Former WellCare Chief Executive Officer Todd S. Farha, 45, of Tampa, Florida, was sentenced today in the Middle District of Florida to serve 36 months in prison for defrauding the Florida Medicaid program.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and United States Attorney A. Lee Bentley III of the Middle District of Florida made the announcement after Farha was sentenced by U.S. District Judge James S. Moody Jr.
Farha was convicted by a federal jury in the Middle District of Florida on June 10, 2013, of two counts of health care fraud.
According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.
WellCare operates health maintenance organizations (HMOs) in several states providing services through government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and a deferred prosecution agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion. In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.
This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General’s Medicaid Fraud Control Unit. The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jay Trezevant and Cherie Krigsman and Special Assistant United States Attorney John Bowers of the Middle District of Florida
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Six Miami-Area Residents Plead Guilty to Mortgage Fraud Scheme Involving Four Condominium Developments
Six Miami-area residents, including three former loan officers, pleaded guilty in the Southern District of Florida this week to participating in a fraudulent scheme designed to enrich real estate developers by selling condominium units to straw buyers.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Special Agent in Charge Phyllis Robinson of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency (FHFA) made the announcement.
Today, Leidy Masvidal, 42, of Miami, pleaded guilty before U.S. District Court Judge Marcia G. Cooke to conspiring to commit bank fraud. Sentencing is scheduled for Sept. 24, 2014. Alfredo Jesus Chacon, 48, of Orange Park, Florida, and Francisco Martos, 63, and Dorian Wong Magarino, 49, both of Miami, also pleaded guilty today to conspiring to commit wire fraud and mail fraud before U.S. District Court Judge Ursula Ungaro. Sentencing is scheduled for Aug. 1, 2014.
On May 14, 2014, Tania Masvidal, 49, and Douglas Ponce, 40, both of Miami, each pleaded guilty before Judge Cooke to conspiring to commit bank fraud. Sentencing is scheduled for July 30, 2014.
According to the defendants’ plea agreements and other court documents, the defendants participated in a scheme to pay straw buyers to submit false loan applications to lending institutions to purchase condominiums owned by co-conspirators. Leidy Masvidal and Tania Masvidal used a mortgage brokerage they owned, EZY Mortgage Inc., to arrange financing for the purchases. Because the straw buyers were not credit-worthy, the Masvidals secured loans in their names by submitting to lending institutions loan applications and other fraudulent documents containing false statements about the buyers’ income, employment and assets, and falsely stating that the buyers intended to reside in the properties. Additionally, the Masvidals enabled their co-conspirators to secretly fund the buyers’ obligations to pay money at closing (known as “cash to close” obligations) by establishing shell corporations, which the co-conspirators used to funnel cash from conspirators to the escrow account used at closing, as well as paying the straw buyers. The co-conspirators compensated the Masvidals for their role in the scheme by sending kickback payments taken from the loan proceeds to the Masvidals’ shell corporations for every straw buyer identified.
According to admissions in court records, Martos was a former loan officer at a mortgage company known as State Lending who helped secure financing for straw buyers in exchange for kickbacks by procuring false employment documents and by including false information in buyers’ loan applications. Chacon and Ponce recruited straw buyers to purchase properties owned by co-conspirators in exchange for kickbacks paid from the sales proceeds. Chacon also allowed a company that he controlled to be used as a false employer for the straw buyers. Magarino accepted payments to act as one of Chacon’s straw buyers and recruited other straw buyers into the scheme. For the properties in which Margarino acted as the straw buyer, he represented to the lender that he personally met his cash-to-close obligations when in fact he knowingly paid these costs with funds supplied by conspirators.
Many of the straw buyers defaulted on their loans after the conspirators stopped making their mortgage payments on their behalf, causing millions of dollars in losses to lenders.
On March 31, 2014, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo were indicted in the Southern District of Florida for their alleged participation in this scheme. They have pleaded not guilty and trial is currently set for Sept. 8, 2014. The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by HUD-OIG and FHFA-OIG. The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.
Marubeni Corporation Sentenced for FCPA Violations
Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, was sentenced today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
Marubeni was sentenced by U.S. District Judge Janet B. Arterton in the District of Connecticut. Marubeni pleaded guilty on March 19, 2014, to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. The company signed a plea agreement in which it admitted its criminal conduct, agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation, and agreed to pay an $88 million fine, which the court accepted in imposing the sentence. The plea agreement cites Marubeni’s refusal to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, and its failure to timely remediate as several of the factors considered by the department in determining the resolution.
According to the court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for the company and its consortium partner to provide power-related services for the citizens of Indonesia. To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.
Also according to court filings, the first consultant retained by Marubeni and its co-conspirators received hundreds of thousands of dollars in his U.S. bank account to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official. E-mails between the co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.
As admitted in court documents, in the fall of 2003, Marubeni and its co-conspirators determined that the first consultant was not effectively bribing key officials at PLN. As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN. In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.” Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.
Frederic Pierucci, a current executive at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA. David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012 to one count of conspiracy to violate the FCPA. Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013.
This case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Connecticut, Resident Agency of the FBI. Significant assistance was provided by the Criminal Division’s Office of International Affairs. In addition, the department greatly appreciates the significant cooperation provided by its law enforcement counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.
The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.
FORMER OWNER OF AIRLINE FUEL SUPPLY COMPANY SENTENCED TO
WASHINGTON — A former owner and operator of a Florida-based airline fuel supply service company was sentenced today to serve 50 months in prison for participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.
Sean E. Wagner, the former owner and operator of Aviation Fuel International Inc. (AFI), was sentenced in the U.S. District Court for the Southern District of Florida in West Palm Beach to serve 50 months in prison and to pay $202, 856 in restitution. On Aug. 13, 2013, a grand jury returned an indictment against Wagner and AFI, charging them for their roles in a conspiracy to defraud Ryan. On March 6, 2014, Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud. According to court documents, from at least as early as December 2005 through at least August 2009, Wagner and others at AFI made kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, totaling more than $200,000 in the form of checks, wire transfers, cash and gift cards in exchange for awarding business to AFI. The charges against AFI were dismissed on Feb. 21, 2014.
Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government – including the U.S. Department of Defense and the U.S. Department of Homeland Security.
“Awarding government contracts in exchange for payoffs is a crime the Antitrust Division takes seriously,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s sentence reaffirms the division’s commitment to vigorously prosecute individuals who engage in this behavior.”
“This sentencing highlights the continuing commitment of the DCIS to thoroughly investigate and bring to justice any companies or individuals who engage in fraudulent and corrupt practices that undermine the integrity of Department of Defense procurement programs,” said John F. Khin, Special Agent in Charge of the Defense Criminal Investigative Service Southeast Field Office.
As a result of the ongoing investigation, five individuals, including Wagner, have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $780,000 in restitution. An additional individual has pleaded guilty to obstructing the investigation and is currently awaiting sentencing.
The investigation is being conducted by the Antitrust Division’s Washington Criminal I office and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s Washington Criminal I office at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm
Massive Medicare Fraud Strike Force Takedown
Medicare Fraud Strike Force Charges 90 Individuals for Approximately $260 Million in False Billing
27 Medical Professionals, Including 16 Doctors, Charged with Health Care Fraud
Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in six cities has resulted in charges against 90 individuals, including 27 doctors, nurses and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $260 million in false billings.
Attorney General Holder and Secretary Sebelius were joined in the announcement by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, FBI Assistant Director Joseph Campbell, U.S. Department of Health and Human Services (HHS) Inspector General Daniel R. Levinson and Deputy Administrator and Director of the Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity Shantanu Agrawal.
This coordinated takedown is the seventh national Medicare fraud takedown in Strike Force history. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 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.
Since their inception in March 2007, Strike Force operations in nine locations have charged almost 1,900 defendants who collectively have falsely billed the Medicare program for almost $6 billion. In addition, CMS, working in conjunction with HHS-OIG, has suspended enrollments of high-risk providers in five Strike force locations and has removed over 17,000 providers from the Medicare program since 2011.
The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Almost 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other federal, state and local law enforcement agencies participated in the takedown.
“Medicare is a sacred compact with our nation’s seniors, and to protect it, we must remain aggressive in combating fraud,” said Attorney General Holder. “This nationwide Medicare Strike Force takedown represents another important step forward in our ongoing fight to safeguard taxpayer resources and to ensure the integrity of essential health care programs. Department of Justice will not tolerate these activities. And we will continue working alongside the Department of Health and Human Services – as well as federal, state, and local partners – to use every appropriate tool and available resource to find, stop, and punish those who seek to take advantage of their fellow citizens.”
“The Affordable Care Act has given us additional tools to preserve Medicare and protect the tens of millions of Americans who rely on it each day,” said Secretary Sebelius. “By expanding our authority to suspend Medicare payments and reimbursements when fraud is suspected, the law allows us to better preserve the system and save taxpayer dollars. Today we’re sending a strong, clear message to anyone seeking to defraud Medicare: You will get caught and you will pay the price. We will protect a sacred trust and an earned guarantee.”
The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud.
According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and often never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit approximately $260 million in fraudulent billings.
“Today, across the nation, scores of defendants were arrested for engaging in hundreds of millions of dollars in health care fraud,” said Acting Assistant Attorney General O’Neil. “Among the defendants charged were 27 medical professionals, including 16 doctors. The crimes charged represent the face of health care fraud today – doctors billing for services that were never rendered, supply companies providing motorized wheelchairs that were never needed, recruiters paying kickbacks to get Medicare billing numbers of patients. The fraud was rampant, it was brazen, and it permeated every part of the Medicare system. But law enforcement continues to strike back. Using cutting-edge, data-driven investigative techniques, we are bringing fraudsters to justice and saving the American taxpayers billions of dollars. Overall, since its inception, the Department of Justice’s Medicare Fraud Strike Force has charged nearly 1,900 individuals involved in approximately $6 billion of fraud. We are committed to using every tool at our disposal to prevent, deter, and prosecute health care fraud.”
“We all feel the effects of health care fraud,” said FBI Assistant Director Campbell. “It leads to higher health care costs and makes it harder for seniors and those who are ill to get the care they need. The FBI and our law enforcement partners are committed to preventing and prosecuting health care fraud at all levels. But we need the public’s help. Take the time to be aware of fraud and call law enforcement if you see anything suspicious included in the billings to your insurance, Medicare, or Medicaid or have any unusual encounters with health care providers. We can work together to ensure your hard-earned dollars are used to care for the sick and not to line the pockets of criminals.”
“ Today’s arrests demonstrate the effectiveness of our Strike Forces in combating Medicare and Medicaid fraud,” said HHS Inspector General Levinson. “Through seamless teamwork, our agents and law enforcement partners bring lawbreakers to justice, protect beneficiaries and recover stolen taxpayer funds.”
“ Fraud can inflict real harm on Medicare beneficiaries and CMS is committed to working with our law enforcement partners to get criminals behind bars and out of the Medicare program as swiftly as possible,” said CMS Program Integrity Deputy Administrator Agrawal. “Today’s actions represent further consequences for bad actors, many of whom CMS had already stopped paying, or even kicked out of the program. Fundamentally, this is about protecting the well-being of our beneficiaries and the investment of taxpayer dollars.”
In Miami, a total of 50 defendants were charged today and yesterday for their alleged participation in various fraud schemes involving approximately $65.5 million in false billings for home health care and mental health services, and pharmacy fraud. In one case, two defendants were charged in connection with a $23 million pharmacy kickback and laundering scheme. Court documents allege that the defendants solicited kickbacks from a pharmacy owner for Medicare beneficiary information, which was used to bill for drugs that were never dispensed. The kickbacks were concealed as bi-weekly payments under a sham services contract and were laundered through shell entities owned by the defendants.
Eleven individuals were charged by the Houston Medicare Strike Force. Five Houston-area physicians were charged with conspiring to bill Medicare for medically unnecessary home health services. According to court documents, the defendant doctors were paid by two co-conspirators to sign off on home health care services that were not necessary and often never provided.
Eight defendants were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $32 million. In one case, a doctor was charged for causing almost $24 million in losses to Medicare through his own fraudulent billing and referrals for durable medical equipment, including over 1,000 expensive power wheelchairs, and home health services that were not medically necessary and frequently not provided.
In Detroit, seven defendants were charged for their roles in fraud schemes involving approximately $30 million in false claims for medically unnecessary services, including home health services, psychotherapy and infusion therapy. In one case, four individuals, including a doctor, were charged in a sophisticated $28 million fraud scheme, where the physician billed for expensive tests, physical therapy and injections that were not necessary and not provided. Court documents allege that when the physician’s billings raised red flags, he was put on payment review by Medicare. He was allegedly able to continue his scheme and evade detection by continuing to bill using the billing information of other Medicare providers, sometimes without their knowledge.
In Tampa, Florida, seven individuals were charged in a variety of schemes, ranging from fraudulent physical therapy billings to a scheme involving millions of dollars in physician services and tests that never occurred . In one case, five individuals were charged for their alleged roles in a $12 million health care fraud and money laundering scheme that involved billing Medicare using names of beneficiaries from Miami-Dade County for services purportedly provided in Tampa area clinics, 280 miles away. The defendants then allegedly laundered the proceeds through a number of transactions involving several shell entities.
In Brooklyn, New York, the Strike Force announced an indictment against Syed Imran Ahmed, M.D., in connection with his alleged $85 million scheme involving billings for surgeries that never occurred; Dr. Ahmed had been arrested last month and charged by complaint. Dr. Ahmed has charged with health care fraud and making false statements. In addition, the Brooklyn Strike Force charged six other individuals, including a physician and two billers who allegedly concocted a $14.4 million scheme in which they recruited elderly Medicare beneficiaries and billed Medicare for medically unnecessary vitamin infusions, diagnostic tests and physical and occupational therapy supposedly provided to these patients.
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana, the Northern District of Illinois and the Middle District of Florida; and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.
A complaint or indictment is merely an accusation, and defendants are presumed innocent unless and until proven guilty.
Former Chief Executive Officer of Oil Services Company Indicted in New Jersey on Foreign Bribery and Kickback Charges
The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – was indicted today for his role in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA) and to defraud PetroTiger.
Acting Principal Deputy Assistant Attorney General Marshall Miller of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.
Joseph Sigelman, 43, of Miami and the Philippines, was indicted today by a federal grand jury in the District of New Jersey and charged with conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering violations. Gregory Weisman, 42, of Moorestown, New Jersey, the former general counsel of PetroTiger, pleaded guilty on Nov. 8, 2013, to conspiracy to violate the FCPA and to commit wire fraud. Sigelman’s co-CEO, Knut Hammarskjold, 42, of Greenville, South Carolina, pleaded guilty to the same charge on Feb. 18, 2014.
According to court records, Sigelman and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million. To conceal the bribes, they first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. Sigelman and Hammarskjold provided Weisman invoices, including her bank account information. The conspirators made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed. Sigelman and his conspirators then took steps to conceal the bribe payments from PetroTiger’s board members.
In addition, court documents allege that Sigelman and others attempted to secure kickback payments while negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition. In exchange for negotiating more favorable terms for the owners of the target company, two of the owners agreed to kick back to the conspirators a portion of the increased purchase price. To conceal the kickback payments, Sigelman and others had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments and used the code name “Manila Split” to refer to the payments amongst themselves.
Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013. Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport. Sigelman was arrested on Jan. 3, 2014, in the Philippines. The charges against Sigelman, Hammarskjold and Weisman were unsealed on Jan. 6, 2014.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which cooperated with the department’s investigation. The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Zach Intrater of the District of New Jersey.
Detroit-Area Physical Therapist, Physical Therapy Assistant and Unlicensed Doctor Convicted in $14.9 Million Medicare Fraud Scheme
A federal jury in Detroit today convicted a physical therapist, physical therapy assistant and unlicensed doctor for their participation in a nearly $15 million Medicare fraud scheme.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Detroit Office of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Office of Investigations made the announcement.
Shahzad Mirza, 43, a physical therapist; Jigar Patel, 30, a physical therapy assistant; and Srinivas Reddy, 38, a foreign medical school graduate without a license to practice medicine were each found guilty of one count of conspiracy to commit health care fraud in connection with a scheme perpetrated from approximately July 2008 through September 2011 at Detroit area companies Physicians Choice Home Health Care LLC (Physicians Choice), Quantum Home Care Inc. (Quantum), First Care Home Health Care LLC (First Care), Moonlite Home Care Inc. (Moonlite) and Phoenix Visiting Physicians. In addition, Mirza and Patel were each found guilty of two counts of health care fraud in connection with the submission of false claims to Medicare for home health services, and Reddy was found guilty of three counts of health care fraud in connection with the submission of false claims to Medicare for home health services and physician home visits. Patel was found guilty of one count of money laundering in connection with his laundering of the proceeds of the fraud through his company MI Healthcare Staffing.
The defendants were charged in a superseding indictment returned Feb. 6, 2012. Three other individuals charged in the indictment remain fugitives.
According to evidence presented at trial, Physicians Choice, Quantum, First Care and Moonlite operated a fraudulent scheme to bill Medicare for home health care services that were never provided. The home health care companies paid kickbacks to recruiters who in turn paid Medicare beneficiaries cash and promised them access to narcotic prescriptions. The conspirators created the company Phoenix Visiting Physicians, which employed unlicensed individuals, including Reddy, to visit patients and provide them with narcotic prescriptions as well as obtain the information necessary to fill out paperwork to refer them for medically unnecessary home health care services.
Evidence presented at trial showed that beneficiaries pre-signed medical paperwork that was provided to Patel and other physical therapist assistants to fill in with false information purporting to show that the care was provided, when it was not. Patel, registered physical therapist Mirza and others would sign this paperwork as though they had provided services. In the course of the conspiracy, Patel incorporated his own staffing company, MI Healthcare Staffing, through which he laundered proceeds of the fraud from home health care companies and a shell company owned and operated by his co-conspirators.
Physicians Choice and the related companies were paid nearly $15 million in the course of the conspiracy.
Sentencing for all three defendants has not yet been scheduled.
The investigation was led by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen and Rohan A. Virginkar of the Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
Texas Army National Guard Soldier Pleads Guilty to Defrauding the U.S.
To Date, 23 Individuals Have Pleaded Guilty in Ongoing Corruption Investigation
A soldier in the Texas National Guard pleaded guilty today for his role in a bribery and fraud scheme that caused more than $30,000 in losses to the U.S. National Guard Bureau, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
Sergeant First Class Zaunmine O. Duncan, 38, formerly of Austin, Texas, pleaded guilty to one count of conspiracy, one count of bribery and one count of aggravated identity theft. The case against Duncan arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against 25 individuals, 23 of whom have pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak), to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program that offered monetary incentives to soldiers of the Army National Guard who referred others to join the Army National Guard. Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.
Duncan admitted that between approximately February 2008 and August 2010, while he was a recruiter for the National Guard, he obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants, including co-conspirators Elisha Ceja, Annika Chambers, Kimberly Hartgraves and Lashae Hawkins, so that these recruiting assistants could use the information to obtain fraudulent recruiting bonuses by falsely claiming that they were responsible for referring these potential soldiers to join the Army National Guard, when they were not. In exchange for the information, Duncan admitted that he personally received a total of at least approximately $24,500 in payments from Ceja, Chambers, Hartgraves and Hawkins.
Duncan is scheduled to be sentenced on Aug. 28, 2014, before U.S. District Judge Lee H. Rosenthal in Houston.
Co-conspirators Ceja, Chambers, Hartgraves and Hawkins have all pleaded guilty to conspiracy and bribery in connection to this scheme. Hartgraves is scheduled to be sentenced on June 24, 2014. Ceja, Chambers and Hawkins are each scheduled to be sentenced on June 26, 2014. All of these sentencing hearings are set before U.S. District Judge Rosenthal in Houston.
The cases are being investigated by special agents from the San Antonio Fraud Resident Agency of Army CID’s Major Procurement Fraud Unit. This case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.
Amedisys Home Health Companies Agree to Pay $150 Million to Resolve False Claims Act Allegations
Amedisys Inc. and its affiliates (Amedisys) have agreed to pay $150 million to the federal government to resolve allegations that they violated the False Claims Act by submitting false home healthcare billings to the Medicare program, the Department of Justice announced today. Amedisys, a Louisiana-based for-profit company, is one of the nation’s largest providers of home health services and operates in 37 states, the District of Columbia and Puerto Rico.
“It is critical that scarce Medicare home health dollars flow only to those who provide qualified services,” said Stuart F. Delery, Assistant Attorney General for the Civil Division. “This settlement demonstrates the department’s commitment to ensuring that home health providers, like other providers, comply with the rules and don’t misuse taxpayer dollars.”
The settlement announced today resolves allegations that, between 2008 and 2010, certain Amedisys offices improperly billed Medicare for ineligible patients and services. Amedisys allegedly billed Medicare for nursing and therapy services that were medically unnecessary or provided to patients who were not homebound, and otherwise misrepresented patients’ conditions to increase its Medicare payments. These billing violations were the alleged result of management pressure on nurses and therapists to provide care based on the financial benefits to Amedisys, rather than the needs of patients.
Additionally, this settlement resolves certain allegations that Amedisys maintained improper financial relationships with referring physicians. The Anti-Kickback Statute and the Stark Statute restrict the financial relationships that home healthcare providers may have with doctors who refer patients to them. The United States alleged that Amedisys’ financial relationship with a private oncology practice in Georgia – whereby Amedisys employees provided patient care coordination services to the oncology practice at below-market prices – violated statutory requirements.
“Combating Medicare fraud and overbilling is a priority for my office, other components of the Department of Justice, and United States Attorneys’ Offices across the country,” said Zane David Memeger, United States Attorney for the Eastern District of Pennsylvania. “We have recovered billions of dollars in federal health care funds from schemes such as the one alleged in this case. Those are health care dollars that should be spent on legitimate medical needs.”
“Home health services are a large and growing part of our federal health care system,” said Sally Quillian Yates, United States Attorney for the Northern District of Georgia. “Health care dollars must be reserved to pay for services needed by patients, not to enrich providers who are bilking the system.”
“Amedisys made false Medicare claims, depriving the American taxpayer of millions of dollars and unlawfully enriching Amedisys,” said Joyce White Vance, U.S. Attorney for the Northern District of Alabama. “The vigorous enforcement work by assistant U.S. attorneys in my office, along with their colleagues in North Georgia, Eastern Pennsylvania, Eastern Kentucky and the Civil Division of the Justice Department, has secured the return of $150 million to the taxpayers and stands as a warning to future wrongdoers that we will aggressively pursue them.”
“This settlement represents a significant recovery of public funds and an important victory for the taxpayers,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Fighting health care fraud and recovering tax payer dollars that fund our vital health care programs is one of the highest priorities for our district.”
Amedisys also agreed to be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services – Office of Inspector General that requires the companies to implement compliance measures designed to avoid or promptly detect conduct similar to that which gave rise to the settlement.
“Improper financial relationships and false billing, as alleged in this case, can shortchange taxpayers and patients,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “Our compliance agreement with Amedisys contains strong monitoring and reporting provisions to help ensure that people in Federal health programs will be protected.”
This settlement resolves seven lawsuits pending against Amedisys in federal court – six in the Eastern District of Pennsylvania and one in the Northern District of Georgia – that were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s settlement, the whistleblowers – primarily former Amedisys employees – will collectively split over $26 million.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19.2 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The United States’ investigation was conducted by the Justice Department’s Commercial Litigation Branch of the Civil Division; the United States Attorneys’ Offices for the Eastern District of Pennsylvania, Northern District of Alabama, Northern District of Georgia, Eastern District of Kentucky, District of South Carolina, and Western District of New York; the Department of Health and Human Services’ Office of Inspector General; the Federal Bureau of Investigation; the Office of Personnel Management’s Office of Inspector General; the Defense Criminal Investigative Service of the Department of Defense; and the Railroad Retirement Board’s Office of Inspector General.
The lawsuits are captioned United States ex rel. CAF Partners et al. v. Amedisys, Inc. et al. 10-cv-2323 (E.D. Pa.); United States ex rel. Brown v. Amedisys, Inc. et al., 13-cv-2803 (E.D. Pa.); United States ex rel. Umberhandt v. Amedisys, Inc., 13-cv-2789 (E.D. Pa.); United States ex rel. Doe et al. v. Amedisys, Inc., 13-cv-3187 (E.D. Pa.); United States ex rel. Ognen et al. v. Amedisys, Inc. et al. 13-cv-4232 (E.D. Pa.); United States ex rel. Lewis v. Amedisys, Inc., 13-cv-3359 (E.D. Pa.); and United States ex rel. Natalie Raven et al. v. Amedisys, Inc. et al., 11-cv-0994 (N.D. Ga.). The claims settled by the agreement are allegations only, and there has been no determination of liability.
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Japanese Automotive Parts Manufacturer Agrees to Plead Guilty to Price Fixing and Bid Rigging on Automobile Parts Installed in U.S. Cars
Showa Corp., an automotive parts manufacturer based in Saitama, Japan, has agreed to plead guilty and to pay a $19.9 million criminal fine for its role in a conspiracy to fix prices and rig bids for pinion-assist type electric powered steering assemblies installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Southern District of Ohio in Cincinnati, Showa engaged in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of, certain pinion-assist type electric powered steering assemblies sold to Honda Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere. In addition to the criminal fine, Showa has agreed to cooperate with the department’s ongoing investigation. The plea agreement will be subject to court approval.
“Today’s guilty plea marks the 27th time a company has been held accountable for fixing prices on parts used to manufacture cars in the United States,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division and its law enforcement partners remain committed to prosecuting illegal cartels that harm U.S. consumers and businesses.”
According to the charge, Showa and its co-conspirators carried out the conspiracy through meetings, conversations and communications in which they discussed and agreed upon bids and price quotations on pinion-assist type electric powered steering assemblies to be submitted to Honda. Showa then submitted quotations in accordance with those agreements and sold pinion-assist type electric powered steering assemblies at collusive and noncompetitive prices. Showa and its co-conspirators monitored adherence to the agreed-upon bid-rigging and price-fixing scheme. The conspirators kept their conduct secret by using code names and meeting at remote locations, among other things. Showa’s involvement in the conspiracy lasted from at least as early as 2007 until as late as September 2012.
Showa manufactures and sells pinion-assist type electric powered steering assemblies. These devices provide power to the steering gear pinion shaft from electric motors to assist the driver to more easily steer the automobile. Pinion-assist type electric powered steering assemblies include an electronic control unit and link the steering wheel to the tires but do not include the column, intermediate shaft, steering wheel or tires.
Including Showa, 27 companies and 24 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of $2.3 billion in criminal fines.
Showa Corp. is charged with price fixing and bid rigging in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office with assistance from the U.S. Attorney’s Office for the Southern District of Ohio. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cincinnati Field Office at 513-421-4310.