NEWARK, NJ—A Hawthorne, N.J., man admitted today to posing as a licensed physician and unlawfully treating patients, prescribing medicine, and ordering procedures at an Elizabeth, N.J., medical practice for $10 an hour, U.S. Attorney Paul J. Fishman announced.
Carlos Quijada, 31, pleaded guilty to an Information charging him with one count of conspiracy to commit health care fraud. The defendant entered his guilty plea before U.S. Magistrate Judge Patty Shwartz in Newark federal court, who recommended to U.S. District Judge Faith S. Hochberg that his plea of guilty be accepted and entered.
According to documents filed in this case and statements made in court:
Quijada posed as a licensed physician at the direction of Yousuf Masood, 47, of Warren, N.J., the doctor who ran the practice. Yousuf Masood and his wife, Maruk Masood, 43—the practice's office manager—pleaded guilty April 21, 2011, before Judge Shwartz to conspiracy to commit health care fraud, admitting that they used unlicensed individuals to treat patients and billed Medicaid and Medicare as if Yousuf Masood provided the services.
At today's hearing, Quijada explained that he had posted an advertisement on craigslist making clear that he was not a licensed physician, and was contacted by the Masoods and offered employment at Yousuf Masood's medical office. Although Quijada told them he had not passed required tests and was not licensed to practice, they directed him to treat, diagnose, and prescribe medication for patients, and to introduce himself to patients as "Dr. Quijada."
Over the course of the scheme, more than 20,000 patient visits were conducted by unlicensed individuals, including Quijada, but billed to Medicaid and Medicare as if Yousuf Masood had examined the patients. Hamid Bhatti, 33, of Rahway, N.J., and Hakim Muta Muhammad, 31, of Newark, are also charged by Complaint for pretending to be doctors during patient visits, and those charges remain pending.
Yousuf Masood was the top prescriber of drugs to Medicaid patients in New Jersey in 2009, prescribing more than $9 million in Medicaid drugs that year. The next-highest prescribing doctor in New Jersey prescribed less than $6 million. Yousuf Masood provided Bhatti, Muhammad, and Quijada with pre-signed, blank prescription forms to write prescriptions in his name for patients they were improperly examining and treating. Quijada admitted today that he wrote prescriptions for a wide variety of drugs, including medications used to treat schizophrenia, bipolar disorder, anxiety, insomnia, and other illnesses.
On some days, more than 100 patients visited the medical practice for treatment, and the majority were treated only by unlicensed individuals. Quijada explained at his plea hearing today that while he and other unlicensed individuals were diagnosing and treating patients, Yousuf Masood was frequently either not in the office at all, or was in his personal office watching television.
In addition to prescribing medication, Quijada ordered that procedures be performed on patients—including electrocardiograms, bronchodilation responsiveness tests, and transnasal eustachian tube inflation. Yousuf Masood and Maruk Masood billed Medicaid and Medicare for these procedures. At his guilty plea, Yousuf Masood agreed to pay more than $1.8 million in restitution and forfeiture based on the fraudulent Medicaid and Medicare billings. The conspiracy charge carries a maximum penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Sentencing is currently scheduled for July 27, 2011, before U.S. District Judge Faith S. Hochberg.
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Friday, April 29, 2011
Carlos Quijada Admits Posing as Licensed Physician in Medicaid and Medicare Fraud Scheme
Thursday, April 28, 2011
Search Warrants and Arrest Warrants Executed on Organized Health Care Fraud Crime Ring
NEW ORLEANS, LA—Eight people were arrested and ten search warrants were executed in furtherance of an extensive investigation into alleged organized crime ring responsible for submitting over $12 million in fraudulent Medicare and Medicaid claims, announced FBI Special Agent in Charge David Welker, U.S. Attorney Jim Letten, Special Agent in Charge Mike Fields, Office of Inspector General, Department of Health and Human Services, Dallas Regional Office, Fred Duhy, Director, Louisiana Department of Justice, Medicaid Fraud Control Unit, and Buddy Caldwell, Louisiana State Attorney General.
Specifically, Aram Khlgation, age 55; Artem Gasparyan, age 46; Vadim Mysak, age 24; Daria Litvinova, age 24; Anahit Petrosyan, age 32; Dr. Jack Voight, age 79; Dr. Jerry Haskin, 78; and Joann Girod, age 38 - all residents of the Greater New Orleans area, were arrested pursuant to a federal criminal complaint charging health care fraud. Additionally, ten different metropolitan area locations were searched. All defendants remain in custody. Bond has been set as to Khlgation, Voight, Haskin and Girod. The remaining defendants' detention hearings are still pending.
According to the criminal complaint, the year-long investigation has determined that various metro-area clinics, and persons associated with these clinics, have submitted false and fraudulent claims to Medicare and Medicaid for medical services that were either not rendered or rendered without any underlying medical necessity as required by both Medicare and Medicaid regulations. During the course of the investigation, information was received that the clinics, through the physicians and others associated with the clinics, were submitting false claims to Medicare and Medicaid for diagnostic services that were not rendered or medically necessary. Further according to the complaint, information developed during the course of the investigation indicated that persons associated with the clinics were paying Amarketers@ and Arecruiters@ kickbacks for locating, referring and transporting patients to the clinics for the sole purpose of allowing the clinics to bill Medicare and Medicaid for procedures that either were not rendered or were not medically necessary. The complaint alleges that doctors gave prescriptions for scheduled pain medications for patients in return for undergoing the diagnostic tests and then these prescription medications were often then shared with the Amarketers@ and Arecruiters."
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Wednesday, April 27, 2011
Donna K. Wells Sentenced to 57 Months in Prison for Causing the Submission of $1.2 Million in False Power Wheelchair Claims to Medicare
WASHINGTON – An Oakland, Calif., woman was sentenced today to 57 months in prison for her role in a scam to bill Medicare for more than $1.2 million in claims for expensive, high-end power wheelchairs and other durable medical equipment (DME) that were not medically necessary, announced the Departments of Justice and Health and Human Services (HHS).
Donna K. Wells, 52, was convicted in November 2010 of health care fraud after a one-week jury trial in the Central District of California. In addition to her prison term, U.S. District Court Judge Dale S. Fischer sentenced Wells to three years of supervised release and ordered her to pay $240,380 in restitution.
The evidence introduced at Wells’ trial showed that Wells worked the streets and low-income, senior living communities of Oakland to recruit Medicare beneficiaries to bill Medicare for expensive power wheelchairs and DME that the beneficiaries did not want, need, or use. Medicare beneficiaries who testified at trial said that Wells approached them on the street, at the store, or in the lobbies of their apartment buildings and offered them free power wheelchairs in exchange for the beneficiaries allowing Wells to copy their Medicare and California identification cards. Witnesses who lived in or worked at the San Pablo Hotel, a low-income, senior living community in Oakland, testified that Wells often sat in the lobby of the hotel to recruit beneficiaries. These and other witnesses testified that many of the residents of the San Pablo Hotel did not use the power wheelchairs that Wells provided to them.
Witness testimony at Wells’ trial established that Wells sold to other individuals the information she solicited from beneficiaries for between $400 and $500 per beneficiary. The individuals who purchased the information from Wells, including the operators of a fraudulent medical clinic in Los Angeles, used the beneficiary information from Wells to fabricate fraudulent prescriptions and medical documents which were then sold to and used by numerous fraudulent Los Angeles-area DME supply companies to submit false claims to Medicare. The claims were for power wheelchairs that cost Medicare approximately $4,000 per wheelchair but cost the DME supply companies only approximately $900 per wheelchair, the wholesale price. One of the DME supply companies that used the Medicare beneficiary information from Wells to defraud Medicare was Maydads Medical Supply of Arleta, Calif, which was owned by Wells’ co-defendant, Sylvester Ijewere, who was sentenced in October 2010 to 46 months in prison for Medicare fraud.
In imposing Wells’ sentence, Judge Fischer found that Wells was responsible for more than $1.2 million in false claims that were submitted to Medicare for approximately 200 Medicare beneficiaries. Judge Fischer also found that Wells purposely misled beneficiaries into believing that she worked for Medicare or another government agency when Wells solicited them to receive power wheelchairs and DME.
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Tuesday, April 26, 2011
Jose Diaz, Lisandra Aguilera and Estrella Rodriguez Sentenced to Prison for Roles in $23 Million Medicare Fraud Scheme
WASHINGTON – Two Miami-area medical assistants and a physician assistant were sentenced to prison today for their roles in a $23 million Medicare fraud scheme involving HIV infusion therapy, announced the Departments of Justice and Health and Human Services.
Jose Diaz, a 62-year old physician assistant, Lisandra Aguilera, a 40-year old medical assistant, and Estrella Rodriguez, a 43-year old medical assistant, were sentenced by U.S. District JudgeJoan A. Lenard to 54 months, 70 months and 57 months in prison, respectively. The defendants each previously pleaded guilty to one count of conspiracy to commit health care fraud for their roles in an HIV infusion fraud scheme.
According to court documents, Diaz, Aguilera and Rodriguez each worked at Metro Med of Hialeah Corp. (Metro Med). In 2003, Metro Med began operating as an HIV infusion clinic that purportedly provided injection and infusion therapies to HIV positive Medicare beneficiaries. In fact, the injection and infusion therapies were medically unnecessary and not provided. Metro Med paid cash kickback payments to Medicare beneficiaries in exchange for those beneficiaries allowing Metro Med to use their Medicare numbers to bill Medicare.
According to court documents, Diaz worked at Metro Med as a physician assistant and instructed Damaris Oliva, the owner of Metro Med, which medications and in what amounts to bill Medicare. Diaz provided these instructions to Oliva to ensure that Metro Med received the maximum reimbursement from Medicare, even though the injection and infusion drugs Metro Med billed to Medicare were not actually provided to the patients. Aguilera was hired by Oliva and worked at Metro Med as an infusionist. Rodriguez also worked at Metro Med as a medical assistant.
While at Metro Med, Diaz, Aguilera and Rodriguez falsified patient files to indicate that injection and infusion treatments were medically necessary, when, in fact, they were not. According to court documents, Aguilera and Rodriguez signed medical records indicating that injection and infusion treatments were provided to Metro Med patients, when, in fact, they were not. Aguilera and Rodriguez also fabricated medical records to show that Metro Med patients had received specific dosages of medications, when the patients had not actually received the treatments or medications reflected on those documents. Aguilera manipulated patient blood samples to make it appear that unnecessary injection and infusion treatments were medically necessary. Diaz, Aguilera and Rodriguez also were aware that beneficiaries who attended the clinic were being paid kickbacks in exchange for allowing Metro Med to bill Medicare under their Medicare numbers for injection and infusion treatments.
From approximately April 2003 through October 2005, Metro Med submitted approximately $23 million in claims to the Medicare program for injection and infusion treatments for Medicare beneficiaries that were not medically necessary, and not provided. The Medicare program paid approximately $11.7 million in claims.
Diaz, Aguilera and Rodriguez were charged in a July 2010 indictment, along with Oliva and Dr. Rene De Los Rios. All five defendants now have pleaded guilty or been convicted at trial. Oliva was sentenced in December 2010 to 82 months in prison.
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Monday, April 25, 2011
Matthew Paul Brown Indicted for Health Care Fraud and Other Criminal Violations
ATLANTA—MATTHEW PAUL BROWN, 29, of Nashville, Tennessee, has been indicted and made an initial appearance this afternoon before United States Magistrate Alan Baverman on charges of health care fraud and wrongful disclosure of individually identifiable health information.
United States Attorney Sally Quillian Yates said, “The Medicare and Medicaid systems are designed to provide elderly and needy individuals with necessary medical care by duly trained and licensed medical personnel. This defendant’s alleged impersonation of a doctor defrauded those systems, private health insurance companies, and the patients he treated, who were unaware of his lack of qualifications. In the coming weeks, federal investigators will be contacting the patients this defendant treated in the Atlanta area regarding this case.”
Brian D. Lamkin, Special Agent in Charge, FBI Atlanta, said, “The fraudulent activities alleged in the federal indictment of Mr. Brown are considered extensive and serious in that, over an extended period of time, this defendant is alleged to have diverted federal monies from those that truly needed them. The FBI will continue to investigate this matter in an effort to determine the further extent of these alleged activities by Mr. Brown.”
According to United States Attorney Yates and the charges: From November 2009 through April 5, 2011, BROWN carried out a health care fraud scheme in the metro Atlanta and Nashville, Tennessee areas. While operating in the Atlanta area, from November 2009 through August 2010, BROWN allegedly approached numerous practicing physicians and persuaded them to bill Medicare, Medicaid, and private health insurers under their own provider numbers for allergy-related care provided by BROWN. The indictment alleges that the care was provided both at the physicians’ own offices and at health fairs, with the physicians agreeing to pay BROWN between 50 percent and 85 percent of a total of approximately $1.2 million they received from the health care benefit programs.
According to the indictment, BROWN has never been licensed in Georgia as a physician, physician assistant, nurse practitioner, or clinical nurse specialist.
BROWN is also charged with wrongful disclosure of individually identifiable health information, in violation of the Health Insurance Portability and Accountability Act (“HIPAA.”) Specifically, the indictment charges that on March 20, 2011, BROWN knowingly disclosed individually identifiable health information to another person, under false pretenses and with the intent to use the information for commercial advantage and personal gain.
The indictment charges 17 counts of health care fraud, each of which carries a maximum sentence of 10 years in prison and a fine of up to $250,000. The HIPAA charge also carries a maximum sentence of 10 years in prison and a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding, but provide appropriate sentencing ranges for most offenders.
Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
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Sunday, April 24, 2011
Ohio-Based Cardinal Health Inc. to Pay U.S. $8 Million to Resolve False Claims Act Allegations
WASHINGTON – Cardinal Health Inc. has agreed to pay the United States $8 million to resolve claims that it violated the False Claims Act by making payments to induce referral orders for its prescription drugs in violation of the Anti-Kickback Statute, the Justice Department announced today.
Today’s settlement with the Dublin, Ohio-based pharmaceutical distributor resolves a lawsuit filed by former pharmacy owner R. Daniel Saleaumua and pharmacy consultant Kevin Rinne under the qui tam, or whistleblower provisions, of the False Claims Act. Mr. Saleaumua alleged that Cardinal paid him $440,000 in exchange for an agreement that he purchase from Cardinal prescription drugs for his pharmacies. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Together, Saleaumua and Rinne will receive $760,000 as their share of the government’s recovery.
“Kickback schemes subvert the health care marketplace and undermine the integrity of the choices made by consumers and providers of health care,” said Assistant Attorney General for the Civil Division Tony West. “We will continue to hold accountable those who we allege are misusing our public health care programs at the expense of taxpayers.”
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Saturday, April 23, 2011
Eight Charged In Multi-Front Hemophilia Medication Billing/Kickback Scheme
MOBILE, AL—Eight individuals, including Lori Brill, Butch Brill, Travis Goodwin, Eric Mosley, Tony Goins, Chris Vernon, Jeff Vernon, and Leroy Waters, were indicted by a federal grand jury on March 24, 2011 in a 23-count indictment charging them with various health care fraud and kickback crimes related to their participation in a scheme to overbill insurance providers for hemophilia medication and supply inducements for Medicaid referrals.
In announcing the return of this indictment, United States Attorney Kenyen R. Brown stated, “Health care fraud in the United States costs consumers billions of dollars, whether the victim is a private medical insurer or a public program such as Medicaid. Individuals exhibiting sheer greed through extensive fraudulent billing and awarding improper inducements for Medicaid business, such as the allegations in today’s indictment, are driving up health care costs and are depriving those who really need medical assistance as provided by these government-funded programs. Our office, in conjunction with our law enforcement partners, will aggressively continue to safeguard precious taxpayer dollars, protect our nation’s most essential health care programs, and dismantle criminal networks that bilk the system.”
FBI Mobile Division, Special Agent in Charge Lewis M. Chapman, stated, “The citizens of Alabama should know the FBI takes all allegations of fraud seriously, particularly the misuse of taxpayer funds and programs. Anyone with information regarding such fraudulent activity is encouraged to contact the FBI.”
The indictment lays out four different, but related, conspiracy counts against the defendants to commit health care fraud and violate anti-kickback laws, as well as multiple substantive counts. The indictment alleges, in support of a health care fraud conspiracy and related substantive charges, that Lori Brill (“Brill”), mother of a hemophiliac son, ran a hemophilia care company known as Hemophilia Management Specialties, Inc. (“H.M.S.”), which provided cost-free services to bleeding disorder clients, including, among other things, ordering their extremely expensive protein replacement medication called “Factor” through speciality pharmacies Hemophilia Infusion Managers, L.L.C. (“H.I.M.”), located in Loxley, and MedfusionRx, L.L.C. (“Medfusion”), located in Birmingham. The indictment charges that, in an effort to increase commissions received from the pharmacies, Brill worked with her ex-husband Butch Brill and H.M.S. employees Ashley Sprinkle (“Sprinkle”) and Sherry Demouey, both of whom pleaded guilty in January to health care fraud charges stemming from this scheme, to falsify the Factor tracking logs of H.M.S. clients. Together, and at the direction of Lori Brill, they manipulated logs to indicate that H.M.S. clients took the maximum amount of Factor at the greatest frequency allowed under their prescriptions without verifying the clients’ actual usage. These logs were then forwarded to the pharmacies to order more Factor medication, who, in turn, billed the clients’ medical insurance providers, including Alabama Medicaid and Blue Cross Blue Shield of Alabama.
The indictment goes on to detail that, as part of this health care fraud conspiracy: Brill pressured some H.M.S. clients to re-order unneeded Factor medication and switch to a more expensive brand; Brill helped Travis Goodwin (“Goodwin”) enroll in Alabama Medicaid and then caused his Factor prescriptions to be billed through the pharmacies to that agency, although, as a Florida resident, Goodwin was ineligible for Alabama Medicaid benefits; and Brill forced Sprinkle to take her Factor medication during a time period that Sprinkle was trying to get pregnant and a physician had advised her to discontinue her Factor use.
The indictment also charges two separate kickback conspiracies against Brill, H.I.M. owners Eric Mosely and Tony Goins, and Medfusion owners Chris and Jeff Vernon. The indictment explains that Brill had unlawful commission agreements with the H.I.M. and Medfusion owners whereby she received a commission equal to a percentage of the profits the pharmacies generated by filling the Factor prescriptions of H.M.S. clients who were Medicaid recipients. In support of the substantive kickback charges against Brill and the pharmacy owners, the indictment details six illegal commission payments Brill received from the pharmacies totaling approximately $144,000.00. In addition, the indictment sets out a kickback conspiracy and substantive charges against the Vernons and Medfusion patient manager Leroy Waters (“Waters”). It is alleged that the Vernons and Waters had an illegal commission agreement which mirrored Brill’s, and that Waters received improper commission payments totaling approximately $45,000.00 based on the profits Medfusion brought in from filling his clients’ Factor prescriptions. The indictment further charges that the pharmacy owners violated anti-kickback laws by routinely waiving the Medicaid co-pays of Brill’s and Waters’ clients as an inducement for their continued business.
The indictment renews bankruptcy fraud charges against Waters that were originally the subject of a February indictment. Among other things, Waters is charged with purposefully understating his 2007 Medfusion earnings in bankruptcy filings by more than $250,000.00.
Lastly, the indictment seeks the forfeiture of approximately $29,000,000.00 in illegal proceeds traceable to the defendants’ scheme.
The charges against the defendants carry a maximum sentence of 20 years, a fine of up to $250,000.00, and other civil penalties and damages.
The case is being jointly investigated by the Federal Bureau of Investigation and the Department of Health and Human Services - Office of Inspector General. Assistant United States Attorneys Christopher J. Bodnar, Gregory A. Bordenkircker, and Adam W. Overstreet will prosecute the case for the United States. As in all criminal cases, the indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by the defendants. The defendants, of course, are presumed innocent until and unless they are proven guilty at trial.
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Friday, April 22, 2011
Yousuf Masood and his wife Maruk Masood Plead Guilty to Medicaid and Medicare Fraud Involving Fake Physicians
NEWARK, NJ—A doctor with a practice in Elizabeth, N.J., and his wife pleaded guilty today to a health care fraud scheme in which more than 20,000 patient visits were conducted by individuals posing as licensed physicians for as little as $10 an hour, U.S. Attorney Paul J. Fishman announced.
Yousuf Masood, 47, and his wife, Maruk Masood, of Warren, N.J., pleaded guilty today to separate informations charging them each with one count of conspiracy to commit health care fraud. The defendants entered their guilty pleas before U.S. Magistrate Judge Patty Shwartz in Newark federal court.
According to documents filed in this case and statements made in court:
Yousuf Masood admitted that he used unlicensed individuals to diagnose and treat patients in his Elizabeth office and billed Medicaid and Medicare as if he had provided the services. As part of his guilty plea, Yousuf Masood agreed to pay more than $1.8 million in restitution and forfeiture based on the fraudulent Medicaid and Medicare billings.
Three other individuals: Hamid Bhatti, 33, of Rahway, N.J.; Hakim Muta Muhammad, 31, of Newark; and Carlos Quijada, 31, of Hawthorne, N.J., were charged with the Masoods by complaint on September 7, 2010, with conspiracy to commit health care fraud for pretending to be doctors during patient visits. Charges against Bhatti, Muhammad, and Quijada remain pending.
According to documents filed in this case and statements made in Newark federal court:
The Masoods employed Bhatti, Muhammad, and Quijada—two of whom they had found through craigslist—at Yousuf Masood’s office in Elizabeth, paying them a wage as low as $10 an hour. Yousuf Masood and Maruk Masood were aware that Bhatti, Muhammad, and Quijada had graduated from medical schools in the Dominican Republic and in the West Indies, but had not passed required tests and were not licensed to practice medicine in New Jersey—including one who had failed Step 1 of the medical boards on two occasions.
Bhatti, Muhammad, and Quijada introduced themselves as doctors and regularly diagnosed and treated patients with Yousuf and Maruk Masood’s knowledge. The office staff referred to them as “Dr. B.,” “Dr. Q.,” “Dr. Bhatti,” “Dr. Quijada,” or “Dr. Muhammad” in the presence of patients.
Yousuf Masood was the top prescriber of drugs to Medicaid patients in New Jersey in 2009, prescribing more than $9 million in Medicaid drugs that year. The next-highest prescribing doctor in New Jersey prescribed less than $6 million. The Masoods admitted that Yousuf Masood provided Bhatti, Muhammad, and Quijada with pre-signed, blank prescription forms to write prescriptions in his name for patients they were improperly examining and treating.
The conspiracy charges to which Yousuf and Maruk Masood pleaded guilty carry a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 27, 2011, before U.S. District Judge Faith S. Hochberg.
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Thursday, April 21, 2011
Eduard Aslanyan Man Pleads Guilty to Establishing Fraudulent Medical Clinics and Using Stolen Doctor Identities to Defraud Medicare of up to $13.6 Million
WASHINGTON— A Los Angeles-area man pleaded guilty today to establishing fraudulent medical clinics and using stolen identities of physicians to defraud Medicare of up to $13.6 million, the Departments of Justice and Health and Human Services (HHS) announced.
Eduard Aslanyan, 37, of Sherman Oaks, Calif., pleaded guilty before U.S. District Judge Consuelo B. Marshall in the Central District of California. Aslanyan admitted that between March 2007 and September 2008, he established a series of fraudulent medical clinics in and around Los Angeles to defraud Medicare. Carolyn Vasquez, who pleaded guilty previously to conspiring with Aslanyan to defraud Medicare, recruited physicians to serve as the medical directors of Aslanyan’s fraudulent medical clinics, and helped them negotiate management agreements with Multiple Trading Inc., a shell company Aslanyan owned, which permitted Multiple Trading to manage the day-to-day operations of the clinics. In return for Multiple Trading’s management services, the physicians agreed to pay Multiple Trading 75 percent of all the revenue the physicians received from Medicare for the services that the clinics billed to Medicare. These services were not performed by the physicians, who were rarely at Aslanyan’s fraudulent medical clinics, but by physician assistants who were hired by Aslanyan and Vasquez and were complicit in the fraud scheme at the clinics.
According to court documents, Aslanyan hired patient recruiters to find Medicare beneficiaries who were willing to provide their Medicare billing information in exchange for expensive, high-end power wheelchairs and other medical equipment that the patient recruiters told the beneficiaries they could receive for free. Often, the Medicare beneficiaries who were solicited by the patient recruiters did not have a legitimate medical need for the power wheelchairs and equipment. The patient recruiters then provided the beneficiaries’ Medicare billing information to Aslanyan or brought the beneficiaries to Aslanyan’s fraudulent medical clinics. In exchange for recruiting the Medicare beneficiaries, Aslanyan paid the patient recruiters cash kickbacks.
In court documents, Aslanyan admitted that he and Vasquez instructed and paid the physician assistants who worked at his fraudulent medical clinics to prescribe medically-unnecessary power wheelchairs and medical equipment, and order medically-unnecessary diagnostic tests for the Medicare beneficiaries. Aslanyan also admitted that physician assistants who prescribed the wheelchairs, equipment and diagnostic tests did so using the stolen identities of physicians who either did not supervise the physician assistants or work at Aslanyan’s fraudulent medical clinics. In one instance, Aslanyan admitted that he and his co-conspirators went so far as to print prescription pads and medical documents with the name of a physician who applied for, but did not accept, a job at one of Aslanyan’s fraudulent medical clinics. Two physician assistants at Aslanyan’s clinics then used the prescription pads and medical documents to prescribe medically-unnecessary power wheelchairs and medical equipment, and to order medically-unnecessary diagnostic tests without the physician’s knowledge or consent.
Aslanyan admitted that one way he profited from the fraud scheme at his clinics was by allowing fraudulent diagnostic testing facilities to use the Medicare billing information he purchased from the patient recruiters to submit false claims to Medicare for the fraudulent diagnostic tests which physician assistants ordered at the clinics. In exchange, the fraudulent diagnostic testing facilities paid Aslanyan cash kickbacks which they disguised as rent payments to Aslanyan.
In addition, Aslanyan profited from the fraud scheme by selling the fraudulent power wheelchair and medical equipment prescriptions and documents generated at his clinics to the owners and operators of fraudulent durable medical equipment (DME) supply companies, which used the prescriptions and documents to submit false claims to Medicare. Aslanyan also used the fraudulent prescriptions and documents to submit false claims to Medicare through his own fraudulent DME supply companies, Vila Medical Supply Inc. and Blanc Medical Supplies. The straw owner of Blanc Medical Supplies, Gabriel Djanunts, pleaded guilty previously to Medicare fraud. Aslanyan admitted that as a result of his conduct, he and his co-conspirators defrauded Medicare of up to $13.6 million.
At sentencing, scheduled for Oct. 17, 2011, Aslanyan faces a maximum penalty of 10 years in prison and a $250,000 fine. Currently, Aslanyan is serving a three-year state sentence for assault. Vasquez’s sentencing is scheduled for July 11, 2011.
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Tuesday, April 19, 2011
Rene De Los Rios Convicted in $23 Million Medicare Fraud Scheme
Miami-area physician Rene De Los Rios was convicted of five felony counts yesterday by a federal jury for his role in a $23 million HIV injection and infusion Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
After a three-week trial, the jury convicted De Los Rios of one count of conspiracy to commit health care fraud and four counts of submission of false claims to the Medicare program. The conspiracy charge carries a maximum penalty of 10 years in prison and a $250,000 fine; each false claims count carries a maximum penalty of five years in prison. Sentencing has been scheduled for June 27, 2011.
Evidence at trial established that Damaris Oliva was the owner and operator of Metro Med of Hialeah Corp. In 2003, Metro Med began operating as an HIV infusion clinic that purportedly provided injection and infusion therapies to HIV positive Medicare beneficiaries. In fact, the injection and infusion therapies were medically unnecessary and not provided. Metro Med paid cash kickback payments to patients at the Metro Med clinic in exchange for those patients allowing Metro Med to use their Medicare numbers to bill the Medicare program.
Evidence at trial established that as part of the scheme, Oliva hired the De Los Rios to order unnecessary tests, sign medical analysis and diagnosis forms, and authorize treatments to make it appear that legitimate medical services, including injection and infusion therapies, were being provided to patients who were Medicare beneficiaries. The defendant also signed patient charts, often without seeing the patient, indicating that injection and infusion treatments were medically necessary, when, in fact, he knew they were not. Evidence at trial also established that the defendant diagnosed almost all of the patients at Metro Med with the same rare blood disorders, which the patients did not in fact have, in order to ensure maximum reimbursement from Medicare. Moreover, the evidence at trial showed that the defendant prescribed expensive medications, including Winrho, Procrit, and Neupogen, to patients for the sole purpose of receiving reimbursement from the Medicare program. The evidence showed that Oliva paid the defendant $3,000 per week for his involvement in the HIV infusion scheme.
From approximately April 2003 through October 2005, Metro Med submitted approximately $23 million in claims to the Medicare program for injection and infusion treatments for Medicare beneficiaries that were not medically necessary, and were not provided. The Medicare program paid approximately $11.7 million in claims. Damaris Oliva and three other individuals have each previously pleaded guilty to conspiracy to commit health care fraud in connection with the scheme.
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Monday, April 18, 2011
CVS Pharmacy Inc. Agrees to Pay $17.5 Million to Resolve False Prescription Billing Case
WASHINGTON – CVS Pharmacy Inc., the retail pharmacy division of CVS Caremark Corporation that operates more than 7,000 retail pharmacies in 41 states and the District of Columbia, has agreed to pay the United States and 10 states $17.5 million to resolve False Claims Act allegations, the Justice Department announced today.
The settlement resolves allegations that CVS submitted inflated prescription claims to the government by billing the Medicaid programs in Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island for more than what CVS was owed for prescription drugs dispensed to Medicaid beneficiaries who were also eligible for benefits under a primary third party insurance plan (excluding Medicare as the primary payor). The United States alleged that rather than billing the government for what the insured would have been obligated to pay had the claims been submitted solely to the third party insurer (typically the co-pay), CVS billed and was paid a higher amount by Medicaid.
Under the terms of the agreement with the United States and the 10 states, CVS will pay the United States $7,993,615.55 and the states $9,506,384.45 plus interest. CVS has also executed an amendment to a Corporate Integrity Agreement (CIA) with the Department of Human Services, Office of Inspector General (HHS-OIG), that was executed on March 14, 2008, in connection with a separate investigation and settlement. The amendment to the CIA, which will be in effect for three years, will monitor CVS’s implementation of correct billing procedures and the training and education of employees. In addition, an independent review organization will conduct regular audits and issue reports on CVS’s compliance with the terms of the amendment to the CIA.
The allegations were brought to the government by Stephani LeFlore, a CVS pharmacist in St. Paul, Minn., in a whistleblower action filed under the qui tam, or whistleblower, provisions of the False Claims Act and state False Claims Act statutes. Ms. LeFlore will receive a total of $2,595,460: $1,278,978 of the United States’ recovery and $1,316,482 of the state proceeds from California, Florida, Indiana, Massachusetts, Michigan, New Hampshire, Nevada and Rhode Island. Alabama and Minnesota do not have state False Claims Act statutes.
“This case is an example of the government’s strong commitment to pursue companies that overcharge our federal health programs by submitting false claims,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.
“We will not tolerate pharmacies that take advantage of taxpayer funds by billing Medicaid more for drugs than they should have received,” said John William Vaudreuil, U.S. Attorney for the Western District of Wisconsin.
This case was investigated jointly by the U.S. Attorney’s Office for the Western District of Wisconsin, the Commercial Litigation Branch of the Justice Department’s Civil Division, the National Association of Medicaid Fraud Control Units and the HHS-OIG.
“Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone, and won’t be tolerated,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health & Human Services. “OIG will work vigilantly with law enforcement partners at all levels of government to safeguard this vital program.”
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Sunday, April 17, 2011
Patrick Ita Pleads Guilty to Defrauding Medicare of Millions in Wake of Hurricanes Katrina and Rita
HOUSTON—A former owner of a durable medical equipment company (DME) pleaded guilty to engaging in a conspiracy to defraud Medicare of more than $5 million, United States Attorney José Angel Moreno announced today.
Patrick Ita, 55, was the owner of Masspoint Medical Equipment & Supplies, a Houston area DME, and of PUITA Research & Procurement Inc., a medical billing company. At a hearing held today before U.S. District Judge Sim Lake, Ita admitted he participated in a 13-month conspiracy to defraud Medicare by billing Medicare using a specific code created by Medicare to expedite the approval and payment of claims for DME lost or destroyed by Hurricanes Katrina and Rita beginning in October 2005. Ita's fraudulent claims involved the replacement of power wheelchairs by Masspoint. Ita used the CR modifier for power wheelchair claims: 1) where the beneficiary did not have a power wheelchair before the hurricanes; 2) where the power wheelchair owned by the beneficiary did not sustain any hurricane-related damage; 3) where Ita never delivered a power wheelchair to the beneficiary; and 4) where Ita delivered a scooter instead of a power wheelchair to the beneficiary.
Ita admitted during today’s hearing that he purchased beneficiaries’ Medicare information from the owner of a former DME company. Ita went down the list and billed Medicare for a new power wheelchair for every beneficiary without determining if the beneficiary lost a wheelchair in the hurricane. Ita also paid marketers to solicit additional Medicare beneficiaries for power wheelchairs. Ita billed Medicare using the CR modifier for every power wheelchair sold to a beneficiary by the marketers.
Ita also pleaded guilty to wire fraud admitting he filed his fraudulent Medicare claims with Palmetto GBA, a Medicare contractor located in Columbia, S.C. All Medicare payments made based on the fraudulent claims were sent by electronic funds transfer from Columbia to Ita’s bank account in Houston. Ita billed Medicare in excess of $5.4 million and was paid at least $1.6 million as a result of his fraudulent scheme.
Ita is scheduled to be sentenced on July 8, 2011, and faces a maximum penalty of 10 years imprisonment and a $250,000 fine for the conspiracy conviction and a maximum penalty of 20 years imprisonment and a $250,000 fine for the wire fraud conviction. As part of his plea agreement, Ita also agreed to pay restitution in the amount of $1.6 million to Medicare.
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Saturday, April 16, 2011
Lawrence S. Duran and Marianella Valera Plead Guilty to Orchestrating $200 Million Medicare Fraud Scheme
WASHINGTON – Two Miami-area residents and owners of a mental health care corporation, American Therapeutic Corporation (ATC), pleaded guilty today in U.S. District Court in Miami for orchestrating a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
Lawrence S. Duran, 49, and Marianella Valera, 40, pleaded guilty at an arraignment hearing before Magistrate Judge Barry L. Garber to all counts charged in a superseding indictment, which was unsealed on Feb. 15, 2011. The superseding indictment charges Duran with 38 felony counts and Valera with 21 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements. The court must hold a hearing scheduled for a later date to accept and enter the guilty pleas.
“Lawrence Duran and Marianella Valera masterminded a complex Medicare fraud scheme,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “They reaped millions in illegal profits by operating a sham mental health care company that provided unnecessary and illegitimate treatments to patients, many of whom were recruited through bribes and kickbacks, and then they laundered the proceeds. In carrying out their elaborate scheme, Duran and Valera and their co-conspirators billed Medicare for more than $200 million – a staggering sum. Having now pleaded guilty to their crimes, they must face the consequences.”
“Community mental health centers are an essential part of the Nation’s health care system and serve vulnerable populations,” said Daniel R. Levinson, HHS Inspector General. “Today’s guilty pleas emphasize that OIG, along with our law enforcement partners, will not tolerate kickbacks and other crimes committed against the Medicare program.”
“These defendants billed Medicare for mental health services that were illegitimate or never provided,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “In this way, these defendants engaged in an eight-year scheme that defrauded Medicare out of more than $200 million in payments for purported community mental health services. We will continue to aggressively prosecute all types of Medicare fraud and all levels of fraudsters, up and down the organizational chain, to help preserve our scarce Medicare dollars for those who really need it, the sick and the elderly.”
“Health care fraud robs from the elderly and disabled,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Field Office. “Today’s pleas should be a warning to illegitimate providers who abuse their position of trust within the medical community. No matter what the scheme or how elaborately disguised, the FBI and our law enforcement partners will investigate and prosecute such fraud to the fullest extent of the law.”
In pleading guilty, Duran and Valera admitted that they masterminded and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Duran and Valera submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Duran and Valera also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.
According to the superseding indictment, Duran, Valera and others paid bribes and kickbacks to recruit Medicare beneficiaries to attend ATC and ASI. The superseding indictment charges that Duran, Valera and others billed Medicare for treatments purportedly provided to these recruited patients. According to court documents, the treatments were medically unnecessary or never provided at all. Duran and Valera supported the kickback scheme through an extensive money laundering scheme that aimed to conceal the illicit conversion of Medicare payments into cash. The defendants and their co-conspirators also engaged in sophisticated measures to conceal their fraudulent activities from Medicare and from law enforcement.
Specifically, according to court filings, Duran, Valera and others paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. The defendants and their co-conspirators actively recruited ALF and halfway house owners and operators and patient brokers to participate in this kickback scheme. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
The superseding indictment charges that Duran, Valera and others caused the alteration of patient files and therapist notes for the purpose of making it appear, falsely, that patients being treated by ATC qualified for PHP treatments. According to court documents, Duran and Valera also instructed employees and doctors to alter diagnoses and medication types and levels to make it falsely appear that ATC patients qualified for PHP services. The superseding indictment also charges that Duran, Valera and co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.
The defendants are also charged with engaging in a money laundering conspiracy to enrich themselves and to provide cash for the millions of dollars in kickbacks paid to recruit Medicare beneficiaries. According to court documents, they used another company they owned and operated, Medlink Professional Management Group Inc., to conceal the health care fraud and kickbacks from Medicare and law enforcement. Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred millions of dollars to Medlink. The superseding indictment charges that they and others opened phony corporations to receive checks and wire transfers from both ATC and Medlink to convert that money into cash for their personal enrichment and for the payment of kickbacks. According to court documents, Duran, Valera and others cashed checks at different bank branches and different locations to conceal the true purpose of their activities and to evade reporting requirements.
Duran and Valera have been in federal custody since their arrests in October 2010, under orders of detention issued by Magistrate Judge Andrea Simonton and U.S. District Court Judge James Lawrence King. Sentencing is scheduled for July 13 at 9:30 a.m. Duran and Valera each face a maximum of 10 years in prison for each count of conspiracy to commit health care fraud and each count of health care fraud; five years in prison for each count of conspiracy to pay and receive health care kickbacks; 20 years in prison for each count of conspiracy to commit money laundering; 10 to 20 years in prison for each count of money laundering; and 10 years in prison for each count of structuring to avoid reporting requirements. The defendants’ assets were frozen at the time of their arrests through civil forfeiture proceedings.
Co-conspirator Margarita Acevedo, also charged in the February 2011 superseding indictment, pleaded guilty on April 7, 2011, for her role in the fraud scheme.
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Friday, April 15, 2011
Cassandra Faye Thomas Convicted of Health Care Fraud
JACKSON, MS—Cassandra Faye Thomas, of Jackson, Mississippi, was convicted by a jury on March 8, 2011, of two counts of health care fraud, four counts of wire fraud, two counts of making false statements related to health care, theft of government funds, and conspiracy to commit health care fraud, U.S. Attorney John M. Dowdy, Jr. announced. Thomas was placed on home confinement pending sentencing. She is currently the owner of Central Jackson Family Medical Clinic.
The evidence at trial showed that Thomas owned Central Mississippi Physical Medicine Group, Inc., which had offices in Flora and Yazoo City, Mississippi. Central Mississippi Physical Medicine Group claimed to provide physical therapy services to Medicare and Medicaid beneficiaries in their homes, free of charge to the beneficiary. Thomas submitted claims to Medicare and Medicaid, which represented that the therapy services had either been provided by a doctor, were provided under the doctors direct supervision, or were provided by a licensed physical therapist. The evidence at trial showed that none of the services that were billed to Medicare and Medicaid were provided or supervised by a doctor, or by a licensed physical therapist. Instead, the therapy services were provided by employees of Central Mississippi Physical Medicine Group, none of which were trained or licensed physical therapists. In fact, most of the employees of Central Mississippi Physical Medicine Group, had little or no medical training at all. From March, 2002, until September, 2004, Thomas billed Medicare and Medicaid for false claims of more than $12,000,000.00, and was paid more than $6,900,000.00.
Frank Wiley, who was previously convicted for his role in a similar company called Mississippi Central Rehab, testified during the trial.
“We will aggressively continue to pursue fraud in entitlement programs, especially Medicare and Medicaid. At a time when the federal government is faced with a serious financial crisis, fraud like this only adds to the strain. When people try to take advantage of these programs and commit almost $7 million in fraud, the taxpayers are the ones who bear the burden and it must be stopped,” said U.S. Attorney Dowdy.
Thomas will be sentenced on June 27, 2011 at 9:00 a.m. by U.S. District Judge Daniel P. Jordan, III, in Jackson. She faces up to 125 years in prison and $2,500,000 in fines, as well as the forfeiture of over $2,100,000.00 in cash, which was seized from Central Mississippi Physical Medicine Group bank accounts during the investigation. Thomas will also be forced to pay restitution.
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Thursday, April 14, 2011
Former Haven Health Care Bookkeeper Serena Sylvia, Sentenced to 18 Months in Federal Priso
David B. Fein, United States Attorney for the District of Connecticut, announced that SERENA SYLVIA, 42, of Fargo Road, Waterford, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to 18 months of imprisonment, followed by two years of supervised release. On January 6, 2011, SYLVIA pleaded guilty to one count of health care fraud and one count of filing a false federal income tax return.
According to court documents and statements made in court, SYLVIA was employed as a regional accounts receivable manager for Haven Health Care Management, LLC. From 2005 to 2008, SYLVIA embezzled funds from nursing home resident trust fund accounts. The nursing homes affected by SYLVIA’s embezzlement include Haven Health Center of Jewett City, Haven Health Center of Norwich, Haven Health Center of Waterford, and Haven Health Center of Soundview in West Haven. SYLVIA took more than $53,000 from the trust fund accounts, and she did not pay income tax on the money she stole.
As part of her sentence, SYLVIA was ordered to pay back taxes and applicable penalties and interest to the government.
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Wednesday, April 13, 2011
Owner and President of Allied Health Care Services, Inc. Charles K. Schwartz Pleads Guilty in $135 Million Medical Equipment Lease Scheme
NEWARK, NJ—The owner and president of Allied Health Care Services, Inc., an Orange, N.J., durable medical equipment corporation, admitted today to organizing and executing a $135 million phony lease scheme that caused losses of more than $80 million and victimized more than 50 financial institutions, U.S. Attorney Paul J. Fishman announced.
Charles K. Schwartz, 57, of Sparta, N.J., pleaded guilty before U.S. District Judge Susan D. Wigenton to one count of mail fraud. Schwartz was previously charged by complaint and arrested by special agents of the FBI on September 2, 2010. He has been in federal custody since that time.
U.S. Attorney Fishman stated: “Charles Schwartz turned phantom medical equipment into very real profits by tricking financial institutions out of tens of millions of dollars. Also victimized in this scheme were his employees, who watched his greed bankrupt the company that signed their paychecks. New Jersey is a hub for health care and financial industry, and we have no room for bad actors who criminally exploit our success.”
According to documents filed in this case and statements made in Newark federal court:
From at least 2002 through July 2010, Schwartz, through Allied Health Care Services, Inc. (“Allied”), convinced financial institutions to pay more than $135 million by telling them that the money would be used to lease valuable medical equipment. In reality, the purported medical equipment supplier did not provide Schwartz and Allied with any equipment during that time. Instead, the “supplier” created phony invoices which appeared to reflect legitimate transactions.
As part of the scheme, Schwartz approached various financial institutions and informed them that Allied needed to lease particular medical equipment. Using the phony invoices from the “supplier,” Schwartz convinced the financial institutions to enter into leasing arrangements. Pursuant to these arrangements, the financial institutions purchased the medical equipment—which they immediately leased to Schwartz and Allied—and sent payment for the medical equipment to the purported supplier. The “supplier” then sent the money received from the financial institutions (minus his 3-5 percent payment) to an entity created by Schwartz to facilitate the fraud.
In addition to spending millions of dollars on properties in New Jersey and New York, including a horse farm, Schwartz used the money in Ponzi-scheme fashion to repay earlier bank loans that were a part of the scheme. By August 2010, several financial institutions from which Schwartz had obtained loans filed lawsuits against Schwartz and Allied, claiming he owed them at least $20 million. Allied and Schwartz were forced into involuntary bankruptcy in August 2010 and September 2010, respectively. Losses from the scheme now total at least $80 million. Schwartz admitted that more than 50 victim financial institutions lost a total of between $50 and $100 million as a result of the scheme.
Schwartz and the medical equipment “supplier” undertook efforts throughout the scheme to deceive bank examiners who wanted to inspect the non-existent medical equipment, which had been purchased by the financial institutions. Schwartz admitted that in advance of expected inspections by financial institutions, he directed others to alter serial numbers or create fraudulent serial numbers on existing ventilators to match fraudulent invoices he had supplied to the various financial institutions. At times, when financial institutions sought to review documentation regarding Allied’s leasing of the ventilators to its customers, Schwartz falsely told the financial institutions that the information was protected by Health Insurance Portability and Accountability Act regulations. At one point during an August 2010 conversation between Schwartz and the “supplier,” Schwartz commented that the financial institutions had fallen “hook, line and sinker” for the false explanation given to bank examiners who asked why the purported supplier used his home address on certain invoices.
The mail fraud charge to which Schwartz pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 18, 2011.
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Monday, April 11, 2011
Adelma Casas Sevilla Pleads Guilty in Connection with an Alleged $5.2 Million Medicare Fraud Scheme
WASHINGTON – A registered nurse employed by a Houston health care company pleaded guilty today in connection with an alleged $5.2 million Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Adelma Casas Sevilla, 54, pleaded guilty before U.S. District Court Judge Nancy Atlas in Houston to one count of conspiracy to commit health care fraud. According to court documents, Family Healthcare Group, a home health care company, purported to provide skilled nursing to Medicare beneficiaries. According to court documents, Family Group hired co-conspirators to recruit Medicare beneficiaries for the purpose of filing claims with Medicare for skilled nursing that was medically unnecessary and/or not provided. After the Medicare beneficiaries were recruited, Casas Sevilla, in her capacity as a registered nurse, fraudulently signed plans of care stating that the beneficiaries needed home health care when in fact she knew the beneficiaries were not home-bound and not in need of skilled nursing.
At sentencing, scheduled for July 21, 2011, Casas Sevilla faces a maximum sentence of 10 years in prison for the health care fraud conspiracy count.
Today’s guilty plea was announced by Assistant Attorney General of the Criminal Division Lanny A. Breuer; U.S. Attorney José Angel Moreno of the Southern District of Texas; Special Agent-in-Charge Richard C. Powers of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations; and Texas Attorney General Greg Abbott.
This case is being prosecuted by Trial Attorneys Charles D. Reed and Laura Cordova, and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 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.
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Sunday, April 10, 2011
Justice Department Requires Divestiture in Stericycle Inc.'s Acquisition of Healthcare Waste Solutions
WASHINGTON – The Department of Justice announced today that it will require Stericycle Inc. to divest an asset used in the treatment of infectious waste in order to proceed with its acquisition of Healthcare Waste Solutions Inc. (HWS). The department said the transaction, as originally proposed, would substantially lessen competition in the provision of infectious waste treatment services to hospitals and other health care facilities in the New York City metropolitan area, resulting in higher prices and reduced service.
The department’s Antitrust Division, along with the attorney general of the state of New York, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the department and the New York attorney general filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“Without the divestiture required by the department, critical healthcare facilities in the New York City metropolitan area would have lost the benefits of competition for the provision of infectious waste treatment services and faced higher prices for those services,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the complaint, the acquisition would remove a significant competitor in the treatment of infectious waste in an already highly concentrated market. The proposed acquisition would reduce from three to two the number of competitors with local transfer stations, leaving Stericycle and HWS with approximately 90 percent of the New York City metropolitan area’s infectious waste treatment market. This loss of competition likely would have resulted in higher prices and lesser quality of service for New York City area health care providers.
Under the proposed settlement, Stericycle and HWS must divest HWS’s transfer station located in the Bronx, N.Y., to a viable purchaser approved by the department. Transfer stations are facilities at which infectious waste collected by daily route trucks is transferred onto tractor trailers for efficient shipment of the waste to distant treatment facilities.
Stericycle is a Delaware corporation with its principal place of business in Lake Forest, Ill. Stericycle is a worldwide provider of infectious waste treatment services, and the largest provider in the United States, with operations in all 50 states. In 2009, Stericycle’s U.S. revenues totaled $913 million.
HWS is a Delaware corporation with its principal place of business in Cincinnati, Ohio. It is the second largest U.S. provider of infectious waste treatment services, with operations in 15 states. Its total revenues in 2009 were about $31 million.
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