Health Care Fraud Blog

HOUSTON - Whether it is known as “courtroom rent” or by some other name, the dangers of going to trial as opposed to pleading guilty requires a careful consideration of the case, the facts, the sentencing guidelines and the judge.

Two Texas DME owners learned the very hard way yesterday at their sentencing following a trial. Rhonda Fleming was sentenced to 30 years in prison for her role in a DME scheme, she was the alleged owner of three DME companies and a billing company that submitted the claims, totaling $36 million. Her trial co-defendants, a co-owner of one DME and a “runner” (someone who supplied patient information for the others in the scheme) were sentenced to 11 years 3 months and seven and a half years in prison. Their co-defendants, who plead guilty before trial and testified at trial received 12 months, 60 months and 70 months in prison.

For more info, click: here.

Health and Human Services Office of Inspector General released an updated fraud alert “Telemarketing by Durable Medical Equipment Suppliers” originally published in March 2003.

The Fraud Alert states in relevant part:

Section 1834(a)(17)(A) of the Social Security Act prohibits suppliers of durable medical equipment (DME) from making unsolicited telephone calls to Medicare beneficiaries regarding the furnishing of a covered item, except in three specific situations: (i) the beneficiary has given written permission to the supplier to make contact by telephone; (ii) the contact is regarding a covered item that the supplier has already furnished the beneficiary; or (iii) the supplier has furnished at least one covered item to the beneficiary during the preceding 15 months. Section 1834(a)(17)(B) specifically prohibits payment to a supplier that knowingly submits a claim generated pursuant to a prohibited telephone solicitation. Accordingly, such claims for payment are false and violators are potentially subject to criminal, civil, and administrative penalties, including exclusion from Federal health care programs.

The Office of Inspector General (OIG) has received credible information that some DME suppliers continue to use independent marketing firms to make unsolicited telephone calls to Medicare beneficiaries to market DME, notwithstanding the clear statutory prohibition. Suppliers cannot do indirectly that which they are prohibited from doing directly. OIG has also been made aware of instances when DME suppliers, notwithstanding the clear statutory prohibition, contact Medicare beneficiaries by telephone based solely on treating physicians’ preliminary written or verbal orders prescribing DME for the beneficiaries. A physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary.

To read the Fraud Alert: Click here.

All OIG Special Fraud Alerts are available on the OIG Web
site at: http://oig.hhs.gov/fraud/fraudalerts.asp

To read the Federal Register: Click here.

MIAMI, FL (September 29, 2009) Defendant Daniel Martinez, of Davie, Florida, was sentenced for his participation in a $20 million health care fraud and money laundering scheme. U.S. District Judge Paul C. Huck sentenced Martinez to a total of a 150 months' imprisonment followed by an additional 18 months of home confinement. For more: Click here.

From experience as criminal defense attorneys, nothing enrages agents and prosecutors more than extravagances by those accused. That is why good defense attorneys will make sure a client being accused of stealing vast or even minor sums of money go into a meeting with the government or into court without wearing a Rolex or pulling up in a new Mercedes. Justifiably, it grates on one’s sensibility that a thief should live better than the rest of the hard working population.

Usually everyone involved in the proceedings knows how much money is at issue, but that will often take a back seat in the minds of those involved to the obvious displays or wealth. Those items also often form the basis for the otherwise irrelevant but juicy nuggets at trial where the prosecutor or witness will speak about those items to inflame the jury. Remember the $6000 shower curtain in the trial of the former Tyco CEO Dennis Kozlowski, do you remember anything else? As with other jurisdictions, California is getting heavily into health care fraud prosecutions.

This article is about a criminal prosecution brought by the California AG over $678,000 in DME fraud. The reporter, generally given such information by agents or prosecutors, feels compelled to point out a defendant bought a new Hummer, as if allegedly stealing $678,000 is not enough.

MIAMI, FL (September 18, 2008) - Thomas McKenzie, 53, a Miami physician’s assistant pleaded guilty today to defrauding the Medicare program in connection with a $119 million HIV infusion fraud scheme.

McKenzie, pleaded guilty in Miami to one count of conspiracy to commit healthcare fraud and one count of submitting false claims to the United States. McKenzie admitted that beginning in approximately December 2001 and continuing through approximately April 2004, he trained physicians at 11 Miami medical clinics how to make medical records appear to support medically unnecessary HIV infusion services allegedly administered to patients. McKenzie also admitted to overseeing the documentation of fraudulent services at these clinics to make it appear that legitimate services were being provided at those facilities.

According to information contained in plea documents, McKenzie entered into an agreement with brothers Carlos, Luis and Jose Benitez to assist them in operating a series of fraudulent HIV infusion clinics throughout south Florida. The Benitez brothers allegedly referred HIV-positive Medicare beneficiaries to these clinics and directed clinic staff to pay cash kickbacks to the patients. McKenzie admitted that his role at the Benitez-owned clinics was to train and oversee the physicians working there, ensuring that the medical records appeared to support the expensive HIV infusion treatments being billed to Medicare by the clinics.

Miami Herald investigative reporter Jay Weaver wrote a series of articles last month disclosing the intricacies often associated with Medicare fraud / money laundering conspiracies. Those articles are quite revealing and detail these types of criminal operations. To read those articles and to learn more about the Benitez brothers click here.

McKenzie admitted to knowing that the infusion treatments being billed at the clinics were medically unnecessary and/or never provided. In his plea, McKenzie admitted that the HIV infusion clinics where he worked submitted $119 million in fraudulent claims to Medicare for medically unnecessary HIV infusion therapy.

According to a report by the Inspector General for the U.S. Department of Health and Human Services made public a year ago, for which attorney, Benson Weintraub, a frequent contributor to this blog was interviewed by the Washington Times (click here to read that blog post), health care providers in Broward, Miami-Dade and Palm Beach submitted $2.5 billion in claims to Medicare on behalf of HIV/AIDS patients in 2005.

Continue reading "PHYSICIAN’S ASSISTANT PLEADS GUILTY TO ROLE IN $119 MILLION FRAUDULENT HIV INFUSION SCHEME" »

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.

Continue reading "MIAMI DME OWNER SENTENCED FOR MEDICARE FRAUD" »

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.

Continue reading "DME DEFENDANTS SENTENCED IN $492M MEDICARE FRAUD SCHEME " »

On April 2, 2008, U.S. District Court Judge Adalberto Jordan of the Southern District of Florida sentenced defendant Michael Labrada, 27, of Miami to a 97 month prison term and Miguel Castillo, 42, of Miami, to a 57 month prison term for their participation in a multi-million dollar health care fraud and money laundering scheme.

Labrada was convicted of conspiring with Angel Castillo, Jr. to commit health care fraud by serving as a straw owner of a medical equipment company known as JJ & D Medical Equipment, Inc. The company submitted more than $6.8 million dollars in bogus claims and received approximately $1.6 million in payments. In the second case, Labrada was convicted of money laundering charges in connection with a $2.3 million laundering scheme orchestrated by his co-defendant, Angel Castillo, Jr.

Miguel Castillo was also convicted of related health care fraud and money laundering conspiracy charges. In addition to serving as a straw owner of a medical equipment company, Miguel Castillo collected hundreds of thousands of dollars in fraud proceeds from check cashers at the direction of his cousin and co-conspirator, Angel Castillo, Jr.

Continue reading "Two Florida Men Sentenced for Healthcare Fraud & Money Laundering" »

Yeleiny Guerrero was the co-owner of Denis Medical Services, Inc. She was charged in a 6 count indictment with conspiracy to defraud the United States by causing the filing of false Medicare claims, conspiracy to commit health care fraud and 4 counts of health care fraud. Her codefendants were Ramon Oscar Soto, Araelia Nieto and Rafael Moreno. Soto was the leader of the charged conspiracy which involved three separate DME companies: P & A Medical, ROS Medical and Denis Medical Services. Nieto and Moreno were co-owners of the other two DME companies. All three of them pleaded guilty and were sentenced to time in the federal pokey: Moreno 18 months, Nieto 24 months and Soto 37 months.

The evidence at trial demonstrated that Guerrero established the corporation in her name, opened a bank account as the sole signatory, applied for all state and federal licenses and signed the Medicare Supplier Application so as to obtain a provider number. She worked at the office in a warehouse district daily from 8 am to 12 noon.

Continue reading "Defendant Acquitted of Healthcare Fraud " »

On September 6, 2007, Gianni Suarez Vazquez, a participant in a massive Medicare fraud scheme, pled guilty in federal court in West palm Beach, Florida, to mail fraud and money laundering charges. He is scheduled to be sentenced before U.S. District Judge Donald M. Middlebrooks on November 15, 2007.

According to the court records, between November 2003 and August 2004, Suarez Vazquez incorporated or set up two medical equipment companies, GK Medical, Inc. and Suplident International Corporation, in Palm Beach County. Thereafter, he obtained Medicare provider numbers for both companies to enable the companies to submit claims directly to Medicare. To conceal his ownership and control of the companies, Suarez Vazquez designated "strawmen" as company owners, including his mother, on the corporate documents and Medicare Provider Agreements.

Continue reading "Palm Beach Medicare Fraudster Pleads Guilty to Mail Fraud & Money Laundering" »

On August 31, 2007, defendants Maricel Li and Marta Perez, both residents of Miami, were sentenced by United States District Court Judge James I. Cohn in Fort Lauderdale, Florida.

Li was sentenced to twenty-four (24) months' imprisonment, followed by three (3) years of supervised release. Li was also ordered to pay $556,519.85 in restitution. Perez was sentenced to five (5) months' imprisonment, to be followed by two (2) years of supervised release.

Both defendants had previously pled guilty. Defendant Li had pled guilty to an Information charging her with conspiracy to commit health care fraud violations and conspiracy to commit structuring violations. Defendant Perez had pled guilty to conspiracy to structure financial transactions.

Continue reading "Miami Defendants Sentenced on Health Care Fraud" »

On August 30, 2007, the owner and operator of a Miami durable medical equipment company and an assisted living facility was convicted as charged in a five-count indictment by a federal jury in Miami of Medicare fraud in U.S. District Court for the Southern District of Florida.

After a jury trial at federal court in Miami, the jury found Marianela Smith guilty on all charged counts including conspiracy to defraud the U.S. government, to submit false claims to Medicare, and to receive kickbacks; conspiracy to commit health care fraud; and three counts of receiving kickbacks in exchange for referring patients to a co-conspirator pharmacy.

Smith faces a maximum sentence of 30 years in prison. Prior to sentencing the U.S. Probation Office will complete a pre-sentence investigation and submit a Pre-Sentence Report to the judge for consideration. The PSI will contain an advisory guideline sentence which the court must consider in determining what type and length of sentence is sufficient, but not greater than necessary, to comply with the statutory directives set forth in 18 U.S.C. § 3553(a).

Smith is scheduled to be sentenced November 9, 2007, before U.S. District Court Judge Joan A. Lenard.

On April 20, 2007, the U. S. Attorney's Office for the Southern District of Florida, together with the Miami Field Office of the FBI, and the U.S. Department of Health and Human Services, Office of the Inspector General, announced the unsealing of an Indictment charging four (4) individuals in connection with a $3 million health care fraud, money laundering, and obstruction-of-justice scheme.

Charged in the 13-count Indictment are defendants Jorge Mariano Hernandez, Marta Saavedra, Tania Michel, and Jorge German Suasnavas. Hernandez, Saavedra, and Michel are charged in connection with a $3 million Medicare billing fraud scheme involving JT & M Medical Services, Inc., a Miami durable medical equipment (DME) company. Hernandez, Saavedra, and Suasnavas are separately charged with a conspiracy to commit money laundering regarding the proceeds of the fraud.

According to the Indictment, the criminal scheme involved the submission of claims for DME that were was neither ordered by doctors nor delivered to Medicare patients. In addition, the Indictment charges that Hernandez and Saavedra, who are married, conspired to obstruct the grand jury’s investigation of the alleged fraud at JT & M. The Indictment charges the pair with destroying records sought by the grand jury and directing a witness to give false testimony.

If convicted, the defendants face a maximum of ten (10) in prison on the health care fraud charges and up to an additional twenty (20) years behind bars for the money laundering charge. Hernandez and Saavedra also face a five (5) year maximum prison term for the obstruction conspiracy.