescribed or ordered by a physician, an authorized Medicare provider who supplies the equipment to a Medicare beneficiary may be eligible for reimbursement by Medicare.

Abner Diaz and Mabel Diaz co-owned and operated All-Med Billing Corp., a Miami medical billing company, where Cano worked as a biller. All-Med submitted claims to Medicare on behalf of suppliers who purportedly provided DME to Medicare beneficiaries. All-Med submitted $419,935,692.74 in fraudulent claims for DME purportedly provided to Medicare beneficiaries by 85 DME suppliers. These claims were for equipment that not been ordered by physicians or delivered to the beneficiaries as claimed. As a result of these claims, Medicare paid the suppliers approximately $148,586,919.99.

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DALLAS, TX (August 27, 2008) - The federal government’s largest health fraud case involving online pharmacies was scheduled to conclude today with the sentencing of Ryokesh Johar Saran (Joe Saran) before US District Judge Jorge A. Solis in the Northern District of Texas. Saran as well and the 30 corporations he controlled were scheduled for sentencing. Sentencing for the corporate and individual defendants was indefinitely postponed due to the apparent heart attack Saran suffered en route to court.

Benson Weintraub, the nationally renown federal sentencing expert and a former full-time professor of law along with publisher of the Health Care Fraud Blog, Robert Malove, both of Fort Lauderdale have represented Saran and the corporate defendants for more than two-years and have been mounting a virtually unprecedented course of complex presentece litigation. The defense has challenged the criminalization of Group Purchasing Organizations (GPO), comparing it to “pharmaceutical arbitrage” according to recent defense pleadings.

Though the government’s theory of “intended loss” reflects a gross exaggeration of loss, artificially inflating the sentencing range called for by the advisory United States Sentencing Guidelines. The amount of restitution, $69,000, better reflects the relative severity of the offense behavior caused by Saran and 30 individual codefendants,

The case was launched by the US Attorney General’s office with much fanfare, but Saran, the lead defendant and virtually only one not yet sentenced, has challenged the methodology by which the government arrived at its loss calculations, particularly in view of the “actual loss” associated with the Mandatory Victim Restitution Act (MVRA).

Defense lawyers and US Attorneys are tracking the Saran case as a benchmark in health care fraud sentencing litigation based on the novel issues presented by his counsel. Similar theories of “loss” asserted by the DOJ Trial Attorneys from Washington were recently rejected by two federal judges in Miami before whom Weintraub and Malove recently prevailed at sentencing.

The defense issued subpoenas for agents of the FBI and FDA as part of it’s reaction to the prosecution’ failure to abide by its earlier commitment to turn over all Brady material in mitigation of punishment. The government moved to quash the subpoenas and that litigation, too, is still in progress. The defense preemptively filed a motion to enforce the government’s promise made one-year ago of an incremental turnover of Brady materials and the defendant’s statements. Parenthetically, Chad Meacham, lead counsel for the Dallas US Attorneys office, repudiated the discovery stipulation reached between the defense and his predecessor, Bill McMurrey, now a partner at the Dallas office of Bracewell and Giuliani.

Today, The New York Times reported that “Medicare’s top officials said in 2006 that they had reduced the number of fraudulent and improper claims paid by the agency, keeping billions of dollars out of the hands of people trying to game the system.

“But according to a confidential draft of a federal inspector general’s report, those claims of success, which earned Medicare wide praise from lawmakers, were misleading.”

CEO Magazine reports that healthcare costs are within the top three business concerns, and for good reason: U.S. healthcare spending has increased from a mere $27 billion in 1960 to $2 trillion in 2005. That is a 7,100 percent increase in spending! Employers today face many unique regulations, systems, procedures and records, with the potential for fraudulent activity at a heightened level.

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According to the L.A. Times, the owner of a Los Angeles-area hospital and a man who acted as a recruiter were arrested August 6 on federal charges of defrauding Medicare and Medi-Cal by providing unnecessary health services to homeless people who were recruited from “Skid Row” with promises of payments.

Rudra Sabaratnam, 64, of Brentwood, an owner and top executive of a hospital; and Estill Mitts, 64, who resides near the Miracle Mile section of Los Angeles, the operator of a Skid Row “Assessment Center,” were arrested without incident.

Sabaratnam and Mitts were indicted under seal by a federal grand jury last week. The 21-count indictment, which was unsealed this morning following their arrests, alleges that Sabaratnam and Mills conspired to recruit homeless people to receive unnecessary health services for the purpose of committing health care fraud.

Sabaratnam and Mitts are jointly charged with conspiring to receive and pay kickbacks for patient referrals and to commit health care fraud. Sabaratnam is charged with eight counts of paying kickbacks for patient referrals. Mitts is charged with four counts of receiving kickbacks for patient referrals. Mitts is additionally charged with six counts of money laundering and two counts of tax evasion for allegedly failing to report more than $479,000 in income in 2005 and more than $620,000 in income in 2006.

If convicted of all counts, Sabaratnam faces a statutory maximum penalty of 50 years in federal prison, and Mitts faces a maximum possible sentence of 140 years in prison. Click here to read the complete text of the US Attorney's press release.

New Stark Law regulations posted on July 31, 2008 by the Centers for Medicare and Medicaid Services (CMS) revise and expand the prohibition on physician referrals for designated health services (DHS) to entities with which they have financial relationships. A recent Health Care Alert from Krieg DeVault LLP provides a more detailed analysis of these changes.

On August 4, 2008, U.S. Attorney for the District of Northern Georgia David Nahmias announced that Angela D. Isley, , 44, of Atlanta, Georgia, was sentenced by United States District Judge Charles A. Pannell, Jr. to serve more than 5 years in prison on charges of health care fraud, mail fraud, and money laundering.

According to United States Attorney Nahmias and the information presented in court: Between January 2001 and December 2003, ISLEY knowingly assigned incorrect “product codes” to certain wrist braces and walking boots in Orthoscript Incorporated’s inventory in order to generate higher reimbursements from Medicare. ISLEY instructed company employees, often over their objections, to file claims with Medicare listing fraudulent product codes which are to be specifically used for custom-fabricated wrist braces, when all Orthoscript actually supplied were cheaper, prefabricated, off-the-shelf items. As a result of the health care fraud scheme, ISLEY caused Orthoscript to fraudulently bill the Medicare program for more than $600,000.

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