Tag Archives: Jonathan T. Baum

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.

Owner of Home Health Agency Sentenced to 75 Years in Prison for Involvement in $13 Million Medicare Fraud Conspiracy

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Friday, August 11, 2017

The owner and director of nursing of a Houston home health agency was sentenced today to 75 years in prison for her role in a $13 million Medicare fraud scheme.

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 U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region and Special Agent in Charge D. Richard Goss of the Houston Field Office of IRS-Criminal Investigation Division (IRS-CI) made the announcement.

Marie Neba, 53, of Sugarland, Texas, was sentenced by U.S. District Judge Melinda Harmon of the Southern District of Texas.  In November 2016, Neba was convicted after a two-week jury trial of one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to pay and receive health care kickbacks, one count of payment and receipt of health care kickbacks, one count of conspiracy to launder monetary instruments and one count of making health care false statements.

According to the evidence presented at trial, from February 2006 through June 2015, Neba and others conspired to defraud Medicare by submitting over $10 million in false and fraudulent claims for home health services to Medicare through Fiango Home Healthcare Inc., owned by Neba and her husband, Ebong Tilong, 53, also of Sugarland, Texas.  The trial evidence showed that using the money that Medicare paid for such fraudulent claims, Neba paid illegal kickbacks to patient recruiters for referring Medicare beneficiaries to Fiango for home health services.  Neba also paid illegal kickbacks to Medicare beneficiaries for allowing Fiango to bill Medicare using beneficiaries’ Medicare information for home health services that were not medically necessary or not provided, the evidence showed.  Neba falsified medical records to make it appear as though the Medicare beneficiaries qualified for and received home health services.  Neba also attempted to suborn perjury from a co-defendant in the federal courthouse, the evidence showed.

According to the evidence presented at trial, from February 2006 to June 2015, Neba received more than $13 million from Medicare for home health services that were not medically necessary or not provided to Medicare beneficiaries.

To date, four others have pleaded guilty based on their roles in the fraudulent scheme at Fiango.  Nirmal Mazumdar, M.D., the former medical director of Fiango, pleaded guilty to a scheme to commit health care fraud for his role at Fiango.  Daisy Carter and Connie Ray Island, two patient recruiters for Fiango, pleaded guilty to conspiracy to commit health care fraud for their roles at Fiango.  On August 11, Island was sentenced to 33 months in prison.  Mazumdar and Carter are awaiting sentencing.  After the first week of trial, Tilong pleaded guilty to one count of conspiracy to commit healthcare fraud, three counts of healthcare fraud, one count of conspiracy to pay and receive healthcare kickbacks, three counts of payment and receipt of healthcare kickbacks, and one count of conspiracy to launder monetary instruments.  Tilong is scheduled to be sentenced on October 13.

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

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.

Jury Convicts All Seven Defendants in $97 Million Medicare Fraud Scheme

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A federal jury in Houston today convicted two owners of a former Houston mental health care company, Spectrum Care P.A. (Spectrum), several of its employees and the owners of certain Houston group care homes for their participation in a $97 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office and Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of Inspector General (HHS-OIG), the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU),  Special Agent in Charge Joseph J. Del Favero of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG) and Special Agent in Charge Scott Rezendes of Field Operations of the Office of Personnel Management’s Office of Inspector General (OPM-OIG) made the announcement following a  jury trial before U.S. District Judge Vanessa Gilmore in the Southern District of Texas.
Physicians Mansour Sanjar, 81, and Cyrus Sajadi, 66, the owners of Spectrum, were each convicted of conspiracy to commit health care fraud and conspiracy to pay kickbacks as well as related counts of health care fraud and paying illegal kickbacks.   Adam Main, 33, a physician’s assistant, was convicted of conspiracy to commit health care fraud and related counts of health care fraud.   Shokoufeh Hakimi, 66, administrator of Spectrum, was convicted of conspiracy to commit health care fraud, conspiracy to pay kickbacks and a related count of paying an illegal kickback.   Chandra Nunn, 35, a group home owner, was also convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and related counts of receiving illegal kickbacks.   Sharonda Holmes, 40, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks and a related count of receiving an illegal kickback.   Shawn Manney, 51, a group home owner, was convicted of conspiracy to pay and receive illegal kickbacks.
According to evidence presented at trial, Sanjar and Sajadi orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until their arrest in December 2011.  Sanjar and Sajadi owned Spectrum, which purportedly provided partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for severe mental illness.   The Medicare beneficiaries for whom Spectrum billed Medicare for PHP services did not qualify for or need PHP services.  Sanjar, Sajadi, Main and Moore signed admission documents and progress notes certifying that patients qualified for PHP services, when in fact, the patients did not qualify for or need PHP services.  Sanjar and Sajadi also billed Medicare for PHP services when the beneficiaries were actually watching movies, coloring and playing games–activities that are not covered by Medicare.
Evidence presented at trial showed that Sanjar, Sajadi and Hakimi paid kickbacks to Nunn, Holmes, Manney and other group care home operators and patient recruiters in exchange for delivering ineligible Medicare beneficiaries to Spectrum.  In some cases, the patients received a portion of those kickbacks.   According to evidence presented at trial, Spectrum billed Medicare for approximately $97 million in services that were not medically necessary and, in some cases, werenot provided.
Sanjar, Sajadi and Nunn are scheduled to be sentenced on Sept. 8, 2014.   Main, Hakimi, Holmes and Manney are scheduled to be sentenced on Sept. 15, 2014.
The case was investigated by the FBI, HHS-OIG, Texas MFCU, RRB-OIG and OPM-OIG and 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 Southern District of Texas.   The case is being prosecuted by Assistant Chief Laura M.K. Cordova and Trial Attorneys Jonathan T. Baum and William S.W. Chang 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.

Former Los Angeles-area Pastor Sentenced for Role in $11 Million Medicare Fraud Scheme

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A pastor and owner of a Los Angeles-area medical supply company was sentenced today for his role in a power wheelchair fraud scheme that defrauded Medicare out of more than $11 million.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Charles Agbu, 58, of Carson, Calif., was sentenced by U.S. District Judge George H. Wu to serve 87 months in prison and was ordered to pay $5,788,725 in restitution to Medicare.  In December 2012, Agbu pleaded guilty to conspiracy and money laundering charges based on his role as owner and operator of Bonfee Inc., a fraudulent durable medical equipment (DME) supply company that Agbu operated with his daughter and co-defendant, Obiageli Agbu, and members of his family from a nondescript office building in Carson.  Agbu admitted that he paid patient recruiters and doctors to provide him with fraudulent prescriptions for expensive, highly specialized power wheelchairs and other DME that he, Obiageli Agbu and their co-conspirators used in submitting more than $11 million false claims to Medicare.  Agbu billed the power wheelchairs to Medicare at a rate of approximately $6,000 per wheelchair even though he paid approximately $900 wholesale per wheelchair.  In many cases, the Medicare beneficiaries to whom Agbu and his co-conspirators claimed they supplied the power wheelchairs and DME did not have any legitimate medical need for the medical equipment, and, in some cases, never received the medical equipment from Agbu’s company.  At the time Agbu engaged in this fraud, he was a pastor at Pilgrim Congregational Church in South Central Los Angeles.

On Sept. 30, 2013, and Oct. 2, 2013, Agbu’s co-defendants, Alejandro Maciel, 43, of Huntington Park, Calif., and Dr. Emmanuel Ayodele, 65, of Los Angeles, were sentenced to serve 41 and 37 months in prison and ordered to pay $5,388,755 and $6,355,949 in restitution to Medicare, respectively.  Two other co-defendants, Dr. Juan Van Putten and Candelaria Estrada, have pleaded guilty to Medicare fraud charges and are scheduled for sentencing on Dec.12, 2013, and Oct. 31, 2013, respectively.  Obiageli Agbu was convicted by a jury on nine counts of conspiracy to commit health care fraud and health care fraud on July 19, 2013.  Her sentencing date has not been set.

The case is being investigated by the FBI, HHS-OIG and the California Department of Justice and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case is being prosecuted by Trial Attorneys Jonathan T. Baum and Alexander Porter of the Criminal Division’s Fraud Section.

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 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Owner of California Medical Equipment Supply Company Found Guilty of $11 Million Medicare Fraud Scheme

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The daughter of a church pastor and owner of a California-based durable medical equipment (DME) supply company was found guilty by a jury of Medicare fraud charges for her role in a Medicare fraud scheme that resulted in over $11 million in fraudulent billings to Medicare.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Obiageli Agbu, 26, of Carson, Calif., was found guilty on July 19, 2013, of one count of conspiracy to commit health care fraud and eight counts of health care fraud following a two-week trial.

The evidence introduced at trial showed that Agbu owned Ibon Inc., a fraudulent DME supply company that she operated from a nondescript office building in Carson.  Agbu’s father and co-defendant, Charles Agbu, a church pastor who pleaded guilty to Medicare fraud and money laundering charges in December 2012, ran a fraudulent DME supply company called Bonfee Inc. from the same office building that housed Ibon.  The trial evidence showed that from Ibon and Bonfee, Agbu, her father and others working with them submitted more than $11 million in fraudulent claims from Ibon and Bonfee to Medicare for expensive, high-end power wheelchairs, hospital beds, braces and other DME that customers either did not need or receive.

According to evidence at trial, Agbu and her father purchased the power wheelchairs wholesale for approximately $900 per wheelchair, but they billed the wheelchairs to Medicare at $4,000 to $5,000 per power wheelchair.  These power wheelchairs were a type of medical equipment of last resort reserved for people with severe mobility limitations and could cause harm if the wheelchairs were supplied to people who did not have a legitimate medical need for them.

Agbu and her father paid kickbacks to street-level patient recruiters or “marketers” who would find senior citizens with Medicare and Medi-Cal benefits and cajole the seniors into agreeing to accept power wheelchairs and other DME that the seniors did not need.  The seniors were directed to doctors who received cash kickbacks of $200 to $1,000 to write fraudulent prescriptions and other Medicare-specific documents conspirators used at Bonfee and Ibon to submit fraudulent claims to Medicare.

As a result of this scheme, between July 2005 and February 2011, Agbu, her father and those working with them submitted approximately $11,094,918 million in fraudulent claims to Medicare and received approximately $5,788,725 on those claims.

At sentencing, scheduled for Oct. 17, 2013, Agbu faces a maximum penalty of 10 years in prison for each count of conviction.  Agbu’s father is scheduled for sentencing on Aug. 15, 2013.  Agbu’s other co-defendants – Dr. Juan Van Putten, Dr. Emmanuel Ayodele, Alejandro Maciel and Candalaira Estrada – have each pleaded guilty to Medicare fraud charges and are scheduled for sentencing in September and October 2013.

The case is being investigated by the FBI, HHS-OIG and the California Department of Justice.  The case is being prosecuted by Trial Attorneys Jonathan T. Baum and Alexander Porter of the Criminal Division’s Fraud Section, with assistance from Trial Attorney William Kanellis.

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 Central District of California.  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 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Owner of Los Angeles-area DME Company Pleads Guilty to Conspiring to Defraud Medicare and Medi-Cal

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The owner of a Los Angeles-area durable medical equipment (DME) supply company has pleaded guilty to conspiring to defraud Medicare and Medi-Cal of more than $650,000.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse, made the announcement.

Kim Ricks, of Moreno Valley, Calif., pleaded guilty on July 17, 2013, before U.S. District Judge Fernando M. Olguin in the Central District of California to one count of conspiracy to commit health care fraud.

In court, Ricks admitted that she owned and operated Kim’s Medical Supplies (“KMS”), a DME company that was located in Moreno Valley.  Ricks enrolled KMS in both Medicare and Medi-Cal, which allowed her to submit claims to both programs.  Ricks admitted that between approximately December 2005 and September 2012, she submitted claims to Medicare and Medi-Cal for power wheelchairs (PWCs) and other DME on behalf of people who did not have a legitimate medical need for the equipment, a practice that, Ricks admitted in court, she knew violated Medicare and Medi-Cal rules and regulations.

Ricks also admitted that she submitted claims to Medicare and Medi-Cal for PWCs and other DME that neither she nor her co-conspirators delivered to KMS’s customers, which Ricks knew violated the rules and regulations of both Medicare and Medi-Cal.  In some cases, Ricks obtained the Medicare billing and personal information of individuals and, without their knowledge, used that information to submit claims to Medicare and Medi-Cal for PWCs and other DME that neither she nor her co-conspirators provided to the individuals.  Ricks admitted that she submitted these types of claims to Medicare and Medi-Cal because she needed the money to keep KMS viable.  Ricks also admitted that she submitted claims to Medicare and Medi-Cal for power wheelchairs and DME that she knew were supported by fraudulent prescriptions forged by her co-conspirators.

Ricks admitted that she was responsible for the claims that KMS submitted to Medicare and Medi-Cal, although, at times, her co-conspirators used her Medicare and Medi-Cal provider numbers to submit false and fraudulent claims to both programs.  As a result of this conspiracy, Ricks admitted that she and her co-conspirators submitted and caused the submission of approximately $643,468 in fraudulent Medicare claims and received approximately $236,882 in ill-gotten reimbursement payments.  Ricks admitted further that she and her co-conspirators submitted and caused the submission of approximately $11,849 in fraudulent Medi-Cal claims and received approximately $8,660 in ill-gotten reimbursement payments.

At sentencing, scheduled for Oct. 24, 2013, Ricks faces a maximum penalty of 10 years in prison.

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section.  The case is being investigated by the HHS-OIG and the California Department of Justice.

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 Central District of California.  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 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Former Owners of Los Angeles-Area Medical Equipment Wholesaler Plead Guilty to Conspiring with Customers to Defraud Medicare

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Tuesday, February 26, 2013

Two former owners of a Los Angeles-area medical equipment wholesale supply company pleaded guilty today to conspiring with their customers to defraud Medicare.

The pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Bill L. Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Joseph Fendrick, Special Agent in Charge of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse (Cal-DOJ).

Rajinder Singh Paul, 69, and Baljit Kaur Paul, 65, of Redlands, Calif., each pleaded guilty before U.S. District Judge Percy Anderson in the Central District of California to one count of conspiracy to commit health care fraud.

In court documents, Rajinder and Baljit Paul admitted that they were the president and vice president, respectively, and shareholders of AHPK Inc., a medical equipment wholesale supply company located in Redlands and Ontario, Calif., and formally known as Major’s Wholesale Medical Supply Inc.  The Pauls later sold Major’s Wholesale Medical Supply Inc. to Major’s Wholesale Medical Supply LLC (collectively, “Major’s”) and, according to court documents, remained employed at Major’s Wholesale Medical Supply LLC as consultants until they were terminated in February 2009.

During the time the Pauls either owned or worked as consultants for Major’s, Major’s sold durable medical equipment (DME) almost exclusively to customers who owned and operated DME supply companies, according to court documents.  A majority of Major’s customers were Medicare providers and relied on Medicare to make money, which they did by billing Medicare for the DME that they purchased from Major’s.

One of the more popular items of DME that the Pauls sold at Major’s were power wheelchairs.  Court documents indicate that to attract customers, the Pauls sold power wheelchairs to Major’s customers wholesale for between $850 to $1,000 each.  Major’s customers, however, billed these power wheelchairs to Medicare at a rate of between $3,000 to $6,000 per wheelchair.

The Pauls admitted they knew that Major’s customers were dependent on Medicare for their revenue, and that Major’s customers could not pay Major’s unless Medicare paid the customers first.  To foster customer loyalty, the Pauls engaged in a variety of conduct over a period of six years that helped Major’s customers defraud Medicare, including by providing Major’s customers with false inventory purchase agreements that showed they had higher credit limits than they really did.  Major’s customers submitted these false inventory purchase agreements to Medicare to prove, as required by Medicare, the ability to purchase the volume of DME they billed.

The Pauls also admitted they provided Major’s customers with backdated invoices, knowing customers were billing Medicare for power wheelchairs and DME before the customers actually purchased or delivered the equipment.  The Pauls admitted that by backdating these invoices, they provided Major’s customers with the paper trail the customers needed to prove to Medicare that they had both purchased the DME and purchased it before they submitted their claims to Medicare.  According to court documents, the Pauls backdated or falsified invoices for more than 100 different customers.

Court documents indicate that two of many customers who conspired with the Pauls to defraud Medicare owned and operated a number of fraudulent DME supply companies in the Los Angeles area, including one customer who used “straw” or nominee owners to operate the customer’s companies.  The Pauls admitted they provided these two customers with false inventory purchase agreements and backdated invoices that the customers used to defraud Medicare.  The Pauls admitted that as a result of their conduct, these two customers were able to use their fraudulent DME supply companies to submit approximately $16,662,143 in false claims to, and receive approximately $9,743,609.42 in ill-gotten reimbursement payments from, Medicare.

At sentencing, scheduled for July 8, 2013, the Pauls each face a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being prosecuted by Jonathan T. Baum of the Criminal Division’s Fraud Section.  The case was investigated by the FBI, HHS-OIG, and Cal DOJ and 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 Central District of California.

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, are 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.