Detroit-Area Resident Pleads Guilty in $13.8 Million Health Care Fraud Scheme

A Detroit-area resident pleaded guilty today in federal court in the Eastern District of Michigan for his role in managing a $13.8 million psychotherapy fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS), and the FBI.

Jawad Ahmad, 42, pleaded guilty before U.S. District Judge Gerald E. Rosen in Detroit to one count of conspiracy to commit health care fraud. At his sentencing, scheduled for November 28, 2012, Ahmad faces a maximum potential penalty of 10 years in prison and a $250,000 fine.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge of the FBI’s Detroit Field Office Robert D. Foley III; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

According to court documents, beginning in July 2008, two of Ahmad’s co-conspirators, Tausif Rahman and Muhammad Ahmad, acquired control over a home health care company known as Physicians Choice Home Health Care LLC (Physicians Choice). From in or around January 2009 and continuing through in or around March 2010, Jawad Ahmad managed the operations of Physicians Choice.

Court documents indicate that Jawad Ahmad managed numerous aspects of the fraud at Physicians Choice, including delivering the payment of kickbacks to beneficiary recruiters who obtained Medicare beneficiaries’ information needed to bill Medicare for home health services, including physical therapy and skilled nursing, that were never rendered. Jawad Ahmad also provided information to employees of Physicians Choice to check the billing eligibility of the Medicare beneficiaries before Physicians Choice began billing them.

In exchange for kickbacks, Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate they received home health services they had never received. Jawad Ahmad delivered the pre-signed beneficiary paperwork to various medical professionals, including nurses, physical therapists, and physical therapy assistants to create and/or sign fictitious patient files to document purported home health services that were never rendered. From in or around January 2009 through in or around March 2010, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice.

According to court documents, from in or around May 2010 through in or around September 2011, Jawad Ahmad managed Phoenix Visiting Physicians PLLC, a company incorporated by co-conspirator Dr. Dwight Smith. Dr. Smith signed home health care referrals for beneficiaries he had not seen or treated. Phoenix employed individuals who held themselves out to be “doctors,” but who were not, in fact, licensed in the state of Michigan to perform any medical services. The unlicensed “doctors” met and purported to examine non-homebound Medicare beneficiaries for home health care services. Jawad Ahmad drove one unlicensed “doctor” to meet and purportedly examine beneficiaries who were not, in fact, homebound.

Between 2008 and 2009, Ahmad’s co-conspirators acquired beneficial ownership and control over three additional home health care companies: First Care Home Health Care LLC, Quantum Home Care Inc., and Moonlite Home Care Inc. Each of these home health companies billed Medicare and operated in a manner the same as or similar to Physicians Choice. Each of these companies received fraudulent home health referrals from Dr. Smith through Phoenix Visiting Physicians. From in or around May 2010 through in or around September 2011, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice, First Care, Quantum, and Moonlite based on Dr. Smith’s fraudulent referrals. The four home health companies at the center of the indictment received approximately $13.8 million from Medicare in the course of the conspiracy.

Eight other defendants have pleaded guilty in this case, including Tausif Rahman and Muhammad Ahmad, who each pleaded guilty to one count of conspiracy to commit health care fraud and one count of money laundering, as well as Dr. Dwight Smith who pleaded guilty to one count of conspiracy to commit health care fraud.

The case is being prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-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 Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 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 Owner of Daytona Beach Clinic Pleads Guilty to Fraud, Conspiracy, and Money Laundering

United States Attorney Robert E. O’Neill announces that Joseph Wagner (62, Daytona Beach pleaded guilty to health care fraud, conspiracy to illegally distribute prescription drugs, and money laundering. Wagner faces a maximum penalty of 30 years in federal prison. He was indicted on June 13, 2012.

According to the plea agreement, Wagner was a licensed chiropractor and owner of Wagner Chiropractic and Acupuncture Clinic (WCAC) in Volusia County, Florida. He operated WCAC as a facility that purported to provide chiropractic and other medical services to customers. On occasion, Wagner did provide chiropractic services to customers of WCAC. However, he also submitted inflated bills to public and private health care beneficiary programs, including Medicare. Wagner charged those programs at the higher rates for services rendered by medical doctors, instead of the rates appropriate for chiropractors. In addition, Wagner systematically submitted claims for reimbursement for services not rendered.

As part of the fraud scheme, Wagner submitted fraudulent billings in the names of medical doctors. By doing so, the health care beneficiary programs would make payments directly to those medical doctors. The doctors accepted those payments and would often split the fraudulently obtained insurance payments with Wagner. In the case of at least one medical doctor participating in the fraudulent scheme, Wagner received payments from the health care beneficiary programs by check and then deposited those checks into the medical doctor’s bank account.

Wagner also provided customers of WCAC with prescriptions for prescription drugs, often in return for cash payments. Since he could not prescribe controlled substances, Wagner provided prescriptions for controlled substances to customers of WCAC using the names of medical doctors who were aware that Wagner was using their names illegally. Many of the patients who obtained prescriptions for controlled substances through Wagner used their Medicaid coverage at pharmacies to pay for those controlled substances.

This case was investigated by the Federal Bureau of Investigation, Food and Drug Administration, Department of Health and Human Services Office of Inspector General, Florida Department of Financial Services, Florida Department of Health, and the Florida Department of Law Enforcement. It is being prosecuted by Assistant United States Attorney Daniel C. Irick.

Houston Doctor Arrested on Charges of Health Care Fraud

Dr. Emmanuel Nwora, 48, of Houston, has been arrested following the return of a sealed indictment alleging health care fraud and conspiracy to commit health care fraud, United States Attorney Kenneth Magidson announced.
The 13-count indictment was unsealed just moments ago upon Nwora’s arrest by agents with FBI, the Texas Attorney General’s Medicaid Fraud Control Unit, and Department of Health and Human Services-Office of Inspector General, Office of Investigations. He is expected to appear before U.S. Magistrate Judge Nancy Johnson. Also charged is Charles Harris, 52, aka Celestine Nwajfor and Okechi Nwajfor, also of Houston. Harris (photo below) is currently a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000.

The indictment alleges that from 2007 to 2010, Nwora and Harris falsely billed Medicare and Medicaid under vestibular diagnostic codes. They allegedly billed Medicare and Medicaid approximately $850,000 and were paid approximately $390,000. Vestibular problems are traditionally inner ear problems with the patients reporting chronic dizziness and balance problems.
Nwora operated a family practice clinic in Houston called Houston Optimum Care Medical Association, while Harris operated a Houston business called Cevine Health Care and Rehabilitation Center. According to the indictment, Harris would send unlicensed persons into Medicare beneficiaries homes to perform some types of vestibular testing. Harris allegedly would then submit “superbills” to Nwora and his billing contractor for this testing. The indictment indicates that patients reported either that none of the testing was performed or that some form of testing was performed but not in the quantity that was actually billed. One patient’s Medicare number was allegedly billed for more than 800 tests on 161 different days over the course of one year. Others were billed for more than 500 tests over a period of one year, according to the indictment. The patients, their families or their treating doctors reported that these patients did not need vestibular testing and did not complain of dizziness.

Nwora allegedly billed Medicare and Medicaid for these diagnostic tests and split the paid claims with Harris. The indictment indicates that Nwora kept 35 percent, while Harris received the remainder.

Each of the 13 counts in the indictment carry as possible punishment up to 10 years in federal prison and a possible $250,000 fine.

The charges are the result of the investigative efforts of the Department of Health and Human Services-Office of Inspector General, Office of Investigations as well as the Texas Attorney General’s Medicaid Fraud Control Unit, FBI, and the United States Attorney’s Office. Special Assistant United States Attorney Suzanne Bradley is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.

Owner of Miami Home Health Company Pleads Guilty in $60 Million Health Care Fraud Scheme

The owner of a Miami health care agency pleaded guilty for his participation in a $60 million home health Medicare fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

Rodolfo Nieto Jr., 40, of Miami, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida to one count of conspiracy to defraud the United States and to receive health care kickbacks.
According to the court documents, Nieto was the owner and operator of Ronat Home Health Care Inc. According to court documents, during the time of the conspiracy, Ronat was a Florida home health “staffing agency” that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Ronat subsequently became a home health agency.
According to court documents, from approximately January 2006 to approximately November 2009, Nieto accepted kickbacks in return for recruiting Medicare beneficiaries to be placed at Nany Home Health Inc., a Miami home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. The owners and operators of Nany paid Nieto kickbacks in return for allowing Nany to bill the Medicare program on behalf of the patients Nieto had recruited through Ronat. Specifically, as part of the scheme, Nany billed Medicare for home health services purportedly provided by Ronat.
In a related case, on April 25, 2012, Roberto Gonzalez and Olga Gonzalez, president and vice president of Nany, and their son, Fabian Gonzalez, all of whom operated Nany, were sentenced to 120, 87, and 87 months in prison, respectively, following their December 19, 2011 guilty pleas to one count each of conspiracy to commit health care fraud. From approximately January 2006 through November 2009, Roberto, Olga, and Fabian Gonzalez and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
At sentencing, scheduled for October 23, 2012, Nieto faces a maximum penalty of five years in prison and a fine of $250,000 or twice the pecuniary gain or loss.
The plea was 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; Jeffrey C. Mazanec, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations, Miami Office.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-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 Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 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.

Canton Resident Convicted in Health Care Fraud Scheme

A Canton pharmacist and pharmacy owner, along with five other associates, were found guilty by a federal jury on 26 counts of an indictment charging him with conspiracy, health care fraud, and controlled substance distribution, United States Attorney Barbara L. McQuade announced today.
The jury deliberated a little more than three days before returning the verdict, concluding a six-week trial before United States District Judge Arthur J. Tarnow.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso of the Drug Enforcement Administration; Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation; and Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services.
The jury convicted Babubhai (Bob) Patel, 49, and four pharmacists he employed, Brijesh Rawal, 36, of Canton; Ashwini Sharma, 34, of Novi; Lokesh Tayal, 36, of Northville; and Viral Thaker, 31 of Findlay, Ohio; and one of Patel’s business associates, Komal Acharya, 28, of Farmington Hills. Brijesh Rawal, Ashwini Sharma, Lokesh Tayal, and Viral Thaker were convicted of conspiracies to commit health care fraud and to distribute controlled substances; Komal Acharya was convicted of the sole charge she faced, conspiracy to commit health care fraud. In addition, Brijesh Rawal was convicted of one count of substantive health care fraud and three counts of substantive controlled substance distribution, in addition to the conspiracies; Viral Thaker was convicted of two substantive health care fraud counts and two substantive distribution counts. The jury was unable to reach a verdict on the sole count pending against Harpreet Sachdeva.
“These defendants stole money from the Medicare and Medicaid programs, which are designed to provide health care and medicine to some of our most vulnerable citizens,” McQuade said. “Pharmacists and health care providers should be aware that we are scrutinizing records to detect and prosecute health care fraud,” McQuade said.
Robert L. Corso, Special Agent in Charge of DEA’s Detroit Field Division stated, “Confronting the illegal diversion and abuse of controlled pharmaceuticals is a top priority of DEA and our law enforcement partners. Today’s verdicts eliminated one of the largest diversion conspiracies ever uncovered in the state of Michigan. The convictions, particularly of the medical professionals, are significant. These individuals abused their positions of trust and endangered the lives of countless people by illegally distributing opiate painkillers and depressants throughout southeast Michigan and beyond. This investigation makes it clear that the DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines.”
“The diversion of prescription drugs, coupled with the submission of fraudulent claims to Medicare, creates a toxic scenario that can place an individual’s health and safety at risk as well as taxpayers’ dollars,” said Lamont Pugh, III, Special Agent in Charge of the Chicago Region for the U.S. Department of Health and Human Services, Office of Inspector General. “The OIG will continue to work diligently with our law enforcement partners to hold those who seek to harm the Medicare program accountable.”
FBI Special Agent in Charge Foley stated, “Those who abuse our health care system by stealing tax payer dollars will be brought to justice. Pharmacists and others who engage in criminal activity in order to enrich themselves financially will be held accountable for their illegal acts. The FBI is committed to stopping this form of fraud.”
The evidence presented at trial demonstrated that, from approximately January 2006 through August 2011, Babubhai Patel owned and controlled over 20 pharmacies, which were operated in and around Detroit, Michigan. In addition, the evidence showed that Patel’s model for turning a profit at his pharmacies was based upon large-scale health care fraud and the diversion of controlled substances. Patel and his associates paid cash kickbacks and other forms of illegal remuneration to physicians in exchange for those physicians writing prescriptions for expensive medications, without regard to medical necessity, that could be billed to Medicare, Medicaid, or a private insurer through one of the Patel Pharmacies. Physicians affiliated with Babubhai Patel would also write prescriptions for controlled substances for their patients, again regardless of medical necessity, which would then be filled at one of the Patel Pharmacies. These controlled substances were distributed to patients and patient recruiters as a kickback in exchange for the patients using a Patel Pharmacy.
Pharmacists within the Patel Pharmacies, including defendants Rawal, Tayal, Sharma, and Thaker, facilitated the fraud and controlled substance distribution schemes by billing Medicare, Medicaid, and private insurers for expensive, non-controlled medications that they had in inventory but never actually dispensed to the patients. The surplus of medications generated through this practice was returned to wholesalers, thereby enabling the Patel organization to maximize its profit on its inventory of medications which were billed for but never dispensed. The defendants billed insurers for dispensing medications that they knew were prescribed outside the course of legitimate medical practice, thus defrauding insurers by billing for medications regardless of medical necessity. The defendants would provide controlled drugs to patients and patient recruiters, knowing that those medications were prescribed outside the course of legitimate medical practice.
Evidence also showed that Acharya assisted Patel in sustaining the illegal health care fraud scheme at his pharmacies, principally by helping Patel and others conceal the proceeds of the fraud.
The case was investigated by the DEA, the Department of Health and Human Services-Office of Inspector General, and the FBI. The case was prosecuted by Assistant United States Attorneys John K. Neal and Wayne F. Pratt.

Former Nursing Home Operator Sentenced to Prison for 20 Years for Health Care Fraud and Tax Fraud

George D. Houser, 64, of Sandy Springs, Georgia, was sentenced by United States District Judge Harold L. Murphy to serve 20 years in federal prison on charges of conspiring with his wife to defraud the Medicare and Georgia Medicaid programs by billing them for “worthless services” in the operation of three nursing homes. Medicare and Medicaid paid Houser more than $32.9 million between July 2004 and September 2007 for food, medical care, and other services for nursing home residents. This is the first time that a defendant has been convicted after a trial in federal court for submitting claims for payment for worthless services.

Houser was convicted after a bench trial before United States District Judge Harold L. Murphy, who issued an order with findings of fact and conclusions of law on Monday, April 2, 2012. Houser had requested the trial before the judge instead of the jury, and Judge Murphy conducted the trial from January 30, 2012, through February 28, 2012. In addition to the health care fraud conspiracy count, Houser was also convicted of eight counts of failing to pay over $800,000 in his nursing home employees’ payroll taxes to the IRS and failing to file personal income tax returns in 2004 and 2005.
“Senior citizens in nursing homes are among our most vulnerable citizens. This defendant stole millions of dollars in Medicare funds to fund his luxurious lifestyle, while the nursing home residents entrusted to his care went without food or medicine. He will now spend the next 20 years in prison,” said United States Attorney Sally Quillian Yates.
“Criminals don’t need to be lip readers to get this message. Provide horrendous care, while at the same time wallowing in luxury, and you will be punished—severely,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General for the Atlanta region. “Working with other law enforcement agencies, we will continue to aggressively investigate and prosecute these taxpayer-funded, worthless services cases.”
“Business owners have an inescapable obligation to withhold employment taxes from their employees and remit those taxes to the Internal Revenue Service,” stated Donald B. Yaden, Special Agent in Charge with IRS-Criminal Investigation. “Those who fail to do so, in order to reap personal benefit at the expense of their employees, will be prosecuted to the fullest extent of the law.”
Houser was sentenced to 20 years in prison, to be followed by three years of supervised release. Houser was also ordered to pay $6,742,807.88 in restitution to Medicaid and Medicare, and $872,515 in restitution to the Internal Revenue Service.
According to United States Attorney Yates, the charges, and other information presented in court: Houser, assisted by his wife Rhonda Washington Houser, 49, also of Sandy Springs, operated two nursing homes in Rome, Georgia, between July 2004 and July 2007, known as Mount Berry and Moran Lake. Each home had approximately 100 residents. They also operated a nursing home known as Wildwood in Brunswick, Georgia, from September 2004 until September 2007, and it had the capacity for 204 residents. Between July 2004 and September 2007, Houser billed Medicare and Medicaid approximately $41 million, and was paid $32.9 million—based on his certifications and promises that he was providing the residents with a safe, clean physical environment, nutritional meals, medical care, and services that would promote or enhance the residents’ quality of life.
In contrast to the pretenses under which Houser accepted Medicare and Medicaid payments, the court concluded that the evidence presented at trial showed “a long-term pattern and practice of conditions at defendant’s nursing homes that were so poor, including food shortages bordering on starvation, leaking roofs, virtually no nursing or housekeeping supplies, poor sanitary conditions, major staff shortages, and safety concerns, that, in essence, any services that defendant actually provided were of no value to the residents.” The court further found that “defendant was well aware that ongoing jeopardy conditions existed at the nursing homes during this time. Rather than make a good faith effort to remedy the glaring issues impacting the residents’ health and welfare, the evidence shows that defendant chose instead to divert significant nursing home funds for his real estate development ventures and for other personal expenses and that defendant intentionally attempted to cover up and conceal from the surveyors the nursing homes’ issues and his diversion of funds.”
During the trial, the government introduced evidence that instead of providing sufficient care for the nursing home residents, Houser diverted slightly more than $8 million of Medicare and Medicaid funds to his personal use. Houser spent more than $4.2 million on real estate for a hotel complex that he planned to build in Rome, and he also had plans to develop hotels in Atlanta and Brunswick. Houser also bought his ex-wife a house in Atlanta for $1.4 million, and, instead of paying her alimony, he paid her a salary as a nursing home employee, though she never worked at any of the homes. Houser also used the nursing homes’ corporate bank accounts for personal expenses, such as Mercedes-Benz automobiles, furniture, and vacations.
The trial evidence showed several examples of the deficiencies at Houser’s nursing homes, including:
Inadequate staffing: Houser failed to maintain a nursing staff that was sufficient to take proper care of the residents. Staffing shortages started plaguing the homes after Houser started writing bad paychecks to his employees, which resulted in numerous staff resignations. Houser also withheld health insurance premiums from his employees, but sometimes let the insurance lapse for non-payment, leaving many employees with large unpaid medical bills for surgery and treatment. The payroll and insurance problem, and unpaid garnishments prompted many employees to seek work elsewhere and discouraged new applicants.
Inadequate physical environments: The roofs in two of the homes were so leaky that employees used 55-gallon barrels and plastic sheeting to catch and divert the rainwater. The leaks worsened over time, but Houser never replaced the roofs, nor did he repair or replace broken air conditioning and heating units. Fiberglass ceiling tiles would become saturated with water until they fell out of the ceiling, occasionally on residents’ beds. The residents kept their windows open to vent the foul odors in the homes, but flies, other insects, and rodents easily entered the homes through ill-fitting screens and doors. The insect problems were aggravated by mounds of rotting garbage, which piled up around the dumpsters near the homes because Houser failed to pay the trash collection services. The moisture and inability to control the humidity in the homes gave rise to rampant mold and mildew growth.
Failure to pay vendors: The Medicare and Medicaid programs require nursing homes to provide sufficient dietary, pharmaceutical, and environmental service to care for their residents’ needs. Houser failed to provide these services, in part by failing to pay food suppliers and vendors of pharmacy and clinical laboratory services, medical waste disposal, trash disposal, and nursing supplies, and in part by failing to repair washing machines and dryers, water heaters, air conditioners, and leaking roofs. The nursing homes suffered continual food shortages, and employees spent their own money to buy milk, bread, and other groceries so that residents would not starve, but the employees were rarely reimbursed by Houser. Employees also bought nursing supplies for the residents and cleaning supplies for the homes, and they regularly had to wash the residents’ laundry in laundromats or their own homes. One nursing home resident testified that residents used to pass the time by making bets on which service or utility would be the next to be cut off for nonpayment.
The Georgia Department of Human Resources Office of Regulatory Services (ORS) received many complaints about Houser’s nursing homes from families, staff, and vendors. After giving the nursing homes many opportunities to correct deficiencies, the ORS closed the two nursing homes in Rome in June 2007, and it closed the Brunswick home in September 2007. One state surveyor inspected the Moran Lake home in Rome in late May 2007, and she testified that the heat, flies, filth, and stench made for an environment best described as “appalling” and “horrendous.”
In addition to the health care fraud count, Houser was convicted of eight counts of deducting $806,305 in federal payroll taxes from his employees’ paychecks but not paying that money over to the IRS. Houser was also convicted of failing to file personal income tax returns for 2004 and 2005.
Houser and his wife were indicted on April 14, 2010. Rhonda Washington Houser pleaded guilty to misprision of the felony of health care fraud in December 2011, and her sentencing date has not yet been scheduled.
This case was investigated by special agents of the Federal Bureau of Investigation; Health and Human Services, Inspector General; and IRS-Criminal Investigation.
Assistant United States Attorneys Glenn D. Baker and William G. Traynor are prosecuting the case.

Three Nurses, Including Two Owners of a Home Health Care Agency, and the Company Among Six Defendants Indicted in Alleged Conspiracy Involving Kickbacks for Medicare Patients

A home health care agency in suburban Lincolnwood, two nurses who are part owners of the company, a third nurse affiliated with them, and two marketers were indicted on federal charges for allegedly participating in a conspiracy to pay and receive kickbacks in exchange for the referral of Medicare patients for home health care services, federal law enforcement officials announced. Defendants Marilyn Maravilla and Junjee L. Arroyo, both part owners of Goodwill Home Healthcare Inc., and three other defendants allegedly conspired to pay and receive approximately $400,000 in kickbacks to themselves, nurses, marketers, and others for the referral and retention of Medicare patients that enabled Goodwill to bill Medicare approximately $5 million.

Also indicted were Ferdinand Echavia, a licensed nurse who referred patients to Goodwill, and Jean Holloway and Rakeshkumar Shah, both of whom marketed Goodwill’s services to Medicare patients.
The 29-count indictment was returned by a federal grand jury last Thursday and unsealed on Friday following the arrests of Holloway, 41, of Bellwood, and Shah, 46, of Des Plaines. Both were released on bond after pleading not guilty in U.S. District Court.
Maravilla, 55, of Chicago; Arroyo, 44, of Elmhurst; and Echavia, 39, of Chicago, all licensed nurses, together with Goodwill as a corporate defendant, are scheduled to be arraigned on August 22 in U.S. District Court.
All six defendants were charged with one count of conspiracy to pay and receive illegal kickbacks for Medicare patient referrals, and each defendant was also charged with the following number of counts of violating the anti-kickback statute: Goodwill, 16 counts; Maravilla, 15 counts; Arroyo, 16 counts; Echavia, five counts; Holloway, three counts; and Shah, eight counts.
Maravilla began working as a nurse at Goodwill in August 2008 and, sometime during the next two months, became an owner and the administrator of the agency. Arroyo was also an owner and Goodwill’s director of nursing.
The indictment was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent in Charge of the Chicago Region of the U.S. Department of Health and Human Services, Office of Inspector General; and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.
“Paying kickbacks to refer Medicare patients is illegal. Money cannot be permitted to be the basis of a medical referral over medical necessity or quality of service,” Mr. Pugh said. The investigation is continuing, the officials said.
Between August 2008 and July 2010, the indictment alleges that Maravilla, Arroyo, and two other individuals—one an officer and an owner of Goodwill, and the other a certified public accountant and Goodwill’s bookkeeper—paid and caused Goodwill to pay kickbacks to nurses, marketers, and other home health care workers who referred patients to Goodwill; assisted in re-certifying patients as homebound; or caused patients to begin new 60-day care cycles of home health care with Goodwill. By offering kickbacks, Maravilla, Arroyo, and others sought to increase Goodwill’s patient census and to enrich themselves and Goodwill. During this time, Goodwill obtained referrals of approximately 900 cycles of home health care, including new patients and the re-certification of existing patients for additional 60-day cycles of care.
According to the indictment, the amount of the kickback payments varied but generally ranged from approximately $400 to $700 for each new care cycle and approximately $100 to $300 for each re-certification. The payments were intended to induce nurses, marketers, and others in the home health industry to refer patients to Goodwill for services to be reimbursed by Medicare, the indictment alleges.
In January 2009, Maravilla and Arroyo allegedly created and circulated to Goodwill employees and affiliates a memo on Goodwill’s letterhead that set forth a structure for kickbacks relating to patient re-certifications, disguising the illegal payments as “bonuses.” The memo provided that a $100 “bonus” would be given to nurses who re-certified a patient for a third cycle, and a $200 “bonus” would be given to a nurse who re-admitted a discharged patient a month after the discharge date.
In order to make certain kickback payments in cash, Maravilla and Arroyo obtained Goodwill checks payable to them and recorded on Goodwill’s books as “loans,” but they allegedly cashed the checks and used the funds to pay kickbacks to marketers.
The indictment alleges that Maravilla, Arroyo, and Goodwill’s bookkeeper paid Echavia cash kickbacks totaling approximately $28,000 and also paid kickbacks totaling approximately $56,000 to a company owned and controlled by Echavia. Maravilla and Arroyo allegedly caused Goodwill to pay approximately $10,400 in kickbacks to Holloway, and kickbacks totaling approximately $21,500 to Shah. In addition, the two owners caused Goodwill to pay approximately $20,000 in kickbacks to two other marketers who were not charged.
The indictment also alleges that Maravilla and Arroyo caused Goodwill to pay at least $58,000 in kickbacks to at least three other nurses who were affiliated with Goodwill and who were not charged. In addition to receiving salary and profits from Goodwill, Maravilla and Arroyo allegedly caused the agency to pay kickbacks to them as well. Maravilla allegedly received approximately $138,000 in kickbacks for patient referrals, and Arroyo allegedly received approximately $44,000 in kickbacks for patients that either he or his wife referred to Goodwill.
Conspiracy and each count of violating the anti-kickback statute carry a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorneys Shoshana Gillers and John Kness.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The case falls under the umbrella of the Medicare Fraud Strike Force, which expanded operations to Chicago in February 2011, and is part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Approximately four dozen defendants have been charged in health care fraud cases since the strike force began operating in Chicago last year. In unrelated cases indicted in late June 2012, 10 defendants, including the owners of two Chicago home health care agencies and three physicians, were charged in two separate alleged Medicare referral kickback schemes.
Since their inception in March 2007, strike force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 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.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Canton Resident Convicted in Health Care Fraud Scheme

A Canton pharmacist and pharmacy owner, along with five other associates, were found guilty by a federal jury on 26 counts of an indictment charging him with conspiracy, health care fraud, and controlled substance distribution, United States Attorney Barbara L. McQuade announced .
The jury deliberated a little more than three days before returning the verdict, concluding a six-week trial before United States District Judge Arthur J. Tarnow.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso of the Drug Enforcement Administration; Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation; and Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services.
The jury convicted Babubhai (Bob) Patel, 49, and four pharmacists he employed, Brijesh Rawal, 36, of Canton; Ashwini Sharma, 34, of Novi; Lokesh Tayal, 36, of Northville; and Viral Thaker, 31 of Findlay, Ohio; and one of Patel’s business associates, Komal Acharya, 28, of Farmington Hills. Brijesh Rawal, Ashwini Sharma, Lokesh Tayal, and Viral Thaker were convicted of conspiracies to commit health care fraud and to distribute controlled substances; Komal Acharya was convicted of the sole charge she faced, conspiracy to commit health care fraud. In addition, Brijesh Rawal was convicted of one count of substantive health care fraud and three counts of substantive controlled substance distribution, in addition to the conspiracies; Viral Thaker was convicted of two substantive health care fraud counts and two substantive distribution counts. The jury was unable to reach a verdict on the sole count pending against Harpreet Sachdeva.
“These defendants stole money from the Medicare and Medicaid programs, which are designed to provide health care and medicine to some of our most vulnerable citizens,” McQuade said. “Pharmacists and health care providers should be aware that we are scrutinizing records to detect and prosecute health care fraud,” McQuade said.
Robert L. Corso, Special Agent in Charge of DEA’s Detroit Field Division stated, “Confronting the illegal diversion and abuse of controlled pharmaceuticals is a top priority of DEA and our law enforcement partners. Today’s verdicts eliminated one of the largest diversion conspiracies ever uncovered in the state of Michigan. The convictions, particularly of the medical professionals, are significant. These individuals abused their positions of trust and endangered the lives of countless people by illegally distributing opiate painkillers and depressants throughout southeast Michigan and beyond. This investigation makes it clear that the DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines.”
“The diversion of prescription drugs, coupled with the submission of fraudulent claims to Medicare, creates a toxic scenario that can place an individual’s health and safety at risk as well as taxpayers’ dollars,” said Lamont Pugh, III, Special Agent in Charge of the Chicago Region for the U.S. Department of Health and Human Services, Office of Inspector General. “The OIG will continue to work diligently with our law enforcement partners to hold those who seek to harm the Medicare program accountable.”
FBI Special Agent in Charge Foley stated, “Those who abuse our health care system by stealing tax payer dollars will be brought to justice. Pharmacists and others who engage in criminal activity in order to enrich themselves financially will be held accountable for their illegal acts. The FBI is committed to stopping this form of fraud.”
The evidence presented at trial demonstrated that, from approximately January 2006 through August 2011, Babubhai Patel owned and controlled over 20 pharmacies, which were operated in and around Detroit, Michigan. In addition, the evidence showed that Patel’s model for turning a profit at his pharmacies was based upon large-scale health care fraud and the diversion of controlled substances. Patel and his associates paid cash kickbacks and other forms of illegal remuneration to physicians in exchange for those physicians writing prescriptions for expensive medications, without regard to medical necessity, that could be billed to Medicare, Medicaid, or a private insurer through one of the Patel Pharmacies. Physicians affiliated with Babubhai Patel would also write prescriptions for controlled substances for their patients, again regardless of medical necessity, which would then be filled at one of the Patel Pharmacies. These controlled substances were distributed to patients and patient recruiters as a kickback in exchange for the patients using a Patel Pharmacy.
Pharmacists within the Patel Pharmacies, including defendants Rawal, Tayal, Sharma, and Thaker, facilitated the fraud and controlled substance distribution schemes by billing Medicare, Medicaid, and private insurers for expensive, non-controlled medications that they had in inventory but never actually dispensed to the patients. The surplus of medications generated through this practice was returned to wholesalers, thereby enabling the Patel organization to maximize its profit on its inventory of medications which were billed for but never dispensed. The defendants billed insurers for dispensing medications that they knew were prescribed outside the course of legitimate medical practice, thus defrauding insurers by billing for medications regardless of medical necessity. The defendants would provide controlled drugs to patients and patient recruiters, knowing that those medications were prescribed outside the course of legitimate medical practice.
Evidence also showed that Acharya assisted Patel in sustaining the illegal health care fraud scheme at his pharmacies, principally by helping Patel and others conceal the proceeds of the fraud.
The case was investigated by the DEA, the Department of Health and Human Services-Office of Inspector General, and the FBI. The case was prosecuted by Assistant United States Attorneys John K. Neal and Wayne F. Pratt.

Altus Healthcare & Hospice Settles Allegations of Inappropriate Use of Inpatient Hospice

Altus Healthcare & Hospice Inc., n/k/a AHH Historic Inc., of Atlanta, Georgia, has reached a $555,572 settlement with the United States to resolve allegations under the False Claims Act that it submitted false or fraudulent claims to Medicare and Medicaid for inpatient hospice services, United States Attorney Sally Quillian Yates for the Northern District of Georgia announced today. Altus was acquired by Halcyon Healthcare in December 2011.

“The hospice benefit is intended to provide end-of-life care to terminally ill patients,” said United States Attorney Sally Quillian Yates. “When a hospice bills Medicare and Medicaid for more expensive services than are warranted, it diverts funds that could be spent caring for patients who truly need that level of care. We will continue to protect health care dollars to care for those in need.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated, “Federally funded programs such as Medicaid and Medicare provide a crucial service to those in need, certainly those requiring the services of a hospice, and the funds associated with these programs need to be protected from those who would engage in fraud, waste, or abuse. The FBI, in working with its various law enforcement partners and federal prosecutors, is determined to provide that protection of these federal funds.”

“Altus Healthcare allegedly milked Medicare’s hospice benefit to increase their own profit as much as possible,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General for the Atlanta region. “The Office of Inspector General is committed to eliminating this greed from our nation’s health care system.”

Medicare and Medicaid beneficiaries are entitled to hospice care if they have a terminal prognosis of six months or less to live. There are four levels of hospice care, each of which are reimbursed at four different per diem levels. General inpatient care provides the second highest level of reimbursement. To qualify for general inpatient care, a patient must need pain control or acute or chronic symptom management that cannot be managed in other settings. The government alleges that Altus submitted false claims to the Medicare and Medicaid programs for general inpatient hospice care for patients who did not qualify to receive that level of hospice care during the period from March 1, 2008 through October 29, 2010, for the Medicare program; and during the period from March 1, 2008 through October 23, 2011, for the Medicaid program.

The civil settlement resolves a lawsuit filed by David C. Boal 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. The case, pending in the Northern District of Georgia, is filed under United States ex rel. Boal v. Altus Healthcare and Hospice Inc., Drew Anderson, and Nora Tucker, No. 1:10-cv-1380 (N.D. Ga. May 7, 2010). Mr. Boal will receive a share of the settlement payment that resolves the qui tam suit that he filed.

The United States’ settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department used to recover approximately $2.4 billion nationwide in fiscal year 2011 in cases involving fraud against federal health care programs. The Justice Department’s total health care fraud recoveries under the False Claims Act since January 2009 have been over $7.7 billion.

This case was investigated by special agents of the Federal Bureau of Investigation and the Office of Inspector General of the U.S. Department of Health and Human Services.

The civil settlement was reached by Assistant United States Attorneys Lena Amanti and Christopher J. Huber.

Summit Oncologist, Madison Biller Plead Guilty to Health Care Fraud

Dr. Meera Sachdeva, 50, of Summit, Mississippi, and Monica Weeks, 40, of Madison, Mississippi, each pled guilty to charges of Medicare fraud, U.S. Attorney Gregory K. Davis, FBI Special Agent in Charge Daniel McMullen, and Mississippi Attorney General Jim Hood announced.

Sachdeva, who owned and operated Rose Cancer Center in Summit, pled guilty to submitting claims for chemotherapy services that were supposedly rendered when she was out of the country. Weeks, who owned and operated The Medical Billing Group in Madison, pled guilty to conspiracy to commit health care fraud by covering up false claims made by Sachdeva that were scheduled for an audit.

According to the indictment in this case, Sachdeva is alleged to have billed for more chemotherapy drugs than she actually purchased from drug suppliers from 2007 to 2011. During the plea hearing, the Assistant United States Attorney told the court that if the case had gone to trial, the government would have proven that “[t]he defendant would prepare...chemotherapy treatments by injecting the prescribed chemotherapy drugs into a bag of fluid that would then be connected to the patient via a ‘chest port.’ Each patient believed that they were receiving an amount of chemotherapy medicine that was equal to the amount being billed to their respective health care benefit programs. The defendant was not providing each patient with the fully prescribed dosage of many of the billed chemotherapy drugs.”

Both Sachdeva and Weeks are scheduled to be sentenced on October 1, 2012, by United States District Judge Daniel P. Jordan, III. Weeks faces a maximum of 10 years in prison, a $250,000 fine, and the forfeiture of a $19,549.52 money judgment. Sachdeva faces up to 20 years in prison, $750,000 in fines, and the forfeiture of almost $6,000,000 in illegal proceeds that were previously seized by the government, as well as the forfeiture of several parcels of real property located throughout the state.

The case was investigated by the United States Department of Health and Human Services Office of the Inspector General, the Medicaid Fraud Control Unit of the Mississippi Attorney General’s Office, and the Federal Bureau of Investigation.

North Carolina Resident Pleads Guilty to Participating in $63 Million Medicare Fraud Scheme

An Asheville, North Carolina resident pleaded guilty today in U.S. District Court in Miami for her role in a health care fraud scheme that resulted in the submission of more than $63 million in fraudulent claims to Medicare and Medicaid in Miami and Hendersonville, North Carolina, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

Serena Joslin, 31, a Licensed Psychological Associate, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in Miami to one count of conspiracy to commit health care fraud. Joslin admitted to participating in a fraud scheme that was orchestrated through an entity called Health Care Solutions Network (HCSN). HCSN operated purported partial hospitalization programs (PHPs), a form of intensive mental health treatment for severe mental illness, in both Miami and Hendersonville.

According to an indictment unsealed on May 2, 2012, HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not provided. HCSN obtained those beneficiaries by paying kickbacks to owners and operators of assisted living facilities (ALFs) or by otherwise recruiting them from ALFs and nursing homes. According to court documents, Joslin admitted that she was aware that HCSN recruited patients who were inappropriate for PHP treatment. Nevertheless, Joslin agreed with other HCSN employees to, among other things, fabricate therapy notes and other medical records, and to direct therapists to fabricate therapy notes and other medical records, all to make it appear as if HCSN patients received appropriate PHP services. Joslin was aware that fraudulent claims to Medicare would be submitted on behalf of these patients.

At sentencing, scheduled for January 11, 2013, Joslin faces a maximum of 10 years in prison and a $250,000 fine.

Eight other charged defendants, including the owner and operators of HCSN, await trial before Judge Altonaga. Defendants are presumed innocent until proven guilty at trial.

Today’s guilty plea was 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; Xanthi C. Mangum, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

The case is being prosecuted by Trial Attorneys Steven Kim, William Parente, and Allan Medina of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, and Medicaid Fraud Control Unit 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 Florida.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, HHS’s 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.

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

Arizona-Based NextCare Inc. to Pay U.S. $10 Million to Resolve False Claims Act Allegations

NextCare Inc., an Arizona-based company, has agreed to pay $10 million to settle federal and state allegations that it submitted false claims, the Justice Department announced today. NextCare is an owner of a chain of urgent care facilities with locations in Arizona, Colorado, Texas, North Carolina, Ohio, and Virginia.

The settlement resolves allegations that NextCare submitted false claims to Medicare, TRICARE, and the Federal Employees Health Benefits Program, as well as the Medicaid programs of Colorado, Virginia, Texas, North Carolina, and Arizona by billing for unnecessary allergy, H1N1 virus, and respiratory panel testing. The United States also alleged that NextCare inflated billings for urgent care medical services in the years under review, a practice known as upcoding.

“This settlement demonstrates the Justice Department’s commitment to ensuring that federal health care dollars are spent appropriately,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “Health care providers who administer unnecessary services or who overcharge for care will be held accountable.”

Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, noted that, “Today’s $10 million settlement with NextCare demonstrates our commitment to putting a stop to improper billing practices that exploit Medicare and drain vital resources from our health care system. NextCare’s upcoding and unnecessary medical testing wasted taxpayers’ dollars. This is a strong message to companies and individuals who engage in such conduct. We are here, we are watching, and we will use all of our resources to safeguard the integrity of important public programs and protect consumers across the nation.”

Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS-OIG), added, “Providers who subject beneficiaries to unnecessary medical testing, as alleged against NextCare, compromise the well-being of their patients and squander federal health care funds.”

As a condition of the settlement, NextCare Inc. is also required to enter into a Corporate Integrity Agreement with HHS-OIG under which the company will be monitored for a period of five years to ensure that in the future it complies with all federal healthcare program rules.

The allegations resolved by today’s settlement were initially raised in a lawsuit filed against NextCare by former NextCare employee Lorin Cohen. Under the False Claims Act, private citizens acting as relators can bring suit on behalf of the United States and share in the recovery. Ms. Cohen will receive $1.614 million as her share of the recovery.

This resolution is part of the government’s emphasis on combating health care fraud and another step forward for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a collaborative effort launched in May 2009 by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS). Settlements such as this one emphasize both the Department of Justice and HHS’s commitment to the reduction and prevention of Medicare and Medicaid financial fraud. Through the False Claims Act alone, the Justice Department has recovered more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.

This matter was handled jointly by the Civil Division of the United States Department of Justice, the U.S. Attorney’s Office for the Western District of North Carolina, the FBI, the North Carolina Attorney General’s Office, the Office of Inspector General of the Department of Health and Human Services (HHS-OIG), the TRICARE Management Activity, and the Office of Personnel Management (OPM), which administers the FEHBP. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Second Owner of Houston-Area Home Health Care Agency Sentenced to 108 Months in Prison for Role in $5.2 Million Medicare Fraud

The former co-owner of a Houston-area home health care company was sentenced in Houston to 108 months in prison for his participation in a $5.2 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Princewill Njoku, a former co-owner and administrator at Family Healthcare Group, was sentenced yesterday by U.S. District Judge Nancy Atlas in the Southern District of Texas to 108 months in prison, followed by three years of supervised release. Njoku was ordered to pay $5.1 million in restitution jointly and severally with his co-defendants. In January 2011, Njoku pleaded guilty to one count of conspiracy to commit health care fraud, one count of conspiracy to pay illegal kickbacks to patient recruiters and sixteen counts of paying such illegal kickbacks.

According to court documents and other evidence presented to the court, Family Healthcare Group, a Houston home health care company, purported to provide skilled nursing to Medicare beneficiaries. According to the evidence, Princewill Njoku paid co-conspirators to recruit Medicare beneficiaries for the purpose of Family Healthcare Group filing claims with Medicare for skilled nursing that was medically unnecessary or not provided. Njoku and his co-conspirators then falsified documents to support the fraudulent payments from Medicare.

Njoku is the ninth defendant sentenced in connection with this scheme, including Njoku’s co-owner, Clifford Ubani, who also received a 108 month sentence earlier this month. One remaining defendant awaits sentencing.

The sentence was announced by Assistant Attorney General Lanny A. Breuer 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; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).

This case is being prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU and the Federal Railroad Retirement Board-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.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4.4 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.

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

RGV DME Owner and Others Indicted on Multiple Health Care Crimes

The owner of a now defunct McAllen area durable medical equipment (DME) business, his wife and two former employees have been charged in a 22-count indictment for their alleged roles in a scheme to defraud Medicare and Medicaid through fraudulent billings, United States Attorney Kenneth Magidson and Texas Attorney General Greg Abbott announced today.

Those charged and arrested include Marcello Herrera, 39, the owner of RGV DME, and his wife Carla Cantu Herrera, 31, both of Mission, Texas, along with Ramon De La Garza, 51, also of Mission, and Beatriz Ramos, 27, of Edinburg, Texas. The sealed indictment, returned Tuesday, June 26, 2012, was unsealed upon their respective arrests this morning. The charges include one count of conspiracy to commit health care fraud, six counts of health care fraud, five counts of wire fraud and 10 counts of aggravated identity theft. They could make their initial appearances as early as 10:30 a.m. today before U.S. Magistrate Judge Peter Ormsby. Otherwise, they will appear in federal court tomorrow.

From early 2004 through early 2010, Marcello Herrera, who did business as RGV DME in the McAllen area, allegedly engaged in and directed a scheme to submit fraudulent claims to Medicare and Texas Medicaid for power wheelchairs, incontinent supplies, hospital beds and mattresses as well as other DME supplies. The indictment alleges that Carla Cantu Herrera, De La Garza and Ramos participated in the conspiracy and aided Marcello Herrera and each other in the submission of fraudulent billings, wire fraud and theft of the identities of beneficiaries and doctors.

According to allegations contained in the indictment, RGV DME submitted approximately 25,000 claims totaling approximately $11 million to Medicare and Texas Medicaid for DME allegedly provided to Medicare and Medicaid beneficiaries and was paid more than $7.1 million. The indictment alleges that 80 to 90 percent of the billings were fraudulent and that the fraudulent claims to Medicare were sent by wire transmissions in interstate commerce.

The indictment also alleges the defendants illegally paid “marketers” to obtain Medicare and Medicaid identification numbers and other information from beneficiaries and then used those numbers and information to fraudulently bill Medicare and Medicaid for expensive power wheelchairs, hospital beds and mattresses, incontinent supplies and other DME. The defendants allegedly billed for DME that was never prescribed, was never delivered, was not needed and in some cases was claimed to have been delivered to persons who were deceased at the time of the alleged delivery. To conceal the fraud, the indictment alleges the defendants forged documents and illegally used the identities of beneficiaries and doctors on their unlawful billings.

Conspiracy to commit health care fraud and each of the six counts of health care fraud carry a maximum punishment of 10 years in federal prison without parole and a $250,000 fine upon conviction. Each of the five counts of wire fraud carries a maximum punishment of 20 years in federal prison without parole and a $250,000 fine upon conviction. Each of the 10 counts of aggravated identity theft carries a mandatory two-year additional prison term which must be served consecutive to any other prison sentence imposed for conviction on any of the other crimes charged.

The investigation leading to the charges was conducted by the U.S. Department of Health and Human Services-Office of Inspector General, the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Special Assistant United States Attorney Rex Beasley and Assistant United States Attorney Grady Leupold are prosecuting the case.

An indictment is an accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless convicted through due process of law.

Hospice Care of Kansas and Texas-Based Parent Company to Pay $6.1 Million to Resolve Allegations of False Claims

Hospice Care of Kansas LLC and its parent company, Ft. Worth, Texas-based Voyager HospiceCare Inc., have agreed to pay $6.1 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program for ineligible hospice services, the Justice Department announced today. Hospice Care of Kansas currently provides hospice services throughout the state of Kansas. Hospice Care of Kansas, which is based in Wichita, Kansas, was purchased by Voyager in 2004.

The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from the symptoms, pain, and stress of a serious illness) for a terminal illness and who have a life expectancy of six months or less if the disease runs its normal course. Today’s settlement resolves allegations that Hospice Care of Kansas and Voyager submitted or caused the submission of false Medicare claims between January 2004 and December 2008 for beneficiaries that did not have a terminal prognosis of six months or less.

The government alleged that Hospice Care of Kansas and Voyager engaged in certain practices that resulted in the submission of false claims, including the provision of compensation to clinical employees based on patient census and admissions, delaying discharges of patients determined not to have a six month or less prognosis, instructions to staff to document patient conditions in a misleading manner, and implementation of an inadequate compliance program.

“The Medicare hospice benefit is intended to provide comfort and care to terminally ill persons in the final stages of their disease,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “This settlement shows that the Department of Justice will not tolerate hospice providers that attempt to maximize their profits at the expense of their legal and ethical obligations to the Medicare program, taxpayers, and beneficiaries.”

“Our goals are to protect taxpayer dollars, ensure the viability of government health care programs, and strengthen our national health care system,” said Barry Grissom, U.S. Attorney for the District of Kansas. “This case is a step in that direction.”

“We expect providers of Medicare services to operate with the utmost integrity and with the best interests of our beneficiaries in mind. Working with our partners at the Department of Justice, we will hold those accountable who do not operate in this manner,” said Gerald Roy, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General.

The allegations that are the subject of today’s settlement were originally raised in a lawsuit filed by a former Hospice Care of Kansas nurse, Beverly Landis, under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring an action on behalf of the United States and share in any recovery. As a part of today’s resolution, Ms. Landis will receive payments totaling $1.342 million.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services, in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.

The investigation was jointly handled by the Justice Department’s Civil Division, the FBI, the Office of the Inspector General of the Department of Health and Human Services, and the U.S. Attorney’s Office for the District of Kansas. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Detroit-Area Clinic Owner Pleads Guilty to $16 Million Psychotherapy Fraud Scheme

Detroit-area resident Louisa Thompson pleaded guilty today for her role in a $16 million fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

Thompson, 63, pleaded guilty today before U.S. District Judge Nancy D. Edmunds in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 18, 2012, Thompson faces a maximum penalty of 10 years in prison and a $250,000 fine.

According to the plea documents, in approximately January 2006, Thompson began billing Medicare for psychotherapy services through two companies, TGW Medical Inc. and Caldwell Thompson Manor Inc. The services billed by Thompson at TGW and Caldwell Thompson were never performed or were performed by unlicensed staff who were not authorized to perform services reimbursed by Medicare. The unlicensed staff members also fabricated therapy notes for patients that were never seen and billed Medicare using document templates created by Thompson.

According to court documents, Thompson also received payments from the owner of P&C Adult Day Care Inc., a psychotherapy clinic. Those payments to Thompson were, in part, for the use of Thompson’s provider number by P&C. Thompson also admitted signing therapy documents for P&C patients she never saw or treated. P&C, like TGW and Caldwell Thompson, billed for psychotherapy services that were either not performed or performed by unlicensed staff. Caldwell Thompson and P&C shared Medicare beneficiaries and/or beneficiary information.

Thompson admitted to submitting or causing to be submitted approximately $15.9 million in fraudulent psychotherapy claims on behalf of TGW, Caldwell Thompson and P&C. Medicare paid approximately $4.9 million of those claims.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG), Chicago Regional Office.

The case is being prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross. The case was investigated by the FBI and HHS-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 Eastern District of Michigan.

Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 individuals and organizations that collectively have billed the Medicare program for more than $4 billion. In addition, HHS’s 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.

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

Second Recruiter Convicted in City Nursing Scheme

Gwendolyn Kay Frank, 43, of Houston, has entered a plea of guilty to conspiracy to violate the Anti-Kickback Statue for her role in role in the $45 million City Nursing health care scandal, United States Attorney Kenneth Magidson announced today.

The Anti-Kickback Statute prohibits referring beneficiaries to business that bill federal health care programs in return for payments. According to the plea agreement, Frank referred at least 28 Medicare beneficiaries to the owner of City Nursing in return for $24,500. City Nursing then billed Medicare for approximately $1,051,392 worth of services for those individuals which were not provided and received $712,052 in payments from Medicare and Medicaid.

Frank is the second recruiter to plead guilty to conspiracy to violate the Anti-Kickback Statue this month and one of a growing list of individuals convicted in the Houston-based City Nursing health care fraud conspiracy. Floyd Leslie Brooks, 45, of Houston, pleaded guilty earlier this month. The owner of City Nursing, Umawa Oke Imo, was convicted in May 2011 and sentenced to more than 27 years in federal prison for his role in the health care fraud conspiracy which included making cash payments to both Medicare beneficiaries and recruiters bringing Medicare beneficiaries to City Nursing.

Frank was permitted to remain on bond pending her sentencing hearing, set for September 14, 2012. At that time, she faces up to five years in prison and a $250,000 fine.

This case has been investigated by the FBI, Internal Revenue Service-Criminal Investigations, the Department of Health and Human Services-Office of Inspector General and the Texas Attorney General’s Office-Medicare Fraud Control Unit. Assistant United States Attorney Julie Redlinger is prosecuting the case.

Owner and Employee of Miami Home Health Company Sentenced to Prison in $22 Million Medicare Fraud Scheme

The owner and an employee of a Miami home health care agency were sentenced today to 108 months and 46 months in prison, respectively, for their participation in a $22 million Medicare fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

U.S. District Judge Patricia A. Seitz in Miami sentenced Marietha Morales, 38, to 108 months in prison and Eduardo Saborit-Dominguez, 48, to 46 months in prison. Both defendants were each sentenced to three years of supervised release. In addition, Morales was ordered to pay $14 million in restitution and Dominugez was ordered to pay $2 million in restitution, jointly and severally with each other.

Last year, Morales pleaded guilty to one count of conspiracy to commit health care fraud, and Dominguez pleaded guilty to one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.

Morales was the president and Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.

According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care (POCs), and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws. Morales used these prescriptions, POCs, and medical certifications to fraudulently bill Medicare for home health care services, which Morales knew was in violation of federal criminal laws.

According to plea documents, nurses and office staff at Prime Home Health falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services. Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services. Morales knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.

From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare. Medicare actually paid approximately $14 million on those claims.

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; John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-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 Florida.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 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

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

Tecumseh Man Ordered to Serve 51 Months in Prison and Pay Over $4.6 Million in Restitution for Health Care Fraud in Sales of Prosthetics

Lance E. Faulkner, 46, from Tecumseh, Oklahoma, was sentenced by United States District Judge Timothy D. DeGiusti to serve 51 months in prison for health care fraud in connection with sales of prosthetic limbs and components, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. In addition, Judge DeGiusti ordered Faulkner to serve two years of supervised release upon his release from prison, serve 104 hours of community service, and pay $4,667,076.27 in restitution.

Faulkner owned and operated Heartland Orthotic Prosthetic Lab Inc., d/b/a Faulkner Prosthetic Designs of Oklahoma LLC (“Heartland”), located in Shawnee, Oklahoma. Heartland was in the business of providing durable medical equipment (DME), specifically, prosthetic limbs and related components. It was alleged that Faulkner billed Medicare and Medicaid for beneficiaries who did not have a prescription for the prosthetics from a licensed physician or other qualified health care provider. Instead, Faulkner submitted physician names and identification numbers to Medicare and Medicaid even though many of those physicians had never treated the patients or prescribed the prosthetic limbs. It was also alleged that Faulkner submitted claims to Medicare and Medicaid for expensive, computerized prosthetic limbs, when the beneficiaries actually received less sophisticated prosthetics or none at all.

Faulkner pled guilty to committing health care fraud on September 9, 2011. The sentencing hearing began on May 17, 2012, where Faulkner received the sentence of 51 months in prison, followed by two years of supervised release, and was ordered to perform 104 hours of community service. The hearing regarding the determination of restitution was continued until yesterday, where the court ordered Faulkner to pay $4,667,076.27 in restitution.

This case was the result of an investigation conducted by the Federal Bureau of Investigation and the Office of Inspector General for the United States Department of Health and Human Services. The case was prosecuted by Assistant U.S. Attorney Amanda Maxfield Green.

Co-Owner of Houston-Area Home Health Care Agency Sentenced to 108 Months in Prison for Role in $5 Million Medicare Fraud

The former co-owner of a Houston-area home health care company was sentenced today in Houston to 108 months in prison for his participation in a $5.2 million Medicare fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

Clifford Ubani, a former co-owner and chief financial officer at Family Healthcare Group, was sentenced by U.S. District Judge Nancy Atlas in the Southern District of Texas. In addition to his prison term, Ubani was sentenced to three years of supervised release and was ordered to pay $4.2 million in restitution jointly and severally with his co-defendants. In January 2011, Ubani pleaded guilty to one count of conspiracy to commit health care fraud, one count of conspiracy to pay illegal kickbacks to patient recruiters, and 16 counts of paying such illegal kickbacks.

According to court documents and other evidence presented to the court, Family Healthcare Group, a Houston home health care company, purported to provide skilled nursing to Medicare beneficiaries. According to court documents and other evidence, Clifford Ubani paid co-conspirators to recruit Medicare beneficiaries for the purpose of Family Healthcare Group filing claims with Medicare for skilled nursing that was medically unnecessary or not provided. Ubani’s co-conspirators would then falsify documents to support the fraudulent payments from Medicare. Ubani also paid co-conspirators to sign fraudulent plans of care stating that the beneficiaries needed home health care when, in fact, they knew the beneficiaries were not home-bound and not in need of skilled nursing.

Ubani is the eighth defendant sentenced in connection with this scheme. Two other defendants, co-owner Princewill Njoku and patient recruiter Cynthia Garza Williams, await sentencing.

The sentences were announced by Assistant Attorney General Lanny A. Breuer 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; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); and the Texas Attorney General’s Medicaid Fraud Control Unit (OAG-MFCU).

This case is being prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU, and the Federal Railroad Retirement Board-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.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 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.

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