Tag Archives: Health Care Fraud

Guest Columnist Al Scott, CFE: Emerging Health Care Fraud: China tackles emerging health care fraud (Part 2 of 2)

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In part 2 of 2 parts, Guest Columnist Al Scott, CFE, principal for NSD Bio Group LLC in Philadelphia, Pa., describes Chinese emerging enforcement approaches.

Jan-Feb ’13 Fraud Magazine Rx for Fraud column – Emerging Health Care Fraud in China (part 2 of 2)

In part 1 of 2 parts, Al described lesser-known but emerging health care frauds, including schemes involving fraudulent treatments, cures and devices, and crimes involving the manufacture, sale or distribution of unapproved FDA-regulated products.

Nov-Dec ’12 Fraud Magazine Rx for Fraud column – Emerging Health Care Fraud

 

The opinions expressed in this column aren’t necessarily those of GeyerGorey LLP.  Special thanks to Fraud Magazine for authorizing us to republish Al’s work— ed.

 

Four Sentenced to Prison in Florida Community Mental Health Center Case

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The owners of three Miami-area assisted living facilities and an affiliated psychologist were sentenced to prison today in connection with a health care fraud scheme, involving now-defunct Miami-area health provider Health Care Solutions Network Inc. (HCSN), in which Medicare was billed for mental health treatments that were unnecessary or not provided.

The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

U.S. District Judge Cecilia M. Altonaga sentenced Serena Joslin, 32, of Looneyville, W.Va., to 63 months in prison, following her previous guilty plea to conspiracy to commit health care fraud.  Raymond Rivero, 55, Daniel Martinez, 46, and Ivon Perez, 50, all of Miami, were each sentenced to 28 months in prison.  All three had previously pleaded guilty to conspiracy to violate the anti-kickback statute.

According to court documents, HCSN operated community mental health centers both in Miami and North Carolina, including partial hospitalization programs (PHP) – a form of intensive treatment for severe mental illness.  HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not provided.

In Miami, HCSN obtained beneficiaries by paying kickbacks to owners and operators of assisted living facilities (ALF) or by otherwise recruiting them from the facilities and from nursing homes.  Rivero, Martinez and Perez admitted during their guilty pleas to referring Medicare beneficiaries to HCSN in exchange for cash bribes.  Rivero, former owner of Miami-based God Is First ALF; Martinez, former owner of Homestead, Fla.-based Mi Renacer ALF; and Perez, former owner of Homestead-based Kayleen and Denis Care Corp., are no longer permitted to operate such facilities as a condition of their guilty pleas.

According to court documents, ALF residents referred to HCSN by Rivero, Martinez and Perez were not qualified to be placed in PHP and were only selected because they had Medicare or state of Florida Medicaid benefits.  In some cases, ALF patients suffered from dementia, Alzheimer’s disease or mental retardation, or were otherwise unable to benefit from mental health services.

According to court documents, Joslin, a licensed psychologist, was hired by HCSN in North Carolina in April of 2010 as a clinical coordinator and later promoted to clinical director. In those roles, she conspired with other HCSN employees to fabricate medical documents to substantiate alleged PHP treatment that was medically unnecessary and, in many instances, not even provided to the beneficiaries.  Joslin admitted that many of the HCSN patients were unqualified for the PHP program because they suffered from conditions such as mental retardation and dementia, and that she directed therapists to fabricate medical records to support HCSN’s fraudulent billing to the Medicare program.  Joslin was also required to surrender her North Carolina license to provide mental health treatment as part of her plea agreement.

According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

In addition to the prison terms, Judge Altonaga sentenced Joslin, Rivero, Martinez and Perez each to serve three years of supervised release, and ordered them to pay $4,464,728; $90,896; $76,358; and $89,245 in restitution, respectively.

The cases are being prosecuted by Special Trial Attorney William Parente and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section.  The cases were investigated by the FBI and HHS-OIG and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 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.

Seven Arrested, Charged with $22 Million Detroit-area Home Health Care Fraud Scheme

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Six Detroit-area residents and one Chicago-area resident were arrested today by federal agents on charges arising from the ongoing investigation into an alleged $22 million home health care fraud scheme.  The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; Special Agent in Charge Lamont Pugh III of the Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office; and Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office.

According to the 18-count indictment returned Jan. 15, 2013, and unsealed today, the seven individuals allegedly participated in a Medicare fraud scheme operating out of four Oakland County, Mich., home health agencies claiming to provide in-home health services: Royal Home Health Care Inc., Prestige Home Health Services Inc., Platinum Home Health Services Inc. and Empirical Home Health Care Inc.  The indictment alleges Medicare paid the agencies approximately $22 million for fraudulently reported services since August 2008.

In addition to the arrests, law enforcement agents suspended Medicare payments to four health care companies associated with the alleged scheme.

Muhammad Aamir, 42; Usman Butt, 39; Hemal Bhagat, 31; Syed Shah, 50; Tariq Tahir, 46; and Raquel Ellington, 56, of the Detroit area; and Tayyab Aziz, 43, from the Chicago area, each are charged with conspiracy to commit health care fraud.  All but Aziz are also charged with health care fraud and with conspiracy to violate the Anti-Kickback Statute.  Butt, Bhagat, Shah and Aziz are additionally charged with conspiracy to commit money laundering.

According to the indictment, Aamir and Butt owned and operated Prestige; Butt, Bhagat and Shah owned and operated Royal; and Aamir owned and operated Platinum and Empirical – all of which allegedly claimed to provide home health therapy services to Medicare beneficiaries that were unnecessary and/or were never performed.  The indictment alleges Tahir and Ellington recruited Medicare beneficiaries, paying them kickbacks for their Medicare information and signatures on documents that detailed physical therapy and/or skilled nursing services that were either never rendered or not medically necessary.  Aamir, Butt, Bhagat, Shah, Tahir and Ellington are also charged with conspiring to pay kickbacks to Tahir and Ellington for their recruiting work.  Butt, Bhagat, Shah and Aziz allegedly conspired to launder the proceeds of the scheme.

The charges of health care fraud conspiracy and health care fraud each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.  The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum potential penalty of five years in prison and a $25,000 fine.  The charge of conspiracy to commit money laundering carries a maximum potential penalty of 20 years in prison and a $500,000 fine.

An indictment is merely a charge and defendants are presumed innocent unless nad until proven guilty.

The case is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.  The investigation is conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, and IRS-CI, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Hudson County, N.J., Pediatrician Charged With Fraudulently Billing Medicaid For Nearly $1 Million

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NEWARK, N.J. – A Hudson County, N.J., pediatrician was arrested at his home this morning for fraudulently billing Medicaid $900,000 for wound-repair treatments on children that were never rendered, U.S. Attorney Paul J. Fishman announced.

Badawy M. Badawy, M.D., 50, of Bayonne, N.J., a licensed pediatrician who owns and operates Sinai Medical Center of Jersey City LLC, a medical practice focusing primarily on pediatrics and family medicine, billed Medicaid thousands of times for nearly $900,000 worth of wound repairs on children and adolescents. He was charged by Complaint with healthcare fraud and is scheduled to make his initial court appearance later today before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to the Complaint:

From January 2004 through December 2008, Badawy billed Medicaid, through its managed care companies, for certain wound repairs more frequently than any other service provider in the State of New Jersey. His claims for these supposed treatments represented a strong majority of all such claims submitted to Medicaid by all New Jersey medical providers during this time period, including 99.4 percent of all claims for the suturing or stapling of facial wounds larger than 30 centimeters.

Virtually all of these claims, which were submitted for supposed wound repairs on children, were fraudulent. Badawy’s patient charts for a large sample of these children who supposedly received treatment revealed no entry, notation, or other evidence, such as suturing or other closing methods, to support his claims that these procedures were actually performed.

The Complaint also identifies by initials 10 children whom Badawy claimed to have treated for wound repairs on numerous occasions.

∙ From April 2004 through June 2007, Badawy purportedly treated three children on 28 separate occasions for a total of 49 procedures involving some type of wound repair. According to the children’s mother, none of these children has ever had a cut that required stitches or other methods of wound closure.

∙ From March 2006 through February 2007, Badawy submitted eight claims for facial wound repairs, including two 30-centimeter facial wound repairs, on a single teenager during four different visits. According to the teenager, he had never seen Badawy for wounds to his face or other body parts.

∙ From July 2005 through July 2007, Dr. Badawy supposedly performed 15 wound repairs, including six 30-centimeter facial wound repairs, on a boy on eight separate occasions. According to the boy, he was never treated for a cut to his face.

The charge of health care fraud carries a maximum potential penalty of up to 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss resulting from the crime.

U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell, and the FBI, under the direction of Acting Special Agent in Charge David Velazquez, with the investigation leading to today’s arrest.
The government is represented by Scott B. McBride of the U.S. Attorney’s Health Care and Government Fraud Unit.

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Defense counsel: Michael J. Keating Esq., Cranford, N.J.

Apple Valley Woman Charged With Defrauding Home Health Care Company, Medica

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FOR IMMEDIATE RELEASE January 10, 2013

MINNEAPOLIS—Yesterday in federal court, an Apple Valley woman was charged with defrauding both her employer and Medica. On January 9, 2012, Lori Jo Mueller, age 48, was charged via an Information with one count of wire fraud and one count of health care fraud.
Allegedly, from June of 2006 through June of 2012, Mueller embezzled approximately $840,000 from Edelweiss Home Health Care and used the funds for her personal use. Mueller began working for Edelweiss, located in Osseo, in 2002, and was promoted to the position of vice president of operations. In that capacity, Mueller was responsible for the review and payment of corporate invoices, bookkeeping, and other financial matters. Mueller allegedly used her access to the corporate checking account to issue payments from corporate accounts to herself. Also, Mueller allegedly concealed her actions from the company owners and made misrepresentations concerning the company’s financial state.
In addition, from March of 2010 through June of 2012, Mueller allegedly defrauded Medica, a health care benefit program. She purportedly submitted claims to various insurers, seeking reimbursement for services provided by Edelweiss nursing staff. In some instances, Mueller double-billed by submitting claims for the same services to multiple insurance providers. For example, Mueller allegedly billed both Minnesota Medicaid and Medica for services provided to one client. The double-billing resulted in a double-payment to Edelweiss with Medicaid being the proper payer and Medica being the overpayer. As a result of this criminal behavior, Mueller obtained for Edelweiss more than $631,000 in fraudulent proceeds. Medica is a non-profit corporation that provides health insurance products to families and individuals.
If convicted in this case, Mueller faces a potential maximum penalty of 30 years in federal prison on the wire fraud count and ten years on the health care fraud count. All sentences will be determined by a federal district court judge.
This case is the result of an investigation by the Federal Bureau of Investigation and the United States Department of Health and Human Services-Office of Inspector General (“DHHS-OIG”). It is being prosecuted by Assistant U.S. Attorney David M. Genrich.
The U.S. Attorney’s Office participates in a task force with the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office that focuses on home health care fraud trends. The task force includes the DHHS-OIG, the FBI, the Internal Revenue Service, and other federal, state, and local law enforcement partners.
As a result of federal convictions for health care fraud, defendants are excluded from participating in federal health benefit programs, including Medicare and Medicaid. Exclusion determinations are made by the U.S. Department of Health and Human Services. Nationwide, more than 3,000 individuals were excluded from program participation in Fiscal Year 2010 based upon criminal convictions or patient abuse or neglect, license revocations, or other factors.

Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud Scheme

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 WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida.  Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial.  The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same.  In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.

Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012.  Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.  Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.

According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness.  Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided.  Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications.  The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.

The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division.  The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s 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 1,480 defendants who have collectively billed the Medicare program for more than $4.8 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.

Pfizer Agrees to Pay $55 Million for Illegally Promoting Protonix for Off-Label Use

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FOR IMMEDIATE RELEASE
Wednesday, December 12, 2012
Pfizer Agrees to Pay $55 Million for Illegally Promoting Protonix for Off-Label Use

Pfizer Inc. will pay $55 million plus interest to resolve allegations that Wyeth LLC illegally introduced and caused the introduction into interstate commerce of a misbranded drug, Protonix, between February 2000 and June 2001, the Justice Department announced today.

 

Wyeth manufactured and promoted Protonix tablets. Protonix is a proton pump inhibitor (PPI) that was used by physicians to treat various forms of gastro-esophageal reflux disease (GERD).  Wyeth sought and obtained approval from the Food and Drug Administration (FDA) to promote Protonix for short-term treatment of erosive esophagitis–a condition associated with GERD that can only be diagnosed with an invasive endoscopy. However, the government alleges that Wyeth fully intended to, and did, promote Protonix for all forms of GERD, including symptomatic GERD, which was far more common and could be diagnosed without an endoscopy.

 

Under the Federal Food Drug and Cosmetic Act, manufacturers must obtain FDA approval for any indication for use for which a manufacturer intends to market a drug.   A drug is misbranded if its labeling does not bear adequate directions for use by a layman safely and for the purposes for which it is intended.   A prescription drug must be prescribed by a physician and is only exempt from the adequate directions for use requirement if a number of conditions are met, including that the manufacturer only intended to sell that drug for an FDA-approved use.   A prescription drug marketed for unapproved off-label uses does not qualify for the exemption and is misbranded.

 

As alleged in the government’s complaint, Wyeth’s illegal promotional campaign for Protonix was multi-faceted. Before Wyeth even began promoting Protonix, the FDA warned Wyeth that its proposed promotional materials were misleading because Wyeth had “overstated” its “erosive esophagitis indication” by “suggesting that Protonix is safe and effective in the treatment of patients with . . . GERD. Protonix is not indicated for treatment of GERD symptoms that occur in the absence of esophageal erosions.”   Despite the FDA’s admonishment, the government alleges that Wyeth trained its sales force to promote Protonix for all forms of GERD, beyond its limited erosive esophagitis indication, and that Wyeth sales representatives frequently promoted Protonix to physicians for unapproved uses, such as symptomatic GERD.

 

In addition, Wyeth allegedly promoted Protonix as the “best PPI for nighttime heartburn.” even though there was never any clinical evidence that Protonix was more effective than any other PPI for nighttime heartburn. The allegations in the complaint are that this superiority slogan was formulated at the highest levels of the company. Wyeth retained an outside market research firm, at the cost of tens of thousands of dollars, to ensure that sales representatives delivered that misleading superiority message.

 

Finally, the government alleges that Wyeth used continuing medical education (CME) programs to promote Protonix for unapproved uses. CME programs are sponsored by accredited independent providers, such as universities, nonprofit organizations, or specialty societies. Pharmaceutical companies are permitted to provide financial support for CME programs, but they are not permitted to use CME programs as promotional vehicles for off-label indications.According to the complaint, Wyeth spent millions of dollars providing “unrestricted educational grants” to CME providers, and these grants invariably included promises that Wyeth would not attempt to influence the content of the program in any way. Nevertheless, the government alleges that one of Wyeth’s core marketing tactics for Protonix was to use CME programs to drive off-label use of the drug. According to the complaint, the Protonix “brand team” influenced virtually every aspect of these CME programs:   program topics, speaker selection, organization, and content. In addition, the government alleges that Wyeth even insisted that the CME program materials use the same color and appearance as Protonix promotional materials–a tactic that Wyeth and the vendor called “branducation.”

 

“Today’s settlement once again demonstrates our commitment to making sure drug manufacturers follow the rules,” said Stuart Delery, Principal Deputy Assistant Attorney General of the Department of Justice’s Civil Division.   “Drug manufacturers should not be permitted to profit from misbranding their products; the disgorgement remedy here ensures that this does not happen in this case.”

 

“Wyeth tried to cheat the system by obtaining a limited FDA approval for Protonix, fully intending to promote this drug for additional, unapproved uses,” said U.S. Attorney Carmen M. Ortiz. “Wyeth ignored the FDA’s warning not to promote Protonix off-label, and then went so far as to contaminate CME programs that physicians rely on for unbiased, independent scientific information. Today’s settlement reinforces this office’s historic commitment to holding drug companies responsible for their misconduct.”

 

This case was litigated by Assistant U.S. Attorneys David Schumacher and Susan Winkler of Ortiz’s Health Care Fraud Unit, together with former Trial Attorney Kevin Larsen and Deputy Director Jill Furman in the Department of Justice Consumer Protection Branch.   This case was investigated by the FDA’s Office of Criminal Investigations; the Office of Inspector General of the Department of Health and Human Services, the Department of Veterans’ Affairs, and the FBI.

 

This civil complaint and settlement resolve the United States’ investigation of Wyeth related to the promotion of Protonix for unapproved uses.   The claims settled by this agreement are allegations only, allegations which Pfizer denies; there has been no determination of liability. Pfizer acquired Wyeth in October 2009.   Since August 2009, Pfizer has been under a Corporate Integrity Agreement with the Department of Health and Human Services, which agreement remains in effect.

Virginia Anesthesiologist Sentenced for Filing False Tax Returns

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FOR IMMEDIATE RELEASE
Wednesday, December 5, 2012
Virginia Anesthesiologist Sentenced for Filing False Tax Returns

Dr. George Anderson, 57, of Farmville, Va., was sentenced today to 33 months in prison, followed by one year of supervised release, for criminal tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Henry Hudson, sitting in Richmond, Va., also ordered Anderson to pay $471,919 of restitution to the IRS.

 

Anderson had earlier pleaded guilty to two counts of willfully filing false tax returns. According to the statement of facts filed with the court, Anderson was the sole owner of Farmville Anesthesia Associates Inc. Beginning in 2001, Anderson attempted to reduce his business’s tax liability to zero by diverting income to sham and nominee entities. Specifically, Anderson paid hundreds of thousands of dollars worth of bogus expenses out of Farmville Anesthesia’s bank accounts to other accounts held in the names of nominee trusts and limited liability companies Anderson himself controlled.   He then falsely reported these payments on Farmville Anesthesia’s corporate income tax returns as legitimate business expenses. Later, Anderson spent substantial funds out of the nominee bank accounts for his personal benefit, including for the construction of his personal residence, and did not report the expenditures as income on his personal tax returns.

 

In his guilty plea, Anderson admitted that he filed a false 2007 corporate income tax return on behalf of Farmville Anesthesia Associates. That return was false because it reported the bogus expenses paid to Anderson-controlled sham entities. Anderson also admitted to filing a false 2005 personal income tax return. That return was false because it did not report the income Anderson spent for his benefit out of the bank accounts held in the names of the nominee trusts and LLCs.

 

This case was investigated by IRS Criminal Investigation and was prosecuted by Trial Attorney Jonathan Marx of the Justice Department’s Tax Division and Assistant U.S. Attorney David Maguire of the U.S. Attorney’s Office for the Eastern District of Virginia.

Brooklyn, N.Y., Clinic Employee Pleads Guilty in Connection with $71 Million Medicare Fraud Scheme

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Brooklyn, N.Y., Clinic Employee Pleads Guilty in Connection with $71 Million Medicare Fraud Scheme

WASHINGTON – A Brooklyn, N.Y., resident pleaded guilty today for his role in a $71 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, Acting Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).

Yuri Khandrius, 50, pleaded guilty today before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit health care fraud, one count of health care fraud and one count of conspiracy to pay kickbacks.

Khandrius was an employee of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (Bay Medical clinic).  According to court documents, owners, operators and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in services that were medically unnecessary or never provided.  The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.

Khandrius admitted in court that he conspired with co-workers at Bay Medical to commit health care fraud and to pay cash kickbacks to Medicare beneficiaries as part of the scheme.

At sentencing, Khandrius faces a maximum penalty of 25 years in prison.  Sentencing is scheduled for March 11, 2013.

In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees and five external money launderers.  To date, 11 defendants have pleaded guilty for their roles in the conspiracy.  Five individuals await trial before Judge Gershon on Jan. 22, 2013.

The case is being prosecuted by Assistant U.S. Attorney Shannon Jones of the Eastern District of New York and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  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 its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 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.

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

President of Miami Medical Clinic Sentenced on Health Care Fraud Charges

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President of Miami Medical Clinic Sentenced on Health Care Fraud Charges

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and Christopher B. Dennis, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), announce yesterday’s sentencing of defendant Arbilio Yanes on Medicare fraud and related offenses. U.S. District Judge Cecilia M. Altonaga sentenced Yanes to 151 months in prison.

Yanes previously pled guilty to conspiracy to commit health care fraud and to pay health care kickbacks, health care fraud, payment of health care kickbacks, and money laundering.

According to the statements made in court at the plea hearing, sentencing, and evidence presented at the plea hearing, Yanes was the president and one of two owners of Research Center (Research Center) of Florida Inc., a purported medical clinic located in Miami-Dade County, Florida. Between October 13, 2003 and November 5, 2004, Research Center submitted claims to Medicare for $21,043,982, almost exclusively for purported treatment of HIV-positive Medicare beneficiaries for the administration of prescription drugs. Based on these claims, Medicare paid Research Center $11,098,388.93. In fact, Research Center personnel generally administered smaller doses of the medications than the clinic billed in its claims or offered no treatment at all.

To execute the scheme, Yanes paid more than $1.6 million to shell companies controlled by outside patient recruiters. Those shell companies did no business with Research Center, but the recruiters located Medicare beneficiaries who were willing to attend Research Center as purported patients and paid the beneficiaries to do so. Yanes also paid himself more than $1.3 million in profits from the scheme. Of that sum, Yanes paid more than $650,000 to two shell companies he controlled, which did no business with Research Center.

After being interviewed by FBI agents in October 31, 2008, in connection with this scheme, Yanes moved to Brazil. He was prosecuted after being extradited back to the United States.

Efren Mendez, the vice-president of Research Center; Damian Beltran, a medical assistant at the clinic; and Barbara Perez and Caridad Perez, patient recruiters for the clinic, all previously pled guilty to conspiracy to commit health care fraud in related cases.

Mr. Ferrer commended the investigative efforts of the FBI and HHS-OIG. This case was prosecuted by Assistant U.S. Attorney Marc Osborne.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.