Category Archives: Fraud

South Carolina Family Practice Chain, Its Co-Owner, and Its Laboratory Director Agree to Pay the United States $2 Million to Settle Alleged False Claims Act Violations for Illegal Medicare Referrals and Billing for Unnecessary Medical Services

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Monday, September 11, 2017

Family Medicine Centers of South Carolina LLC (FMC), has agreed to pay the United States $1.56 million, and FMC’s principal owner and former chief executive officer, Dr. Stephen F. Serbin, and its former Laboratory Director, Victoria Serbin, have agreed to pay $443,000 to resolve a False Claims Act lawsuit alleging that they submitted and caused the submission of false claims to the Medicare and TRICARE programs. FMC is a physician-owned chain of family medicine clinics located in and around Columbia, South Carolina, whose practices include Springwood Lake Family Practice, Woodhill Family Practice, Midtown Family Medicine, Saluda Pointe Family Medicine, Lake Murray Family Medicine, and the now closed Rice Creek Family Medicine.

The settlements announced today resolve allegations that FMC, as directed by Dr. Serbin, submitted claims to the Medicare Program that violated the physician self-referral prohibition, commonly known as the Stark Law, which is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives. The Stark Law forbids a clinic from billing Medicare for certain services ordered by physicians who have a financial relationship with the entity. In this case, the government alleged that the Stark Law was violated by FMC’s incentive compensation plan that paid FMC’s physicians a percentage of the value of laboratory and other diagnostic tests that they personally ordered through FMC, which FMC then billed to Medicare. Dr. Serbin, FMC’s co-owner and chief executive, allegedly initiated this program and reminded FMC’s physicians that they needed to order tests and other services through FMC in order to increase FMC’s profits and to ensure that their take-home pay remained in the upper level nationwide for family practice doctors.

“Financial arrangements that compensate physicians for referrals can sometimes encourage physicians to make decisions based on financial gain rather than patient needs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs and drive up the cost of healthcare for taxpayers.”

The settlements also resolve allegations that FMC, Dr. Serbin, and Victoria Serbin submitted and caused the submission of false claims to Medicare and TRICARE for medically unnecessary laboratory services by creating custom laboratory panels comprised of diagnostic tests not appropriate for routine measurement, performing these tests without an order from the treating physician, implementing standing orders to assure these custom panels were performed with defined frequency and not in reaction to clinical need, and programming FMC’s billing software to systematically change certain billing codes for laboratory tests to ensure payment by Medicare.

“Healthcare decisions should be made by physicians based on medical science and not with regard to maximizing the doctor’s own income,” said U.S. Attorney Beth Drake for the District of South Carolina. “Our goal in bringing this case was not only to recover money for improper healthcare claims, but also to deter similar conduct and promote health care affordability.”

The allegations settled today arose from a lawsuit filed by a physician formerly employed by FMC, Dr. Catherine A. Schaefer, under the whistleblower provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Dr. Schaefer will receive $340,510.

As part of the settlement announced today, FMC and the Serbins have also agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which ensures the Serbins will have no management role in FMC for five years and obligates FMC to undertake other substantial internal compliance reforms, including hiring an independent review organization to conduct annual claims reviews.

“Patients and taxpayers should expect that doctors’ best medical judgement is not clouded by what amount to thinly-veiled bribes,” said Special Agent in Charge Derrick L. Jackson for HHS-OIG. “We will work tirelessly with our law enforcement partners to preserve government health funds by bringing violators to justice.”

“We applaud the Department of Justice and the U.S. Attorney for the District of South Carolina for holding this provider accountable for its actions,” said Deputy Director Guy Kiyokawa of the Defense Health Agency. “The provider’s actions targeted American service members, veterans and their families, diverting valuable resources through unnecessary tests. The Defense Health Agency continues to work closely with the Justice Department and other state and federal agencies to investigate all those who participated in these nefarious, fraudulent practices.”

This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of South Carolina, HHS-OIG and the Defense Health Agency.

The litigation and settlement of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The claims resolved by this settlement are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Schaefer v. Family Medicine Centers of South Carolina, LLC, Stephen F. Serbin, M.D. and Victoria Serbin, No. 3:14-cv-342-MBS (D.S.C.).

Doctor & Owner of Multiple Home Health Companies Sentenced in a nearly $60 Million Medicare Fraud Scheme

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Friday, August 18, 2017

DALLAS – Myrna S. Parcon, a/k/a “Merna Parcon,” 62, of Dallas and Ransome N. Etindi, 57, of Waxahachie, Texas, were sentenced yesterday by U.S. District Judge Jane Boyle for their role in a nearly $60 million Medicare fraud scheme, announced U.S. Attorney John Parker of the Northern District of Texas.

Parcon and Etindi each pleaded guilty to conspiracy to commit health care fraud. Judge Boyle sentenced Parcon to 120 months in prison and ordered her to pay $51,497,930.87 in restitution. Judge Boyle sentenced Etindi to 30 months in prison and ordered him to pay $18,309.171.21 in restitution. They are scheduled to surrender to the Bureau of Prisons on September 20, 2017.

Co-defendant Noble U. Ezukanma, 57, of Fort Worth, Texas, was convicted, following a five-day trial, in March 2017 of one count of conspiracy to commit health care fraud and six counts of health care fraud and is awaiting sentencing. Co-defendants Oliva A. Padilla, 57, of Garland, Texas and Ben P. Gaines, 55, of Plano, Texas, have pleaded guilty to their role in the scheme and are awaiting sentencing. Lita S. Dejesus, 70, of Allen, Texas, also pleaded guilty and was sentenced to 24 months in federal prison and ordered to pay $4,193,655.78 in restitution.

According to their pleas, Ezukanma, Parcon, and Dejesus owned/operated US Physician Home Visits (USPHV), a/k/a “Healthcare Liaison Professionals, Inc.” located on Viceroy Drive in Dallas. Parcon was the owner/manager and Ezukanma was a licensed medical doctor who had an ownership interest in USPHV. Both Ezukanma and Etindi provided their Medicare number to the company to use to submit Medicare claims. Dejesus served in various roles at USPHV, including overseeing Medicare billing.

Gaines formed A Good Homehealth (A Good), a/k/a “Be Good Healthcare, Inc.,” which was located in the same office as USPHV. Parcon, who owned and operated A Good, purchased the company through a “straw” buyer; both Gaines and Parcon concealed Parcon’s ownership. Parcon and Padilla formed Essence Home Health (Essence), a/k/a “Primary Angel, Inc.,” located on Midway Road in Addison, Texas. While the three companies appeared to be set up as three separate entities, the companies worked as one; the same employees often worked for all three companies and were often paid by all three companies.

According to the factual resumes for each defendant, from January 1, 2009 to approximately June 9, 2013, Ezukanma and Etindi certified 94% of the Medicare beneficiaries receiving home health services from A Good, and 65% of the Medicare beneficiaries receiving home health services from Essence. Had Medicare known of the true ownership and improper relationship between the three companies, Medicare would not have allowed these companies to enroll in the program and bill for services.

USPHV submitted billing under both Dr. Ezukanma’s and Dr. Etindi’s Medicare provider number, regardless of who actually performed the service. They billed at an alarming rate, generally billing for only the most comprehensive physician exam, and always adding a prolonged service code. USPHV submitted claims to Medicare for physician visits of 90 minutes or more, when most visits took only 15 to 20 minutes. Most all of USPHV patients came from home health companies soliciting certifications and recertifications for home health. More than 97% of USPHV Medicare patients received home health care, whether they needed it or not. The false certifications caused Medicare to pay more than $40 million for fraudulent home health services.

The case was investigated by the U.S. Department of Health and Human Services – Office of Inspector General, the FBI, the and the Texas Attorney General’s Medicaid Fraud Control Unit and were brought as part of the Medicare Fraud Strike.

Assistant U.S. Attorney Katherine Pfeifle prosecuted.

United States Recovers More Than $12 Million In False Claims Act Settlements For Alleged Kickback Scheme

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Monday, August 21, 2017

United States will also pursue claims against Precision Lens, Paul Ehlen and Dr. Jitendra Swarup

Acting United States Attorney Gregory G. Brooker today announced that Sightpath Medical, Inc. (n/k/a Sightpath Medical, LLC) (“Sightpath”), TLC Vision Corporation (n/k/a TLC Vision (USA, LLC)) (“TLC”) (collectively the “Sightpath Entities”) and their former CEO, JAMES TIFFANY, have agreed to pay more than $12 million to the United States to resolve kickback allegations under the False Claims Act (“FCA”). The United States also intervened in an underlying lawsuit against the Cameron-Ehlen Group, Inc. d/b/a Precision Lens (“Precision Lens”), Precision Lens’ owner PAUL EHLEN, and JITENDRA SWARUP.

“Medicare beneficiaries depend on their physicians to make decisions based on sound medical judgment,” said Assistant U.S. Attorney Chad Blumenfield. “Our office will take decisive action to address allegations that medical providers are receiving improper financial benefits that could influence medical decision making. We are grateful to our law enforcement partners for their excellent work in investigating this matter.”

“This settlement is an outstanding result and represents the third major False Claims Act case successfully handled by this Office in the last three months. These types of cases remain a top priority of our Office, I applaud the hard work and dedication of the Civil Frauds Unit and the agencies involved in the case,” said Acting U.S. Attorney Gregory Brooker.

“The FBI together with our law enforcement partners aggressively investigate companies and individuals who engage in kickback schemes at the expense of Medicare and other federal health care programs,” said FBI Special Agent in Charge Richard T. Thornton of the Minneapolis Division. “Those who seek to exploit the nation’s health care system through fraud will be held accountable.”

According to the complaint, brought by a whistleblower, Sightpath and Precision Lens supply intraocular lenses, as well as ophthalmic surgical equipment and services to medical facilities. These products and services are used by ophthalmologists in connection with eye surgeries, including cataract surgeries performed in Ambulatory Surgical Centers and hospitals for which federal payers, such as Medicare, provide reimbursements. The complaint alleges that Precision Lens, EHLEN and the Sightpath Entities paid kickbacks to physicians in various forms, including travel, entertainment and improper consulting agreements. The complaint identifies multiple examples of trips including luxury skiing vacations and high-end fishing, golfing and hunting trips. The complaint also alleges that these various items of value were provided in order to induce the physicians to use Precision Lens’ and the Sightpath Entities’ products and services.

According to the settlement agreements, the United States contends that between January 1, 2006 and January 1, 2015, the Sightpath Entities provided physicians items of value to induce the use of Sightpath Entities’ products and services, which resulted in the submission of false claims to the United States for ophthalmological products and services. These items of value included hunting, skiing, fishing, and golf trips. Additionally, the Sightpath Entities entered into consulting agreements with physicians and physician practices for services that were never performed or not properly tracked, resulting in payments in excess of fair market value.

According to the settlement agreements, the United States further alleged that TIFFANY directed much of the conduct at issue, particularly between 2010 and 2013 when he was CEO of Sightpath and TLC, and that TIFFANY was directly involved in setting up and participating in several of the trips with physicians who were either Sightpath customers or potential customers. In addition, TIFFANY directly participated in establishing and continuing the lucrative consulting agreements with physicians and physician practices. The United States contends that by providing these items of value, the Sightpath Entities and TIFFANY knowingly induced physicians to utilize the Sightpath Entities’ products and services and submit false claims to the federal government. The claims were false because they were tainted by illegal kickbacks to the physicians, in violation of the Anti-Kickback Statute and the False Claims Act.

These settlements resolve allegations filed in a civil lawsuit originally brought by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected. The whistleblower in this matter, Kipp Fesenmaier, will receive 19.5 percent of the amounts recovered in connection with the settlement agreements.

As part of the FCA Agreement and in exchange for a release of OIG’s permissive exclusion authority, Sightpath has agreed to enter into a 5-year corporate integrity agreement (CIA) with OIG. Although not a signatory to the CIA, TLC is participating in the CIA as a “covered person.”

The United States has declined to intervene in the case against the other defendants named in the complaint. The claims resolved by these settlements are allegations only; there has been no determination of liability or wrongdoing.

The case was handled by Assistant U.S. Attorney Chad A. Blumenfield of the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.

The case is United States ex rel. Fesenmaier v. Sightpath Medical, Inc. TLC Vision Corporation, The Cameron Ehlen Group, Inc. dba Precision Lens, et al., Civil No. 13-CV-3003 (RHK/FLN).

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Cleveland Doctor Sentenced in Hospice Fraud Case

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Monday, August 14, 2017

OXFORD, Miss. – Robert H. Norman, Acting United States Attorney for the Northern District of Mississippi; Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General; Christopher Freeze, Special Agent in Charge at the Federal Bureau of Investigation, and Mississippi Attorney General Jim Hood announced that:

Dr. Nathaniel Brown, 62, of Cleveland, Mississippi, was sentenced Thursday, August 10, 2017 before United States District Judge Neal B. Biggers, Jr. in Oxford, Mississippi. Dr. Brown was sentenced to serve thirty-nine (39) months in federal prison followed by three (3) years supervised release and ordered to pay $1,941,254 in restitution to the Medicare program.

In January, Dr. Brown pled guilty to conspiracy to commit healthcare fraud in violation of 18 U.S.C. §§ 1347 & 1349. Brown admitted to referring patients who were not hospice appropriate to Milestone Hospice and Sandanna Hospice which led to $1,941,254 in Medicare payments to Milestone and Sandanna. Brown also admitted to receiving $47,750 in payments by check from the hospice owner in addition to cash payments.

Dr. Brown is a corrupt doctor who participated in a hospice scam to exploit patients and their families,” said Special Agent in Charge Derrick L. Jackson, of the U.S. Department of Health and Human Services, Office of Inspector General. “The verdict today should send a clear message to dishonest medical professionals who abuse our health care system – they will be caught and face significant criminal charges.”

“Joint investigations continue to be indispensable in the fight against fraud in healthcare benefit programs,” said Attorney General Jim Hood. “We will continue to work with our federal and state partners in this ongoing battle to protect the resources needed to serve our most vulnerable citizens.”

“It is important the Medicare fund is properly guarded against inappropriate billing by health care providers, and patients are receiving those services billed to Medicare,” said Christopher Freeze, Special Agent in Charge of the FBI in Mississippi. “The FBI will continue to take a strong stance against individuals who engage in health care fraud.”

This case was investigated jointly by the US Department of Health and Human Services, Office of Inspector General, the Medicaid Fraud Control Unit of the Mississippi Attorney General’s Office and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Clay Dabbs and Clay Joyner.

Mylan Agrees to Pay $465 Million to Resolve False Claims Act Liability

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Thursday, August 17, 2017

Mylan Underpaid Medicaid Rebates on EpiPen

BOSTON – The U.S. Attorney’s Office announced today that pharmaceutical companies Mylan Inc. and Mylan Specialty L.P. have agreed to pay $465 million to resolve allegations that they violated the False Claims Act by knowingly misclassifying EpiPen, a branded epinephrine auto-injector drug, as a generic drug to avoid paying rebates owed to Medicaid.  Mylan Inc. and Mylan Specialty L.P. are both wholly owned subsidiaries of Mylan N.V., a Dutch-registered entity headquartered in Canonsburg, Penn.

Congress enacted the Medicaid Drug Rebate Program to ensure that state Medicaid programs were not susceptible to price gouging by manufacturers of drugs that were available from only a single source.  It therefore subjected such single-source, or brand name drugs, to a higher rebate that includes any difference between the drug’s current price and the price the drug would have had if its price had increased only at the general rate of inflation.  In contrast, generic drugs originating from multiple manufacturers are subject to lower rebates that, at least until recently, did not include an inflationary component.

The government contends that Mylan improperly avoided paying state Medicaid programs the higher rebates for branded drugs by misclassifying EpiPen as a generic drug, even though EpiPen had no FDA-approved therapeutic equivalents and even though Mylan marketed and priced EpiPen as a brand name drug.  Mylan raised the price of EpiPen by approximately 400% between 2010 and 2016.

“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said Acting United States Attorney William D. Weinreb.  “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules.  We will continue to root out fraud and abuse to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies. We commend Sanofi for bringing this matter to our attention.”

“This settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled,” said Acting Assistant Attorney General Chad A. Readler of the Department of Justice’s Civil Division.  “Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs.”

As part of this settlement, Mylan has also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires, among other things, an independent review organization to annually review multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.

“Our five-year corporate integrity agreement requires intensive outside scrutiny to assess whether Mylan is complying with the rules of the Medicaid Drug Rebate Program,” said Gregory E. Demske, Chief Counsel to the Inspector General for the U.S. Department of Health and Human Services. “In addition, the CIA requires individual accountability by Mylan board members and executives.”

A competing pharmaceutical manufacturer, Sanofi, raised this matter with the United States Attorney’s Office in 2014.  At the time, Sanofi was selling another epinephrine auto-injector drug called AUVI-Q and was reporting it to the Medicaid Drug Rebate Program as a brand name drug.  In 2016, Sanofi filed a complaint against Mylan under the qui tam provisions of the False Claims Act, which permits private parties to sue on behalf of the government and to receive a share of any recovery.  See United States ex rel. sanofi-aventis US LLC v. Mylan Inc., et al., No. 16cv11572 (D. Mass.).  As a result of today’s settlement, Sanofi will receive $38.7 million as its share of the federal recovery, plus a share of the states’ recovery.

Acting U.S. Attorney Weinreb, Acting Deputy Assistant Attorney General Raab, and HHS OIG Chief Counsel Demske made the announcement today.  The matter was handled by Assistant U.S. Attorneys Gregg Shapiro and Kriss Basil of Weinreb’s Office, and by Trial Attorneys Augustine Ripa and Nicholas Perros of the Justice Department’s Civil Division.

Compounding Pharmacy Sales Representative Pleads Guilty to Prescription Fraud Conspiracy

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Thursday, August 17, 2017

TUSCALOOSA – A sales representative for a Haleyville, Ala.-based compounding pharmacy pleaded guilty today in federal court to participating in a conspiracy to generate prescriptions and defraud health care insurers and prescription drug administrators out of tens of millions of dollars in 2015.

U.S. Attorney Jay E. Town, FBI Special Agent in Charge Johnnie Sharp, U.S. Postal Inspector in Charge Adrian Gonzalez, U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson, Defense Criminal Investigative Service Special Agent in Charge John F. Khin, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge James E. Dorsey announced the plea.

BRIDGET McCUNE, 41, of Destin, Fla., pleaded guilty before U.S. District Court Judge L. Scott Coogler to conspiracy to commit health care fraud, wire fraud and mail fraud and to conspiring to solicit and receive kickbacks in return for referring prescriptions under Medicare and TRICARE, a U.S. Department of Defense health care program. McCune also pleaded guilty to four counts of health care fraud, and to two counts of money laundering for spending proceeds of the crimes. She remains out on bond pending sentencing, which is not yet scheduled.

McCune worked for Northside Pharmacy, an Alabama company doing business as Global Compounding Pharmacy. Global’s compounding and shipping facility was in Haleyville. The pharmacy did its prescription processing, billing and customer service at its “call center” in Clearwater, Fla.

Global hired sales representatives, including McCune, who were located in various states and were responsible for generating prescriptions from physicians and other prescribers. To bill insurance providers, including Blue Cross Blue Shield of Alabama, Medicare and TRICARE, for these prescriptions, Global contracted to enter the pharmacy networks of their third-party administrators, known as “pharmacy benefit managers” or “PBMs. These PBMs included Prime Therapeutics, Express Scripts Incorporated and CVS/Caremark.

McCune’s plea agreement with the government describes a conspiracy at Global that centered on generating and billing PBMs for fraudulent, often high-reimbursement prescriptions. To generate prescriptions, Global hired sales representatives who were married or related to doctors and other prescribers. Global also encouraged sales representatives to volunteer at doctors’ offices where they would review patient files and push Global’s products to patients. Global executives also frequently instructed employees to obtain high-reimbursing prescriptions that Global would fill and bill for reimbursement. The plea agreement describes a Global executive instructing sales representatives to obtain certain prescriptions and, shortly after, McCune obtained those prescriptions for herself and her dependents.

When billing, Global engaged in various fraudulent practices, including splitting drug quantities to evade PBM billing safeguards and automatically refilling and billing for prescriptions regardless of patient need, according to court documents. Global routinely waived co-pays to encourage patients to accept unnecessary medications and refills.

As part McCune’s plea, she agrees to forfeit $401,628 to the government as proceeds of illegal activity.

Global paid McCune a base salary plus a monthly commission for prescriptions that she obtained, according to court documents.

McCune began as a sales representative for Global’s Florida region in September 2014, working from Destin. Global promoted her to national field trainer in January 2015, but she also continued to function as a sales representative until she left the company in July 2016. McCune had a “close familial relationship” with a Florida physician, according to her plea agreement, and the “overwhelming majority of prescriptions she obtained” were issued under her family member’s signature.

At the same time that the U.S. Attorney’s Office for the Northern District of Alabama charged McCune, it separately charged another Global sales representative, KELLEY NORRIS, also known as KELLEY NORRIS-HARTLEY, 41, of Tuscaloosa. Norris faces the charge of conspiracy to commit health care fraud, wire fraud and mail fraud, as well as charges of health care fraud for submitting fraudulent prescription reimbursement claims to Blue Cross Blue Shield of Alabama. Norris also entered a plea agreement with the government.

The charges against McCune and Norris followed charges brought by the U.S. Attorney’s Office in May against Global sales representative Robin Gary Lowry, 49, of Columbus, Miss. Lowry was charged with conspiracy to defraud BCBS of Alabama and Prime Therapeutics. She also faced three counts of health care fraud for submitting fraudulent claims for payment to BCBS of Alabama.

Lowry pleaded guilty to the charges in June. She is scheduled for sentencing Nov. 7.

FBI, U.S. Postal Inspection Service, U.S. Department of Health and Human Services Office of Inspector General, U.S. Defense Criminal Investigative Service and Internal Revenue Service, Criminal Investigation investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor and Nicole Grosnoff are prosecuting.

CEO Indicted For Wire Fraud And Aggravated Identity Theft

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Thursday, August 10, 2017

Greenbelt, Maryland – A federal grand jury has indicted Zheng Geng, a/k/a “Jason Geng”, age 59, of Vienna, Virginia, on charges related to a scheme to defraud the United States. The indictment was returned on August 9, 2017, and unsealed today upon the arrest of Geng. Geng is the Chief Executive Officer of Xigen LLC (Xigen), which has offices in Maryland and Virginia.

The indictment was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Inspector General Paul Martin of the National Aeronautics and Space Administration Office of Inspector General; Inspector General Allison Lerner of the National Science Foundation Office of Inspector General; Special Agent in Charge Nick DiGiulio of the Health and Human Services Office of Inspector General; Special Agent in Charge Gordon Thompson of the U.S. Postal Service Office of Inspector General; and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.

According to the six-count indictment, Geng devised a scheme between 2005 to 2016 to defraud the United States by submitting false and fraudulent grant applications under the Small Business Innovation Research (SBIR) Program. The SBIR program aims to stimulate United States technological innovation. A further aim is to foster and encourage participation in technical innovation by socially and economically disadvantaged small businesses that in some instances are at least 51-percent owned and controlled by women. Geng prepared materially fraudulent proposals for awards, subsequent reports, and related communications under the programs.

To support the applications, Geng submitted endorsements for his grant applications using the identities of people without their permission, or misrepresenting their positions within Xigen. In addition, he submitted endorsements that misrepresented active affiliations with various universities including, Harvard University Medical School and Johns Hopkins University School of Medicine, and budgeted funds for subcontractors without their knowledge and without providing them with budgeted funds. With this false information, the United States government approved SBIR program awards and grants through the Department of Health and Human Service’s National Institutes of Health and the National Aeronautics and Space Administration. The awards totaled over $1.8 million.

According to court documents, Geng used the rewarded funds for his own personal use and the use of his family members and associates.

“The NASA Office of Inspector General will continue to aggressively investigate those who undermine and defraud NASA programs and operations,” said Inspector General Martin. “The NASA OIG appreciates the efforts of the entire investigative and prosecution team during this multi-year investigation, and we look forward to continued cooperation with our law enforcement partners in this and related matters.”

Allison Lerner, Inspector General for the National Science Foundation said, “The SBIR program is a valuable tool for advancing promising new technologies. My office will continue to vigorously pursue attempts to defraud scarce research dollars intended to promote economic growth through innovative SBIR investments.”

“The United States Department of Health and Human services provides research grant funds to qualified small businesses; we cannot tolerate the theft of taxpayer funds meant for honest research projects” said Nick DiGiulio, Special Agent in Charge for the Inspector General’s Office of the US Department of Health and Human Services.

Geng faces a maximum sentence of 20 years in prison and a $250,000 fine for wire fraud and a 2-year mandatory minimum consecutive sentence for each of the aggravated identity theft charges.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

Acting United States Attorney Stephen M. Schenning commended the NASA Office of Inspector General, the National Science Foundation Office of Inspector General, the HHS Office of Inspector General, U.S. Postal Service Office of Inspector General and the FBI for their work in the investigation. Mr. Schenning thanked Assistant U.S. Attorneys Phil Selden and Jennifer Sykes, who are prosecuting the case and Assistant U.S. Attorney David Salem who also helped investigate this case.

Contact ELIZABETH MORSE at (410) 209-4885

www.justice.gov/usao/md       

AG Healey Returns $500,000 to Masshealth in Settlement With Springfield Dentist Over Alleged Improper Billing

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August 21, 2017

BOSTON – Attorney General Maura Healey announced today that her office has reached a settlement with a pediatric dentist in Springfield, returning $500,000 to the state’s Medicaid program (MassHealth) and resolving claims that the dentist improperly billed the program for services.

The settlement agreement resolves allegations that Dr. Annie Watson, DDS and her dental practice, Gentle Smiles, LLC, improperly billed MassHealth for palliative care (emergency pain treatment) between March 2010 and June 2013, and failed to comply with MassHealth rules associated with the use of that emergency treatment billing code.

The AG’s Office began an investigation into Dr. Watson and Gentle Smiles upon a referral from MassHealth, which identified Dr. Watson as the top biller of the palliative care code among all MassHealth dental providers.

Palliative care is the emergency treatment of dental pain that relieves the pain but is not curative and can include draining of an abscess or prescribing pain medication or antibiotics. In order to bill this code, the patient’s dental record must contain a description of the treatment provided and must document that the treatment was given on an emergency basis.

The AG’s investigation revealed that Dr. Watson routinely billed for palliative care without any supporting documentation, including when patients only received cleanings and x-rays.

Under the terms of the civil settlement, Dr. Watson and her business will pay MassHealth $500,000 as restitution for improper billing. The settlement also requires that Dr. Watson and her employees review and comply with all applicable state and federal statutes, and all regulations governing participation in MassHealth.

MassHealth provides healthcare products and services to eligible low-income individuals, including people with disabilities, children and senior citizens.

This matter was handled by Managing Attorney Lee Hettinger and Investigator Deborah El Majdoubi, both of the AG’s Medicaid Fraud Division. MassHealth assisted in this investigation.

Houston Home Health Agency Owner Sentenced to 480 Months in Prison for Conspiring to Defraud Medicare and Medicaid of More Than $17 Million

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Friday, August 18, 2017

WASHINGTON – The owner and operator of five Houston-area home health agencies was sentenced on Thursday to 480 months in prison for conspiring to defraud Medicare and the State of Texas’ Medicaid-funded Home and Community-Based Service (HCBS) and Primary Home Care (PHC) Programs of more than $17 million and launder the money that he stole from Medicare and Medicaid.  The HCBS and PHC Programs provided qualified individuals with in-home attendant and community-based services that are known commonly as “provider attendant services” (PAS).  This case marks the largest PAS fraud case charged in Texas history.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Abe Martinez of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Dallas Regional Office, Special Agent in Charge D. Richard Goss of IRS Criminal Investigation’s (CI) Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

Godwin Oriakhi, 61, of Houston, was sentenced by U.S. District Judge Sim Lake of the Southern District of Texas.  In March 2017, Oriakhi pleaded guilty to two counts of conspiracy to commit health care fraud and one count of conspiracy to launder monetary instruments.

According to admissions made as part of Oriakhi’s plea, he, his co-defendant daughter and other members of his family owned and operated Aabraham Blessings LLC, Baptist Home Care Providers Inc., Community Wide Home Health Inc., Four Seasons Home Healthcare Inc. and Kis Med Concepts Inc., all of which were home health agencies in the Houston area.  Oriakhi admitted that he, along with his daughter and other co-conspirators, obtained patients for his home health agencies by paying illegal kickback payments to patient recruiters and his office employees for hundreds of patient referrals.  In his plea, Oriakhi also admitted that he, along with his daughter and co-conspirators, paid Medicare and Medicaid patients by cash, check, Western Union and Moneygram for receiving services from his family’s home health agencies in exchange for the ability to use the patients’ Medicare and Medicaid numbers to bill the programs for home healthcare and PAS services.  Oriakhi admitted that he, his daughter and their co-conspirators also directly paid some of these patients for recruiting and referring other Medicare and Medicaid patients to his agencies.  Additionally, Oriakhi admitted that he, his daughter and other co-conspirators paid physicians illegal kickbacks payments, which Oriakhi and his co-conspirators called “copayments,” for referring and certifying Medicare and Medicaid patients for home health and PAS services.

Oriakhi further admitted that each time he submitted a claim predicated on an illegal kickback payment he knew he was submitting a fraudulent claim to Medicare or Medicaid based on his false representations that the claim and the underlying transaction complied with the federal Anti-Kickback Statute and other state and federal laws.  Oriakhi further admitted that he knew that Medicare and Medicaid would not otherwise pay for the fraudulent claims, according to his plea.  In addition to the home health care and PAS services fraud scheme, Oriakhi admitted that he and his co-conspirators used the money fraudulently obtained from Medicare and Medicaid to make illegal kickback payments to patient recruiters, employees, physicians and patients to promote the Medicare home health and Medicaid PAS fraud conspiracies, and ensure their successful continuation.

In total, Oriakhi that he and his co-conspirators submitted approximately $17,819,456 in fraudulent home healthcare and PAS claims to Medicare and Medicaid and received approximately $16,198,600 on those claims.

To date, three others have pleaded guilty based on their roles in the fraudulent scheme at Oriakhi’s home healthcare agencies.  Oriakhi’s daughter, Idia Oriakhi, and Charles Esechie, a registered nurse who was Baptist’s primary admissions nurse, each pleaded guilty to one count of conspiring with Oriakhi and others to commit health care fraud.  Jermaine Doleman, a patient recruiter, pleaded guilty to conspiring with Oriakhi and others to commit health care fraud and launder money.  Doleman was also charged in two other healthcare fraud cases.  Esechie was also sentenced on August 17, to 60 months in prison.  Idia Oriakhi and Jermaine Doleman are awaiting sentencing.

The case was investigated by the IRS-CI, FBI, HHS-OIG and MFCU under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.  The case is being prosecuted by Senior Trial Attorney Jonathan T. Baum and Trial Attorneys Aleza S. Remis and William S.W. Chang of the Fraud Section of the Justice Department’s Criminal Division.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

Acting Manhattan U.S. Attorney Announces $13.4 Million Settlement Of Civil Healthcare Fraud Lawsuit Against US Bioservices Corp.

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Wednesday, August 23, 2017

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services’ Office of Inspector General for the New York Region (“HHS-OIG”), announced that the United States has settled a civil fraud case against US BIOSERVICES CORP. (“US BIO”) pursuant to which US BIO will pay a total of $13.4 million. The settlement resolves claims that US BIO violated the Anti-Kickback Statute and the False Claims Act by participating in a kickback scheme with Novartis PharmaceuticalS Corp. (“Novartis”) relating to the NOVARTIS drug Exjade. Specifically, the United States’ Complaint alleges that US BIO and NOVARTIS entered into a kickback arrangement pursuant to which US BIO was promised additional patient referrals and related benefits in return for refilling a higher percentage of Exjade than the two other pharmacies that also dispensed Exjade. The settlement will also resolve numerous state law civil fraud claims.

Yesterday, Chief U.S. District Judge Colleen McMahon approved a settlement stipulation to resolve the Government’s claims against US BIO. Under the settlement, US BIO is required to pay approximately $10.6 million to the United States and has made extensive admissions regarding its conduct. Further, as part of the settlement, US BIO will pay approximately $2.8 million to resolve the state law civil fraud claims. In prior lawsuits, the Government sued NOVARTIS and the two other pharmacies that participated in this same Exjade kickback scheme. The Government settled those lawsuits, pursuant to which NOVARTIS paid $390 million, the two other pharmacies paid $75 million, and NOVARTIS and the pharmacies made extensive admissions regarding their conduct.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The integrity of the federal healthcare system requires that all providers, including pharmacies like US Bioservices, refrain from entering into kickback relationships. When healthcare providers accept kickbacks, they violate the law, subject what should be health-based decision-making to the influence of profit-seeking drug manufacturers, and thereby put their own financial interests ahead of the interests of their patients. This Office will continue to use its law enforcement tools to pursue healthcare providers who accept kickbacks or otherwise put their profits ahead of patient safety.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “The conduct displayed by US Bioservices compromised patient care and undermined the integrity of our nation’s health care programs. This settlement should serve as a warning to all providers that choose to let financial inducements cloud their medical judgment.”

As alleged in the Government’s Complaint, US BIO participated in a kickback scheme with NOVARTIS that violated the federal Anti-Kickback Statute and the False Claims Act. In connection with this scheme, US BIO submitted claims for thousands of Exjade prescriptions to Medicare and Medicaid, causing those programs to pay out millions of dollars for false claims tainted by kickbacks. As part of the settlement, US BIO admitted as follows:

  • In December 2005, US BIO signed a contract with Novartis relating to the distribution of Exjade. Under that contract, Novartis agreed that US BIO would be one of three specialty pharmacies (the “EPASS pharmacies”) permitted to dispense Exjade as part of Novartis’s EPASS network. US BIO, in turn, agreed to provide specialty pharmacy services to Exjade patients, including having clinical staff available to speak with patients and to answer clinical questions or concerns about Exjade.
  • In or about June 2007, Novartis began issuing monthly “Exjade Scorecards” to US BIO and the other two EPASS pharmacies that measured, among other things, the pharmacies’ “adherence” scores. The “adherence” score in the Exjade Scorecards showed how long Exjade patients continued to order refills, without excluding patients who stopped ordering refills due to side effects or patients who were directed to stop therapy by their physicians. Starting in or about July 2007, Novartis had discussions with US BIO regarding how US BIO could improve its “adherence” scores in the Exjade Scorecards.
  • In late 2007 and early 2008, and to improve its “adherence” score, US BIO trained its nurses to call Exjade patients and tell patients that not treating iron overload, for which Exjade is prescribed, could have severe consequences like organ failure, and that while Exjade had certain common side effects like diarrhea, such side effects typically went away with time. The nurses at US BIO did not use written scripts for the calls with Exjade patients.
  • In October 2008, Novartis implemented a new plan for allocating Exjade patient referrals among US BIO and the other EPASS pharmacies. Under that plan, Novartis would allocate 60% of all undesignated patient referrals to the EPASS pharmacy with the top “adherence” scores in the Exjade Scorecards and allocate 20% of the undesignated patient referrals to each of the other two EPASS pharmacies.

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Mr. Kim thanked HHS-OIG and the Medicaid Fraud Control Units for New York, Washington, and California for their investigative efforts and assistance with this case.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Li Yu and Mónica P. Folch are in charge of the case.