Health Care Fraud Blog

As reported previously here, a central feature of the Obama administration’s health care reform has been the HEAT (Health Care Fraud Prevention and Enforcement Action Team) initiative is the use of Strike Force teams. Strike Forces are multi-agency units of Federal and State law enforcement personnel designed to identify, investigate, and prosecute Medicare fraud. Strike Forces are supported by a CMS data analysis team and CMS program experts.

Since May 2009, this Administration has expanded Strike Force cities from Miami and Los Angeles, when Strike Force teams were launched in Houston and Detroit in May 2009 and in Brooklyn, Baton Rouge, and Tampa in December 2009. (To read more, click: here).

Building on the momentum started last May, U.S. Department of Health and Human Services Deputy Secretary William Corr and U.S. Department of Justice Acting Deputy Attorney General Gary Grindler, testified earlier this month before the United States House of Representatives Subcommittee on Labor, Health and Human Services, Education, and Related Agencies Committee on Appropriations and stated that the entire $250 million increase in the President’s Budget advances the goals of the HEAT initiative.

Strike Force defendants are also more likely to receive prison sentences and longer terms of imprisonment than more traditional criminal health care fraud defendants. Since the Strike Force’s inception, over 94% of all Strike Force defendants were convicted and sentenced to terms of imprisonment compared to 64% of all criminal health care fraud defendants. The average prison term for Strike Force defendants was 45 months, which was about 10% longer than the overall national average for federal health care fraud defendants over this same period.

New Strike Force locations are chosen based on thorough analysis of Medicare claims data, which helps identify hot spots of unexplained high-billing levels in concentrated areas, and a review of the most effective allocation of investigative and prosecutorial resources. The cost associated with Strike Forces expansion resulting in 20 locations by end-of-year FY 2011 is an estimated $46 million.

Alex Carrazana was a Medical Assistant. He is currently serving 72 months in prison for Medicare Fraud. He was for a time employed by a clinic called Midway Medical. At that clinic his job was to help with the infusion of drugs to HIV patients for therapy for a condition called thrombocytopenia, a bleeding disorder. He was not an owner, operator or licensed health care professional. Nearly everyone connected to the alleged conspiracy and probably even the government would concede he was not a major participant in the crimes (by way of disclosure, we represented other parties in this matter).

According to the government and the plea proffers of the co-defendants who were physicians, physicians assistant and owner of Midway, the clinic billed Medicare for approximately $8,000,000 in false claims. The claims were for infusion of a drug, RhoGAM, which in many instances was not provided. It was somewhat fortunate the drug wasn’t provided because the blood tests, detailing the need for the infusion therapy, had false data because the blood of the patients was altered by a person hired by the owner to mix the blood to generate false results.

There were apparently some facts that indicated Mr. Carrazana was aware fraud was going on and at a certain point he quit, according to his lawyer because he discovered what was going on and wanted out. Rather than pleading guilty with a plea agreement as most of the co-defendants did, he plead openly to the court because he and his lawyer disagreed with the facts the prosecutors would have required him to agree to as well as several sentencing guidelines adjustments; and he would have given up his right to an appeal.

By pleading guilty without a plea agreement, he and his lawyer could challenge at sentencing and on appeal everything from the amount of loss alleged down to his role in the clinic and the conspiracy. They did exactly this, and it did not turn out well - he unfortunately received a higher sentence than some of the other co-defendants. He appealed and the United States District Court for the 11th Circuit rejected all of his arguments and upheld his sentence. (To read the opinion, click: here).

The court found that leaving a conspiracy is not enough to cut off responsibility for the acts of co-conspirators after he left, therefore he was responsible for the full $8 million dollars in fraud. In addition, even though Mr. Carrazana did nothing sophisticated himself to aid in the commission of the crime and may have been unaware of the blood mixing, the court held that he should have known that his co-defendants would do something by sophisticated means, so he was also responsible for their acts in that sense.

To read more, click: here.

In the 1990’s there was a system in place that seemed reasonable at the time. The government hired private companies to audit hospital cost reports on the government’s behalf and to add additional incentive, those companies, generally large insurance companies, would receive bonuses based upon funds recovered. This lead to a sort of system where there were "gotcha" games between the auditors and providers, the providers would try and maximize their reimbursement knowing that the auditors would be specifically looking for places to cut.

Making matters worse, the auditors tended to ignore “errors” that benefited the providers because those errors didn’t benefit the government contractors. So too, the providers, in analyzing and contesting the audits through the appeals process would only report “errors” that benefited the providers. This system eventually led to the prosecution of a number of hospital executives as well as one of the largest whistleblower cases ever. (Click here to read more about John W. Schilling and the case against HCA/Columbia) The government ended that incentive program in part because of the gaming of the system it produced.

Well, it is back again. The government has contractors, called recovery audit contractors, or RACs that receive between 9-12% of overpayment funds they recover on behalf of the government on Medicare audits. In just three years, they have reportedly collected over $1 billion dollars. The only problem, except that the last time it produced somewhat unseemly results, is that these contractors are required to report to law enforcement instances of criminal fraud as opposed to billing errors or overpayment.

To date, only two cases have been referred to for criminal prosecution. The motive, you might suspect, is financial. The RACs don’t get any money for cases referred for criminal prosecution, only for their own recoveries. This suggests that the RACs are erring on the side of overpayment as opposed to fraud, which still benefits the government as well as the RAC and the provider; no harm, no foul. However, the implicit or explicit threat of criminal referral may be an interesting bargaining tool to make these recoveries. Another interesting twist is that the RACs can go back and audit the same providers over and over again, collecting on overpayments (not fraud) no matter how many times the provider makes the same errors.

To read more, click here.

If a provider discovers that it may have submitted false claims to Medicare or Medicaid, either through errors or through the malfeasance of an employee, the provider is obligated to pay the program back the funds wrongfully obtained. Medicare has a self disclosure protocol that allows providers to report false or erroneous claims but the terms of the protocol does not guarantee that by so doing anyone will avoid triple times damages under the False Claims Act or criminal prosecution.

When a provider self reports, its owners and employees can hope to avoid false claims or criminal liability based upon the benefit of telling Medicare before the false claim is otherwise discovered; whether through a whistleblower or the Program itself. However, often the problem can be large enough to cause serious financial distress to the provider or put other seemingly non responsible employees or owners at risk of criminal prosecution. Once reported, providers generally lose control of what happens; the money is not owed by only the criminal, but also the apparently innocent provider itself. The overpayment cannot be paid back at the provider’s schedule and the provider cannot control who the government decides to hold liable for the fraudulent acts.

Many times when reporting the crimes, others, innocent of the crime, also face scrutiny and the criticism “how could you have not known about this” is directed at the leaders of the organization. Some providers facing these circumstances, based upon a lack of certainty of the outcome, are tempted to end the problem, not report it, and hope that no one figures it out, fearing their own disclosure could be ruinous. This, of course, is the wrong decision, if discovered, the failure to disclose certainly tends to make everyone involved both in the activity and the decision to cover it up look guilty of a crime.

Take the case of the Eye Specialty Group of Memphis . They discovered that a physician employee was diluting the drugs used on patients so he could steal the excess drugs to sell for a profit. However, the provider unknowingly submitted claims to Medicare based upon the doctor’s services as if the doctor had been providing the accurate dose, causing the submission of false claims to Medicare. The provider had purchased all of the medicine it billed for, but the crooked doctor was stealing and reselling the excess medication. So the provider reported the doctor to the authorities and the result was a bill from Medicare for hundreds of thousands of dollars, potential lawsuits by patients, and a lot of really bad publicity.

To read more, click: here.

As part of the recent focus of a task force in the Tampa area, a physician and a physician’s assistant who owned and operated 8 clinics were arrested for health care fraud and drug trafficking charges.

The clinics, Neurology & Pain Centers, operated in Tampa , Lakeland , Sarasota , Orlando and Jacksonville . State officials say that prescription drug overdose deaths are now more prevalent than overdose deaths for street drugs such as heroin and cocaine. The Tampa area, according to State officials, is responsible for 25% of those deaths. The allegations contained in the indictment include that the PA, Troy Wubbenna, offered free drugs to a 17 year old to recruit other high school students and that the physician, Dr. Jeffrey Friedlander, signed blank prescription pads so that drugs, particularly Oxycodone and Oxycontin, could be dispensed when he was not around.

To read more, 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.

As the federal government’s Medicare Fraud Task Force called HEAT (Health Care Fraud Prevention and Enforcement Action Team), left Miami and deployed out across the country in six phases to Houston, Los Angeles, Detroit, Tampa, Baton Rouge and Brooklyn, it seemed many of the initial arrests, particularly out of the Detroit area, had a Miami connection as if the frauds were Miami transplant operations.

Well, finally, a sizeable operation with it seems nary a link to Miami. More importantly, this arrest out of Detroit of 13 people and many of the latest arrests are all pointing towards home health as the priority. Several home health operators and several doctors were arrested in an alleged scheme involving paid patients, false plans of care, and services never performed.

To read more: Click here.

Recently state and federal authorities announced a regional health care fraud strike force in the Tampa and Orlando region. In what may be one of the first operations of that strike force, a Lakeland, Florida couple, Lilian Pagkaliwangan, 40, and Raymundo P. Arellano, 42, operators of Lakeland Therapy Providers Inc. and Optimum Therapy Inc., were arrested for health care fraud with respect to the operation of those businesses. The charges include alleged fraudulent billing for services not provided.

According to the indictment the couple submitted claims for reimbursement for medical services not rendered, including services that were claimed to have been provided on days when the patients were not present at the clinic and couldn't receive services.

Click here to read more.

According to a report released this earlier this morning, hours ahead of an official announcement scheduled for later today, arrests were made in Miami, Brooklyn and Detroit. Federal agents are expected to take about 30 suspects into custody from three states on charges related to Medicare fraud totaling $61 million.

The arrests follow an investigation by the Medicare Fraud Strike Force, a partnership between the two federal agencies that started nationally in May. Click here to read an earlier blog post.

According to sources speaking on the condition of anonymity, HHS Secretary Kathleen Sebelius will hold a news conference this afternoon in New York to make the announcement of the government’s continued crackdown on Medicare fraud. A key part of President Barack Obama's proposed healthcare overhaul targets eradicating an estimated $60 billion a year lost to Medicare fraud.

Today’s raids come a week after HHS reported that in 2008 Miami-Dade County received more than $500M from Medicare in home healthcare payments intended for the sickest patients. This figure is more than the rest of the country combined. To read the OIG report, click here.

Indictments are expected to charge that Florida scammers arranged for fake patients to bill for home healthcare, including homeless patients and others fraudulently listed as blind diabetics who submitted bills for visits by nurses twice-daily to give them insulin injections. See this Miami Herald video.

In Detroit, suspects paid recruiters to find patients willing to fake symptoms in order to justify expensive testing, and in turn bill Medicare for reimbursement. Two Brooklyn suspects are alleged to have billed Medicare for medically unnecessary durable medical equipment (DME), including expensive shoe inserts reserved for diabetics.

Increasingly the manner in which the government promotes its law enforcement efforts in the Medicare arena sound more and more like military operations or even Saturday morning cartoons. The creation of the “Strike Force” known as HEAT, Health Care Fraud Prevention & Enforcement Action Team, sounds a lot more like commandos than lawyers and agents arresting doctors and white collar criminals. In the press releases you see the use of the words “combat” and “battle” and now the battle also has phases: Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), and Houston (Phase Four).

For more, click here.

In one of the recent pleas related to the government’s new focus on Medicare fraud in Detroit, a physical therapist and two others pleaded guilty to approximately $2.5 million in Medicare Fraud related to physical and occupational therapy services. Click here to read the plea agreement.

Baskaran Thangarasan, one of the conspirators, was paid $50 per file to falsify multiple physical therapy visits for patients who received no therapy. Mr. Thangarasan admitted to producing over 1000 such files during the course of the conspiracy. He now faces a maximum of 10 years in prison for his role although the actual sentence will be somewhat less.

To read the article click here.

A Jacksonville physician, Janet Johnson-Hunter, pleaded guilty to altering medical records to justify ambulance transportation of patients. Rather than have the case presented to a grand jury and require the government obtain an indictment, Dr. Hunter-Johnson waived that right and instead pleaded guilty to an information, available here. Physicians do not receive reimbursement for ambulance transportation, however ambulance companies do and Dr. Hunter allegedly owned a private ambulance company.

According to the plea related documents, the doctor had staff modify patient records to reflect that patients could not walk or use a wheelchair, a precondition for payment for ambulance transportation. The Stark law prohibits a physician from referring patients to pharmacies, diagnostic companies and other ancillary service providers in which the physician has an ownership interest. The law was put into effect to prevent physicians from over-ordering services due to that financial interest.

For more info, click here.

Federal officials in charge of preventing fraud in the billion-dollar Medicare program ignored dozens of warnings of criminal activity during the Bush administration, according to investigations by the Associated Press and U.S. Senator Charles Grassley’s (R-IA) office.

CMS received about 30 tips over more than three-years reporting scams, but less than half of them got any attention. Organized crime groups have realized it is much easier and less dangerous to steal millions from the Medicare without as opposed to traditional criminal enterprises like prostitution, gambling or dope dealing.

Southern California is one that has been particularly hard hit area for Medicare fraud, where Russian, Armenian and Nigerian mafias are under investigation by federal agents. Konstantin Grigoryan, a former Soviet army colonel turned crime boss, recently pled guilty to taking $20 million from Medicare. Click here to watch a CNN report including undercover surveillance video.

Budget priorities and redirection of investigations at the state level, has led to a drop off in investigations of workers compensation fraud at a time when such fraud is increasing, according to investigators. The focus on Medicare and Medicaid fraud prosecutions has led, according to insurance industry sources, to a decrease in private insurance fraud cases, including health care insurance fraud and most notably worker’s compensation fraud. Actually, the rationales are somewhat simple, legislatures looking at investigation budgets, State and Federal, are often concerned with the return on investment. Therefore, if a state agency is bring back stolen Medicaid funds, the legislator sees a direct benefit to funding those fraud investigation programs as the programs become budget neutral or even a budget positive. However, recouping funds for private companies does not share the same status. This is a phenomenon more likely in Attorney General Office or state programs directly funded by the legislature, as opposed to more local offices.

To read more, click here.

In a Sixty Miutes piece on Medicare Fraud, reviewed by the HCFBlog here, Steve Kroft claimed the government loses $60 Billion to health care fraud. The piece, otherwise quite good, then goes on to describe some of what we have been documenting here. However, the $60 Billion dollar a year health care fraud number used on Sixty Minutes and now making the rounds doesn’t seem to have roots in any actual data. The figure, first attributed to US DOJ Heathcare fraud prosecutor Kirk Ogrosky, started getting pretty mushy when a reporter tried to get to the actual source. The reporter, Pierre Tristam, soon found numbers ranging from $13 Billion to $68 Billion all using a perception that a certain percentage of health care spending must be fraud rather than some actual data on the fraud.

Tor read more click here.

Part of the Health Care Fraud Task Force initiative in Miami, Houston, Detroit and Los Angeles has met with some success, and not so coincidently some of the cases have Miami roots. The FBI press release related to a plea in a in a $10 million infusion fraud case which mirrors frauds extensively prosecuted in Miami, a Miami resident plead guilty with regard to the fraud in Detroit.

The AP does an interesting story on the influence of organized crime on Medicare Fraud, including some violence associated with the schemes. Former drug dealers and mobsters are getting more involved in the fraud due to the lower criminal penalties and larger amounts of money available than drug dealing, loan sharking or other organized crime activities. I recall one case in which a former drug trafficker explained why he moved to Medicare Fraud, “I got older, didn’t want to run around so much and no one shoots at you.”

For more, click here.

This past Sunday night, 60 Minutes ran an excellent exposé on the $60 billion Medicare Fraud crime wave sweeping the country. 60 Minutes correspondent Steve Kroft spent some time in Miami this past August with FBI Special Agent Brian Waterman getting an overview of how Medicare fraud is perpetrated by DME scammers.

South Florida is the epicenter of Medicare fraud, so there was plenty to report. DOJ prosecutor and Healthcare Fraud Strike Force leader, Kirk Ogrosky was also interviewed and said Medicare fraud is "way bigger than the drug business in Miami now." Waterman and Ogrosky agreed that the criminals perpetrating Medicare fraud are more sophisticated than before.

"They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car," Ogrosky explained.

"You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's," Waterman added, speaking about South Florida.

To read the transcript of the 60 Minutes segment click here.

To watch, click here.

MIAMI, FL (June 29) In the ongoing prosecutions by the joint DOJ-HHS task force, another physician, Roberto Rodriguez was sentenced to 97 months in prison and ordered to pay over $9,000,000 in restitution in connection with $20,000,000 in fraudulent claims submitted to Medicare through 4 clinics associated with the doctor. The physician had pled guilty in March. To read the plea agreement click here, and to read the factual proffer click here.

In this, as in many of the ongoing prosecutions related to this subject matter, the allegation was that expensive drugs related to the treatment of HIV symptoms were claimed to have been administered to patients, many of whom did not have HIV. Most of the drugs were not purchased by the clinics at all. To read the indictment, click here.

Click here to read more.

“Sweeps” among law enforcement are generally used in high drug crime areas to literally sweep in and arrest as many people as possible to clear out the drug dealing in that area.

In a modification of the theme, the State of Florida Agency For Health Care Administration (AHCA) decided to conduct an auditing sweep of durable medical equipment (DME) providers in Bay County, Florida. AHCA is the Florida Medicaid program administrator, and has the authority under Florida law to initiate overpayment actions or terminate a program provider, but is not a law enforcement authority, referring instances of fraud to the Attorney General’s Medicaid Fraud Control Unit. The probe was directed to supplies of oxygen to patients with COPD under the Medicaid program.

To read more click here.

Some 60 defendants charged with Medicare Fraud in the Southern District of Florida have fled pending trial since 2004. Many who have fled are of Cuban origin, leading authorities to conclude that they have returned to Cuba, which is generally out of reach of U.S. law enforcement.

Previously, defendants were able to be released on minimal restrictions. However, over the last year judges in the Southern District have been denying bond and placing significant restrictions on defendants to assure the presence of Medicare fraud defendants.

In another very good article, Jay Weaver of the Miami Herald, breaks down the fugitive life of one such defendant, Alcides Garcia, originally believed to have fled to Cuba but who had traveled to Mexico, Spain and was eventually arrested in the Canary Islands.

To read more click here.

Telemarketers in Houston are pushing “Medicare approved arthritis kits” that are really an assortment of DME and prosthetic devices billed to Medicare individually.

Barbara McGinity with the Better Business Bureau explains that the scam artists have taken something Medicare will pay for, individual items like a wrist band, like a knee brace, like a back brace, and have packaged them making it sound like it's a new thing a Medicare approved arthritis kit.

Houston's FOX 26 Investigates report that many of the Medicare patients contacted never got the kit even though their Medicare was billed hundreds of dollars.

You can click here to read the article.

The term “medically necessary” in the context of Medicare and Medicaid reimbursement has been under some scrutiny lately. Medicare defines "medical necessity" as services or items reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Medicaid has a similar definition. For items or services where there is no specific limitation based upon a coverage policy, medical necessity has often been left to the good faith determination of a physician. However, in several prosecutions of physicians for infusion of HIV drugs, the government has relied on fraudulent diagnosis or unnecessary prescribing of medications as a basis of prosecution, citing to the physician motive of profit over appropriate patient care. In addition, the 11th Circuit Court of Appeals in Atlanta has recently held that the Medicaid program in Georgia can overrule a physician’s determination of medical necessity.

The case involved a young girl whose physician ordered additional nursing care than was available under a Medicaid policy. A Federal District Court Judge found that the state could not override the physician’s order and that "the state's discretion is limited to a review of the request for fraud, abuse of the Medicaid system, and whether the service is within the reasonable standards of medical care." The Eleventh Circuit disagreed, saying both the state and the treating physician have roles in determining what is medically necessary. It cited a federal regulation that says a Medicaid agency "may place appropriate limits on a service based on such criteria as medical necessity or utilization control procedures." The Court concluded that "A private physician's word on medical necessity is not dispositive."

The case is Moore v. Medows, No. 08-13926. To read the case, click here. To read more, click here.

Florida, New York and California are generally on the cutting edge of Medicare fraud, and many hours of law enforcement time is taken to uncover the next wave of perceived schemes. However, fresh from Georgia: hyperbaric oxygen therapy fraud.

A clinic owner in Georgia plead guilty to receiving over $1,000,0000 in reimbursement for treatment, “Hyperbaric chambers have a number of legitimate medical uses, as varied as helping burn victims and even scuba divers in their recovery. This defendant, however, turned a hyperbaric chamber into a means of generating over a million dollars in fraudulent claims…” said United States Attorney David E. Nahmias. To read more about this, click here

While it appears on the surface that fraudulent claims, particularly arising out of a single clinic would be quickly discovered and it would also seem that there are not enough burn victims or senior citizen scuba divers with the bends to make such treatment viable in the Medicare context, those are not the only reimbursable services. There is a national coverage determination (NCD) NCD 20.29 that permits hyperbaric oxygen therapy (HBOT) for several uses, particularly diabetic patients who have diabetic wounds of the lower extremities after there are no measurable signs of healing for at least 30 days of treatment with standard wound therapy and must be used in addition to standard wound care. There is also a Florida local coverage determination (LCD); LCD L28887. Click here for more.

You can read the USAO Press Release about the case by clicking here.

Eight Miami-Dade County residents have been charged in a 16-count indictment for their alleged roles in a Medicare fraud scheme involving fake HIV infusion treatments.

After the arrests, the Sept. 24, 2008, indictment was unsealed charging one count of health care fraud conspiracy against Juan A. Marrero, a/k/a Tony Marrero; Orlando Pascual Jr.; Belkis Marrero; Dr. David Rothman; Luz Borrego; Dr. Keith Russell; Eda Milanes; and Jorge L. Pacheco.

In addition to the conspiracy charge, Tony Marrero is charged with six counts of health care fraud, two counts of money-laundering conspiracy and four counts of money laundering. Pascual is also charged with six counts of health care fraud, two counts of money-laundering conspiracy and four counts of money laundering. Belkis Marrero is additionally charged with six counts of health care fraud, one count of money-laundering conspiracy and one count of money laundering. In addition to the conspiracy charge, Rothman and Borrego are each charged with four counts of health care fraud, and Milanes, Russell and Pacheco are each charged with two counts of health care fraud. The indictment also seeks forfeiture from all defendants.

According to the indictment, Tony Marrero, Pascual and Belkis Marrero controlled the day-to-day operations of two Miami medical clinics: Medcore Group LLC (Medcore) and M&P Group of South Florida Inc. (M&P). As medical assistants, Borrego (at Medcore), Pacheco (at M&P) and Milanes (at M&P) provided unneeded HIV infusion treatments to paid patients. The indictment charges that Pascual, Borrego and Milanes delivered cash payments to the patients. Furthermore, the indictment charges Rothman with ordering the unnecessary treatments at Medcore, and Russell with ordering the unnecessary treatments at M&P. Rothman and Russell allegedly conducted cursory examinations of the beneficiaries and signed the required documentation, including medical and billing records, to make it appear that the injection and infusion treatments billed by Medcore and M&P were medically necessary and provided, when, in fact, they were not.

Juan Marrero, Pascual, Belkis Marrero, Rothman and Borrego allegedly caused Medcore and M&P to submit fraudulent claims to Medicare for more than $5.3 million. The indictment alleges that the defendants laundered a portion of the proceeds to acquire the cash necessary to pay the patients.

In the event of conviction, the advisory sentencing guidelines sentence range will be determined by measuring the dollar amount of the loss suffered. It is anticipated that lawyers for the government will advocate that loss is equal to the intended loss - an amount equal to the dollar amount alleged in the indictment. However, we have been successful in persuading federal judges that an obscure provision of “Special Rules” in the calculation of loss under the Federal Sentencing Guidelines is instructive and resulted in a significant exclusion of “relevant conduct” claimed by the government and a Guideline range approximately half of that requested.

As reported earlier in this blog, (click here and here) one U.S. District Court Judge has declared that he didn’t care whether the government proved the “submitted” amount as “intended loss” when the law actually requires calculation of the “allowed amount” minus 20 percent.

Continue reading "MEDICARE FRAUD STRIKE FORCE INDICTS EIGHT MIAMI-DADE RESIDENTS FOR AIDS/HIV INFUSION FRAUD" »

MIAMI, FL (September 11, 2008) - Miami physicians, Carlos Contreras, M.D., and Ramon Pichardo, M.D., each pleaded guilty today to defrauding the Medicare program in connection with a $6.8 million HIV infusion fraud scheme. To read the indictment in its entirety, click here.

Contreras, 60, pleaded guilty to conspiracy to commit healthcare fraud and admitted that he owned a Miami clinic named CNC Medical Inc. (CNC), which purported to specialize in the treatment of HIV positive patients. From November 2002 through April 2004, Contreras admitted that he conspired with others to submit approximately $6.8 million in fraudulent Medicare bills; that he knowingly signed documents containing false information about treatments purportedly given to HIV positive patients. Contreras admitted that he approved medically unnecessary treatments at CNC and that CNC received approximately $4.2 million from the Medicare program as a result of his and his co-conspirators’ criminal conduct.

Furthermore, Contreras admitted that he entered into an agreement in approximately November 2002 with Carlos Benitez, Luis Benitez, Thomas McKenzie, Pichardo and others to operate CNC as a fraudulent HIV infusion clinic.

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.

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 the underworld character of these types of criminal operations. To read those articles click here.

Continue reading "Miami Physicians Plead Guilty and Admit Ordering $6.8M Worth of Unnecessary HIV Infusion Treatments" »

MIAMI, FL (September 9, 2008) – Dilcia Marinez, 57, pleaded guilty today in U.S. District Court to her role in defrauding the Medicare program and laundering the proceeds of the crimes in connection with a $14 million HIV infusion fraud scheme. Click here to read the indictment.

According to information in plea documents, the Benitezes referred HIV-positive Medicare beneficiaries to the clinic and directed McKenzie to teach doctors how to make it appear legitimate health services were being provided.

For the past couple of months, Miami Herald reporter Jay Weaver has written a number of articles detailing how South Florida remains a hotbed for Medicare fraud, including several articles about the Benitez brothers' fraudulent HIV infusion schemes. To read those articles, click here.

Marinez pleaded guilty to conspiracy to commit health care fraud and conspiracy to commit money laundering. Marinez admitted that she was the president and director of G&S Medical Center Inc. (G&S), a Miami health care clinic. Marinez admitted that she entered into an agreement in approximately May 2003 with Carlos Benitez, Luis Benitez, Thomas McKenzie and others to operate G&S as an HIV infusion clinic. According to a report released almost one year ago, by the Inspector General for the U.S. Department of Health and Human Services, 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 "Miami Still a Hotbed for Medicare Fraud - HIV Clinic Administrator Pleads Guilty for Role in a $14 Million Medicare Fraud Scheme" »

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.”

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.

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.

Continue reading "MEDICAL SUPPLY EXECUTIVE IMPRISONED FOR DEFRAUDING MEDICARE" »

MIAMI (July 11, 2008). Yesterday the Bureau of National Affairs first reported another case rejecting the government’s methodology of computing “loss” in health fraud cases under the federal sentencing guidelines in the Southern District of Florida.

BENSON WEINTRAUB, the nationally renown federal sentencing expert National sentencing expert, a former full-time professor of law, persuaded US District Judge Cecilia Altonaga to reduce the government’s overarching figure of $14 million down to less than $400,000. The sentence of 41 months was about half of what the government claimed should be applied under the sentencing guidelines.

This ruling adopted the legal rationale of Judge Adalberto Jordan reported earlier in this blog when he declared that he didn’t care whether the government proved the “submitted” amount as “intended loss” when the law actually requires calculation of the “allowed amount” minus 80 percent.

The defendant was a physician, Ana Caos, MD who, after a mistrial and retrial, was convicted of dual conspiracies to file false Medicare claims and receive kickbacks.

Weintraub also argued that before, during, and after trial/sentencing, the defendant suffered from significantly reduced mental capacity which materially impacted her cognitive and volitional functions to mitigate the extent of her mens rea.

The case is legally significant as setting precedential loss rulings for health care fraud.

Dr. Caos was also represented by trial attorney Robert Josefsberg.

After a six day trial in Miami, a federal jury in Miami convicted Gustavo Smith, 43, the owner of a Miami pharmacy for his role in a $3 million Medicare fraud scheme and for money laundering of all 17 counts charged against him in the September 2007 Indictment.

The charges included: conspiracy to defraud the U.S. government, to commit health care fraud, and to submit false claims to the Medicare program; seven counts of health care fraud; seven counts of submitting false claims to the Medicare program; conspiracy to commit money laundering; and one count of money laundering.

Smith’s co-defendant, Friedhelm Schock, the nominee owner of Medstar, was acquitted by the jury on all charged counts.

According to Schock's defense attorney, Michael Band of Adorno & Yoss, the government argued that Schock was the "nominee" owner of the pharmacy, signed all the Medicare documents, opened all the bank accounts, formed the corporation, received monies far in excess of what reflected the work he performed at the pharmacy and lied to the government to cover up the fraud.

Continue reading "Miami Pharmacy Owner of Convicted of Medicare Fraud, Co-defendant Acquitted" »

Check this out. Usually you would think of a psychiatrist as being someone who treats patients who suffer from auditory or visual hallucinations. However, an Illinois psychiatrist is headed to federal prison for two and a half years for defrauding Medicare of $1.75 million for submitting bills to Medicare for patients he never saw.

According to the indictment, Dr. Ajit Trikha (ah-JEET' TREEK'-ah) a 55-year-old psychiatrist pleaded guilty last June in U.S. District Court in East St. Louis to two counts of health care fraud. Trikha submitted bills to Medicare for reimbursement claiming that he had therapy sessions with patients, when in truth he never met the patient and in some instances was out of the country on vacation. He also billed for group-therapy sessions that far exceeded the 12-person limit set by Medicare and Medicaid.

Additionally, the indictment specifically alleged that the doctor and his medical practice "regularly submitted claims with [erroneous] . . . codes when spending little or no time with the patient rather than approximately 20 to 30 minutes face-to-face with the patient as required by 08 17, or approximately 45 to 50 minutes face-to-face with the patient as required by 9081. TRIKHA and TRX also submitted claims with these codes for visits with patients who were not able to communicate verbally at all."

A federal judge has ordered Trikha to reimburse the government for the money he bilked.

On April 2, the same day that seven co-defendants were indicted (click here) for their roles in an $11 million Medicare fraud scheme involving HIV infusion clinics, Rita Campos Ramirez who had pleaded guilty in August 2007 to a $170 million conspiracy to commit health care fraud was sentenced to 10 years in prison. According to the U.S. Department of Justice and local federal prosecutors, the scheme represents the largest known individual case of Medicare fraud in the history of the program.

Continue reading "Miami Woman Sentenced to 10-years for Role in $170M Healthcare Fraud Consiracy" »

Seven Miami-area residents were indicted on April 2, 2008, in connection with an $11 million Medicare fraud scheme involving HIV infusion clinics. The defendants were all charged with: conspiracy to defraud the United States, to cause the submission of false claims, to pay health care kickbacks, and conspiracy to commit health care fraud.

According to a report filed early last fall, by the Inspector General for the U.S. Department of Health and Human Services, 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 "Feds Charge Seven in $11 Million 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 December 13, 2007, the owners of five separate Miami-based health care corporations have were sentenced to prison. Collectively, the five defendants filed fraudulent claims with Medicare for over $28.6 million worth of unnecessary durable medical equipment (DME) and infusion therapy.

The five defendants who were sentenced in Miami are: Rodolfo Aenlle, 47, who was sentenced to 84 months in prison; Simon Seruya, 74, who was sentenced to 50 months; Alberto Gourie, 35, who was sentenced to 51 months in prison; William Garcia, 31, who was sentenced to 41 months; and Marina Ruiz, 48, who was sentenced to 24 months in prison. In total, these individuals were ordered to repay more than $13 million in restitution.

“We are continuing to seek appropriate sentences for the most serious Medicare fraud offenders,” said Assistant Attorney General Fisher. “The Strike Force in South Florida has successfully prosecuted some of the most egregious cases of Medicare fraud, and the average prison sentence for these violators is now up to almost 52 months which is above the national average of 31 months, with many Strike Force defendants receiving over 10 years.”

Continue reading "Medicare Fraud Strike Force Cases Result in Long Prison Terms for Five Health Care Company Owners" »

September 21, 2007

From The Washington Times

By Jim McElhatton - Doctors and clinics in three Southern Florida counties account for most of the billions of dollars charged to Medicare nationwide for HIV and AIDS drugs and services, billing records show.

Federal health care regulators call the lopsided billing patterns "egregious" and warn that South Florida — particularly Broward, Miami-Dade and Palm Beach counties — is a potential hotbed for health care fraud, waste and abuse.

"It"s all ultimately part of the money-driven, underground economy in Miami," said Benson B. Weintraub, a health care fraud lawyer based in Fort Lauderdale.

According to a report this week by the Inspector General for the U.S. Department of Health and Human Services, 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 "South Florida bills billions for HIV" »

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 28, 2007, a federal grand jury indicted the former operations director of A-Care EMS Inc. on charges that he sent fraudulent claims to the Centers for Medicare and Medicaid Services to pull in more money.

The indictment, filed Tuesday in the U.S. District Court for the Southern District of Texas, claims Rodney Lee Ramos, 34, of Weslaco, instructed emergency medical technicians to transport patients for dialysis who were not confined to bed."

According to the indictment, Ramos worked as an EMT coordinator for A-Stat Ambulance Services Inc., which was owned by Guadalupe Garces Jr. and Araceli Garces. Medicaid and Medicare placed a vendor hold on that ambulance provider -- withholding payment to the company -- after federal agents determined that the owners were defrauding the federal and state health insurance programs.

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 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.

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.

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.”

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.

On April 18, 2007, U. S. District Court Judge Marcia G. Cooke sentenced Marcelo de Jesus Serrano, a laboratory owner, who previously pled guilty in connection with a $2.5 million Medicare billing fraud scheme to a 57-month term of imprisonment for his role in the health care fraud scheme.

Serrano also agreed to forfeit in excess of $2.8 million in cash and stock holdings, along with three Mercedes Benz automobiles and a motorcycle.

The case stemmed from a fraudulent medical laboratory billing scheme that netted Serrano and his co-conspirators more than $2.5 million in Medicare payments from 2003 through 2005. Serrano operated two clinical labs, Biocyte Laboratories, Inc., and Washington Medical Laboratory, Inc., formerly located in Hallandale Beach, Florida. To conceal his ownership interests in the labs, Serrano incorporated the labs with the State of Florida in the names of fake owners, including a deceased nursing home patient. Serrano then submitted in excess of $5 million in claims to the Medicare program for fraudulent clinical laboratory testing.