Source- http://www.fbi.gov/cleveland/press-releases/2012/seven-charged-in-scheme-to-fraudulently-obtain-prescription-painkiller-pills
A 39-count indictment was filed charging seven people from Cleveland and East Cleveland with various offenses related to a scheme to fraudulently obtain thousands of prescription painkiller pills, law enforcement officials announced today.
Health care fraud and aggravated identity theft charges were also filed against some defendants, who are accused of forging prescriptions for Oxycontin and Percocet pills, hiring people to have them filled at pharmacies throughout the region, and then selling the pills on the street, according to the indictment.
“We have seen a huge increase in prescription drug abuse in Ohio, and this case demonstrates the lengths people will go to defraud and profit from pills,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “Instead of dealers shipping in drugs from South America, we now have people forging prescriptions.”
“The abuse of illicitly obtained prescription drugs is reaching epidemic proportions, surpassing that of marijuana, cocaine, and heroin combined,” said Stephen Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office. “Dismantling illicit drug diversion networks such as the organization charged in this investigation will remain a top FBI priority.”
Those charged with conspiracy to possess with intent to distribute Oxycodone:
Louis Eppinger, age 53, of Cleveland
Patricia Arnold, age 61, of Cleveland
Anthony H. Perry, age 42, of East Cleveland
Elizabeth A. Davis, age 40, of East Cleveland
James Byrge, age 62, of Cleveland
Judy Burrows, age 25, of Cleveland
Brittany N. Glass, age 22, of Cleveland
Between 2011 and 2012, Eppinger, Arnold, Glass, Perry, Davis, Burrows, and Byrge engaged in a conspiracy to possess with intent to distribute oxycodone, according to the indictment.
Eppinger obtained blank prescription paper from an unknown source and DEA numbers of various physicians located in Northern Ohio for the purposes of passing fraudulent prescriptions for Oxycontin and/or Percocet, both of which contain oxycodone, according to the indictment.
Eppinger provided the blank prescription paper to Arnold, who forged the prescriptions, according to the indictment.
Eppinger then provided the fraudulent prescriptions to Glass, Perry, and Davis, who served as “walkers” and attempted to pass the prescriptions at pharmacies in Northeast Ohio, including several in Cleveland as well as locations in Shaker Heights, Willoughby, and Garfield Heights, according to the indictment.
Glass, Perry, and Davis then gave the pills to Eppinger, who paid them for passing the fraudulent prescriptions. Eppinger then sold the pills or provided them on consignment to Burrows, Burge, and others, according to the indictment.
Eppinger also faces 18 counts of health care fraud for defrauding the Ohio Medicaid program by billing more than $20,000 for prescription painkillers to which he was not entitled, according to the indictment. He is also charged with two counts of aggravated identity theft for using the identities of two people in relation to a felony, according to the indictment.
If convicted, the defendants’ sentences will be determined by the court after reviewing factors unique to this case, including the defendant’s prior criminal record, if any; the defendant’s role in the offense; and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
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Source- http://www.fbi.gov/newyork/press-releases/2012/manhattan-u.s.-attorney-announces-health-care-fraud-charges-against-two-employees-of-the-new-york-city-human-resources-administration
Preet Bharara, the United States Attorney for the Southern District of New York; Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); Rose Gill Hearn, the Commissioner of the New York City Department of Investigation (DOI); and Raymond W. Kelly, the Police Commissioner of the City of New York (NYPD), today announced charges against KELVIN JENNINGS and PAMELA JONES, two long-time employees of the New York City Human Resources Administration (NYC-HRA), for allegedly creating and distributing fraudulent Medicaid cards in exchange for cash payments. JONES was arrested this morning and is expected to appear in Manhattan federal court later today. JENNINGS remains at large.
The following allegations are based on the complaint unsealed earlier today in Manhattan federal court:
JENNINGS has been employed with NYC-HRA since 1982 and is a Medicaid eligibility specialist at Metropolitan Hospital in Manhattan. JONES has been employed with NYC-HRA since 2000 and is a Medicaid eligibility specialist in its Office of Mail Renewal in Manhattan.
From 2003 through 2011, JENNINGS and JONES were involved in a scheme to sell fraudulently obtained Medicaid accounts and Medicaid cards to individuals who were not entitled to Medicaid. In the course of this scheme, JENNINGS sold approximately 18 fraudulent Medicaid cards. As part of the scheme, JONES used her employee-specific identification number at her personal NYC-HRA workstation to create fraudulent Medicaid accounts in the names of fictitious individuals or the names of individuals who would ultimately receive the cards but were ineligible for Medicaid. In total, the 18 fraudulent Medicaid accounts that were part of this scheme resulted in the fraudulent billing of approximately $387,000 to Medicaid.
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Source- http://www.fbi.gov/miami/press-releases/2012/miami-area-resident-pleads-guilty-to-participating-in-200-million-medicare-fraud-scheme-2
WASHINGTON—A Miami-area resident pleaded guilty yesterday for his role in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).
Frank Criado, 33, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Criado was charged in an indictment unsealed on February 15, 2011 in the Southern District of Florida.
Criado admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink, and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities 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. 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 PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Criado admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Criado’s participation in the ATC fraud resulted in $7.3 million in fraudulent billings to the Medicare program.
Sentencing for Criado is scheduled for May 31, 2012 at 8:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers, and marketers of ATC, Medlink, and ASI were charged with various health care fraud, kickback, money laundering, and other offenses in two indictments unsealed on February 15, 2011. ATC, Medlink, and 11 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012 before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
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Source- http://www.fbi.gov/buffalo/press-releases/2012/michigan-man-arrested-on-health-care-fraud-charge
BUFFALO—U.S. Attorney William J. Hochul, Jr. announced today that Fitzgerald Anthony Hudson, 51, of Dearborn Heights, Michigan, was arrested and charged by criminal complaint with health care fraud. The charge carries a maximum penalty of 10 years’ imprisonment and a fine of $250,000.
Assistant U.S. Attorney Aaron J. Mango, who is handling the case, stated that according to the criminal complaint, in October 2007, the defendant obtained a New York state medical license. Thereafter, from August of 2008 to August of 2010, Hudson provided medical care in the Western District of New York at Jones Memorial Hospital in Wellsville, New York and the Nicholas H. Noyes Memorial Hospital in Dansville, New York. The defendant allegedly obtained his medical license by listing on his New York state application that he graduated from York University-Facility of Science, North York, Ontario, Canada, when he had not. In addition, Hudson failed to list that he had been dismissed from the Warren Hospital Family Practice residency program in July 2003.
As a result of his fraudulently obtained medical license, the defendant was improperly reimbursed approximately $200,000 under the Medicare Part-B and Part-D programs. Hudson was arrested today in Michigan, and an initial appearance on the charge has been scheduled for March 29, 2012 at 3 p.m. before United States Magistrate Judge H. Kenneth Schroeder, Jr.
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Source- http://www.fbi.gov/denver/press-releases/2012/palisade-man-sentenced-for-defrauding-health-care-programs-for-nuclear-weapons-workers-and-certain-miners
DENVER—Anthony Paul Breaux, of Palisade, Colorado, was sentenced this morning to serve four years in federal prison for health care fraud and money laundering greater than $10,000 in connection with his actions to defraud government funded health care programs meant to compensate nuclear weapons workers and certain miners. The sentence was handed down by U.S. District Court Judge Christine M. Arguello. Following his prison sentence, Breaux was ordered to spend three years on supervised release. The defendant was also ordered to pay restitution of over $3,500,000 to the victims of his crime. Breaux is to surrender to a Bureau of Prisons facility within 30 days of designation. To date, the government, using asset forfeiture, has seized approximately $1,300,000.
Breaux was indicted by a federal grand jury on September 1, 2011. He pled guilty on November 10, 2011. He was sentenced today, Friday, March 16, 2012.
According to public court documents, including the indictment and the stipulated facts contained in the plea agreement, in October 2009, Breaux created and was acting as a registered agent for Honor-Bound Healthcare Providers (HBHP), a Colorado Corporation. Breaux owned 100 percent of Honor-Bound and was in the business of providing home health care services to patients in Colorado, Oregon, Arizona, and elsewhere.
Part of Honor-Bound’s patients were nuclear weapons workers or miners, millers, and transporters. In order to be reimbursed for providing medical services to these individuals, Breaux billed Energy Employees Occupational Illness Compensation Program (EEOICP) pursuant to the Radiation Exposure Compensation Act (RECA). EEOICP is a health care benefit program that provides lump-sum compensation and health benefits to eligible Department of Energy nuclear weapons workers. RECA provides coverage to eligible uranium miners, millers, and transporters. Coverage is extended under both acts to certain eligible survivors with lump-sum compensation that would have otherwise been payable to the workers. The United States Department of Labor (DOL), Office of Workers’ Compensation Programs, Division of Energy Employees Occupational Illness Compensation (DEEOIC) is responsible for administering EEOICP.
From June 2010 until June 2011, Breaux, doing business through Honor-Bound, knowingly and willfully executed and attempted to execute a scheme to defraud these health care benefit programs by submitting and causing to be submitted bills for payment knowing those bills already had been paid. In other cases, the defendant submitted invoices for services never provided. He obtained payments on the claims in part by submitting false supporting documentation. In total, the fraud the defendant perpetrated is over $3.5 million.
Breaux recruited individuals to provide care to the DEEOIC claimants he recruited who lived on the Indian Reservation in Arizona, and these individuals were family members who were already taking care of the beneficiaries. Breaux told the family members HBHP could pay them $13 per hour for care they were providing. The individuals who provided the care to the claimants in Arizona were not registered nurses, but Breaux billed DEEOIC at the registered nurse rate, $90 to $100 per hour, for the care the family members provided. Breaux knew this was not right, but he did it because of the large amount of money he was able to bring into HBHP. Breaux also forged doctor signatures he submitted to DEEOIC so that DEEOIC would authorize 24-hour, seven days a week home health care.
On or about December 4, 2010, Breaux knowingly engaged in a monetary transaction of criminally derived property of a value of $18,235.47 by writing, delivering, and causing the depositing and cashing of a check by a person Breaux used to recruit patients eligible as claimants; those funds had been derived from unlawful activity. The parties stipulated that the aggregate loss to the victims in this case was in excess of $3,400,000.
“Health care fraud is in part responsible for higher health care costs: whenever a government program is defrauded, every taxpayer is a victim,” said U.S. Attorney John Walsh. “Breaux defrauded a well-meaning program designed to address persons afflicted with serious conditions related to radiation exposure inherent in their jobs. The defendant’s conduct was reprehensible in light of the persons who should have benefitted from the funds associated with the program.”
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Source- http://www.fbi.gov/detroit/press-releases/2012/three-detroit-area-clinic-owners-plead-guilty-for-their-roles-in-5.4-million-medicare-fraud-scheme
WASHINGTON—Three Detroit-area clinic owners pleaded guilty today for their participation in a Medicare fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).
Karina Hernandez, 28; Marieva Briceno, 46; and Henry Briceno, 58, all of Miami, pleaded guilty before U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, each defendant faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Hernandez managed the daily operations of three Livonia, Michigan clinics: Blessed Medical Clinic, Alpha & Omega Medical Clinic, and Manuel Medical Clinic. Marieva Briceno contributed capital to fund the opening of one clinic, and assisted her daughter, Hernandez, in the daily management of the clinics. At each clinic, Hernandez and Marieva Briceno hired recruiters who paid cash bribes to Medicare beneficiaries to attend the clinics and provide their Medicare numbers and other information. Hernandez and Marieva Briceno admitted that they used the beneficiary information to bill for medically unnecessary diagnostic tests and treatments. Henry Briceno admitted that he incorporated Manuel Medical Clinic and opened a bank account to conceal the actual ownership of the clinic. According to court documents, Blessed Medical Clinic, Alpha & Omega Medical Clinic, and Manuel Medical Clinic fraudulently billed Medicare for $5.4 million during the course of the scheme.
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Source- http://www.fbi.gov/chicago/press-releases/2012/physician-who-operated-south-side-medical-clinic-convicted-of-health-care-fraud-involving-unnecessary-patient-tests
CHICAGO—A federal jury yesterday convicted Dr. Jaswinder Rai Chhibber, a physician who operated a south side medical clinic, of engaging in a health care fraud scheme between 2007 and July 2010, federal law enforcement officials announced today. Chhibber, who operated the former Cottage Grove Community Medical Clinic located at 642 East 79th St., Chicago, was convicted of defrauding Medicare and Blue Cross Blue Shield of Illinois by submitting false insurance claims for medically unnecessary tests and using false diagnosis codes to justify the tests he had ordered.
Chhibber, 43, of Schaumburg, was found guilty of five counts of health care fraud and four counts of making false statements involving a health care benefits program after less than two full days of deliberations following a week-long trial in U.S. District Court. The jury found him not guilty of seven additional counts.
Chhibber remains free on bond pending sentencing, which U.S. District Judge Suzanne Conlon scheduled for May 10. He faces a maximum penalty of 10 years in prison on each count of health care fraud, and five years in prison on each false statements count, and a $250,000 fine on each count.
The evidence at trial showed that Chhibber ordered medically unnecessary tests, falsified patients’ medical records, and used false diagnosis codes on insurance claim forms in various fashions for at least five patients who testified at trial, including two undercover federal agents who posed as patients. Evidence also showed that Chhibber administered echocardiograms, electrocardiograms, nerve conduction studies, and carotid doppler and abdominal ultrasounds for an unusually high percentage of his Medicare and Blue Cross patients.
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Source- http://www.fbi.gov/houston/press-releases/2012/humble-woman-sentenced-for-east-texas-health-care-fraud
BEAUMONT, TX—A 61-year-old Humble, Texas woman has been sentenced to federal prison for health care related fraud in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Lula Thurman pleaded guilty on October 18, 2011 to conspiracy to commit health care fraud and was sentenced to 46 months in federal prison today by U.S. District Judge Thad Heartfield. Thurman was also ordered to pay restitution in the amount of $483,883.76.
According to information presented in court, from August 2005 to March 2007, Thurman, the owner of LT’s Faith-N-Action, a durable medical equipment (DME) supplier, devised and managed a scheme to commit $483,833.76 in health care fraud by falsifying Medicare applications and filing fraudulent Medicare and Medicaid claims for power wheelchairs allegedly supplied to victims of Hurricanes Katrina and Rita. Thurman and her associates recruited unwitting Medicare/Medicaid beneficiaries in Texas and Louisiana by promising them a free motorized wheelchair after Hurricanes Katrina and Rita. Thurman fraudulently billed Medicare using a special modifier code issued by Medicare for claims resulting from a catastrophe or disaster like Hurricanes Katrina and Rita. This code, called a “CR Modifier,” was supposed to be used by a DME supplier when that supplier had provided a replacement piece of equipment, like a power wheelchair, that had been severely damaged or destroyed by either Hurricane Katrina or Rita. Instead, Thurman used the CR Modifier for numerous power wheelchair claims where the CR Modifier did not apply because the beneficiary either did not possess a power wheelchair prior to either hurricane; did not suffer significant damage to, or destruction of, his/her power wheelchair from either hurricane; or never received a power wheelchair from the defendant after either Hurricane Katrina or Rita. Thurman was indicted by a federal grand jury on May 4, 2011.
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Source- http://www.justice.gov/opa/pr/2012/March/12-crm-317.html
WASHINGTON – A Miami-area resident pleaded guilty today for his role in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Mathis Moore, 56, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Moore was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
Moore admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities 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. 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 PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Moore admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Moore’s participation in the ATC fraud resulted in $17 million in fraudulent billings to the Medicare program.
Sentencing for Moore is scheduled for May 29, 2012, at 9:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 10 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
Source- http://www.fbi.gov/miami/press-releases/2012/broward-county-halfway-house-owner-sentenced-to-24-months-in-prison-for-participating-in-fraud-and-kickback-scheme
WASHINGTON—The owner and operator of a Broward County, Florida halfway house was sentenced today to 24 months in prison for his role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).
Barry Nash, 69, was also sentenced by U.S. District Judge James Lawrence King in Miami to serve three years of supervised release following his prison term. Nash pleaded guilty on January 9, 2012 to one count of conspiracy to commit health care fraud. Nash was the owner and operator of Starter House, a halfway house operating in Broward County.
Nash admitted that, in exchange for illegal health care kickbacks, he agreed to refer Medicare beneficiaries who resided at Starter House to American Therapeutic Corporation (ATC) and American Sleep Institute (ASI), a company related to ATC. Nash knew that ATC and ASI fraudulently billed Medicare for partial hospitalization program (PHP) services and sleep treatment purportedly provided to his referrals. PHP is a form of intensive mental health treatment.
According to court documents, ATC’s principals paid kickbacks to owners and operators of assisted living facilities 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. Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. Ultimately, ATC and ASI billed Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Nash’s participation in the fraud resulted in more than $959,901 in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers, and marketers of ATC, Medlink, and ASI were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on February 15, 2011. ATC, Medlink, and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
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Source- http://www.fbi.gov/houston/press-releases/2012/owner-of-houston-health-care-company-sentenced-to-30-months-in-prison-in-connection-with-medicare-fraud-scheme
WASHINGTON—An owner and operator of a Houston durable medical equipment (DME) company was sentenced today in Houston federal court to 30 months in prison for his role in a Medicare fraud scheme, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).
Akinsunbo Akinbile, 44, of Richmond, Texas, was sentenced by U.S. District Judge Keith P. Ellison in Houston. In addition to his prison term, Akinbile was sentenced to three years of supervised release and was ordered to pay $471,022 in restitution.
Akinbile pleaded guilty on November 29, 2011 to eight counts of health care fraud.
According to court documents, Akinbile was the owner and operator of Hallco Medical Supply, a company that purported to provide orthotics and other DME to Medicare beneficiaries. According to court documents, Hallco submitted claims to Medicare for DME, including orthotic devices that were medically unnecessary and/or not provided. Many of the orthotic devices were components of an “arthritis kit,” and purported to be for the treatment of arthritis-related conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heating pads. From June 2007 through May 2009, Akinbile submitted claims of approximately $737,770 to Medicare and was paid approximately $471,022.
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Source- http://www.fbi.gov/chicago/press-releases/2012/two-doctors-and-four-nurses-among-11-new-defendants-added-to-case-alleging-20-million-home-health-care-fraud-conspiracy-medical-kickbacks-money-laundering-and-income-tax-evasion
CHICAGO—Two physicians and four registered nurses are among 11 new defendants who were added to a federal indictment against a suburban Chicago man who operated two home health care businesses for allegedly swindling Medicare of at least $20 million over five years, federal law enforcement officials announced today. Nine of the 11 new defendants allegedly conspired with the initial defendant, Jacinto “John” Gabriel, Jr., to submit millions of dollars in false claims for reimbursement of home health care services purportedly provided to Medicare beneficiaries, which allegedly were never provided or were not medically necessary so that they could profit from the fraudulently-obtained funds. Gabriel and his co-schemers allegedly used the proceeds for various purposes, including using cash to gamble at casinos in the Chicago area and Las Vegas; to buy automobiles, jewelry; to purchase real estate in the United States and the Philippines; to perpetuate the businesses by paying his employees and providing them with gifts; and to bribe physicians and pay kickbacks to others in exchange for patient referrals.
Gabriel, 44, of Berwyn, who had no formal medical training, medical degrees, or licenses to practice as a health care professional, was charged in the new indictment with one count of health care fraud conspiracy, 43 counts of health care fraud, 11 counts of money laundering, and four counts of federal income tax evasion in a 69-count superseding indictment returned yesterday by a federal grand jury, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois. Gabriel was arrested on preliminary charges in February 2011 and was charged alone in a 15-count indictment last summer. He pleaded not guilty to the original charges and is free on bond.
According to the indictment, Gabriel did not identify himself as an owner, but in fact exercised ownership and control over Perpetual Home Health, Inc., based in Oak Forest, and Legacy Home Healthcare Services, which was located on the city’s north side. Both firms have ceased operating and no longer receive Medicare payments. Between May 2006 and January 2011, Perpetual submitted more than 14,000 Medicare claims seeking reimbursement for services allegedly provided to beneficiaries. As a result of those claims, Perpetual received more than $38 million in Medicare payments. Between 2008 and January 2011, Legacy submitted more than 2,000 claims for Medicare reimbursement and received more than $6 million. Neither Perpetual nor Legacy had any sources of revenue other than Medicare funds, the indictment states.
The new defendants are:
Jassy Gabriel, 42, of Berwyn, John Gabriel’s brother, the nominal majority owner of Perpetual and its president, as well as a registered nurse. He was charged with one count of health care fraud conspiracy and one count of filing a false federal income tax return.
Stella Lubaton, 46, of Midlothian, a minority owner of Perpetual and an officer and administrator, as well as a registered nurse. She was charged with one count of health care fraud conspiracy, 16 counts of health care fraud, one count of filing a false federal income tax return, and one count of violating the medical anti-kickback statute.
Nessli Reyes, 35, of Elgin, part-owner of Legacy and its president, as well as a registered nurse. She was charged with one count of health care fraud conspiracy and nine counts of health care fraud.
Charito Dela Torre, 71, of Berwyn, a physician, was charged with one count of health care fraud conspiracy, 12 counts of health care fraud, and three counts of federal income tax evasion.
Ricardo Gonzales, 75, of Orland Park, a physician, was charged with one count of health care fraud conspiracy, 19 counts of health care fraud, and one count of violating the medical anti-kickback statute.
Rosalie Gonzales, 42, of Chicago, a registered nurse and Ricardo Gonzales’ daughter, was charged with one count of violating the medical anti-kickback statute.
James Davis, 37, of West Chicago; Francis Galang, 27, of Crest Hill; and Michael Pacis, 38, of Homer Glen, all data entry employees of Perpetual, were charged with one count each of health care fraud conspiracy.
Regelina “Queenie” David, 58, of Joliet, a Perpetual quality assurance employee, was charged with one count of health care fraud conspiracy.
Kennedy Lomillo, 44, of Mundelein, who provided bookkeeping and payroll services to Perpetual and also prepared a corporate tax return for Perpetual, as well as an individual return for Lubaton, was charged with two counts of aiding and abetting the preparation of false income tax returns.
The indictment also seeks forfeiture of $20 million against the Gabriel brothers and Lubaton.
As part of the conspiracy, Gabriel, acting in various combinations with the nine co-conspirators, allegedly obtained personal information of Medicare beneficiaries to bill Medicare without the beneficiaries’ knowledge or consent; paid bribes and kickbacks in cash and by check, directly and indirectly, to physicians and others in exchange for referrals of patients to Perpetual and Legacy; created false patient files to support fraudulent Medicare claims and submitted false claims based on those records; used Medicare proceeds to pay themselves and others who assisted in carrying out the scheme; and concealed the fraud proceeds by directing Perpetual and Legacy to issue checks payable to fictitious entities, John Gabriel’s friends and associates.
Among other details, the indictment alleges that John and Jassy Gabriel, Lubaton, and Reyes authorized Perpetual and Legacy to pay various amounts, ranging between $200 and $800, to employees and others, including indirectly to Ricardo Gonzales, for each patient they referred and enrolled in home health care services. John Gabriel and others also cold-called Medicare beneficiaries to try to persuade them to enroll with Perpetual and Legacy.
As part of allegedly falsifying patient records, John Gabriel directed Perpetual and Legacy employees, including Davis, Galang, and Pacis, to systematically complete standard forms by listing the same false diagnoses, including arthropathy (joint disease) and hypertension, which enabled them to claim a higher level of Medicare reimbursement, according to the charges.
In addition to the fraud counts, the money laundering charges allege that between October and December 2010, Gabriel cashed 11 checks in amounts under $10,000—usually $9,000 and all involving fraud proceeds—to avoid federal currency transaction reporting requirements.
The four tax evasion counts against John Gabriel allege that for calendar years 2006 through 2009, he failed to pay taxes totaling approximately $889,062 on gross income totaling more than $2.82 million. The three tax evasion counts against Dela Torre allege that for calendar years 2005 through 2007, she failed to pay taxes totaling approximately $158,405 on gross income totaling more than $560,000.
Lubaton was charged with filing a false tax return for 2007 for allegedly failing to report all of her income, which was in excess of the $546,442 that she reported, and Lomillo was charged with aiding and abetting the preparation of her false return. Jassy Gabriel was charged with filing a false tax return for 2007 for allegedly failing to report all of his adjusted gross income, which exceeded the $603,974 that he reported, and Lomillo was charged with aiding and abetting the preparation of his false return.
Health care fraud conspiracy and each count of health care fraud carries a maximum penalty of 10 years in prison and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain, whichever is greater, as well as mandatory restitution. Each count of money laundering carries a maximum 20-year prison term and a maximum fine of $500,000. Violating the medical anti-kickback statute carries a maximum penalty of five years in prison and a $250,000 fine. Each count of tax evasion carries a five-year maximum prison term, while each count of filing a false income tax return carries a three-year maximum, and a $250,000 fine. In addition, defendants convicted of tax offenses must pay the costs of prosecution and remain liable for any and all back taxes, as well as a potential civil fraud penalty of 75 percent of the underpayment plus interest. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
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Source- http://www.fbi.gov/newark/press-releases/2012/medical-assistant-charged-for-allegedly-treating-patients-without-a-license-falsifying-billings-to-medicare
NEWARK—A federal grand jury has indicted a medical assistant for a pair of large medical services companies with offices in New Jersey and New York who allegedly posed as a doctor and treated patients without a license, U.S. Attorney Paul J. Fishman announced.
Mario Roncal, 60, of Woodland Park, New Jersey, is charged with one count of conspiracy to commit health care fraud. Roncal surrendered this morning to special agents of the FBI in Newark and is expected to appear before U.S. Magistrate Judge Cathy L. Waldor this afternoon in Newark federal court.
According to the indictment returned on March 2, 2012 and unsealed today:
Roncal has a medical degree from San Juan Bautista School of Medicine in San Juan, Puerto Rico, but is not licensed to practice medicine in New Jersey, New York, or any other state. Roncal is ineligible under New Jersey law to obtain a medical license in New Jersey because San Juan Bautista School of Medicine is not properly accredited and he lacks certain requirements for international medical students.
From approximately 2004 through 2008, Roncal was employed as a medical assistant at a pair of companies owned and run by the same chief executive officer. Cardio-Med Services, LLC (“Cardio-Med”), provided cardiology, internal medicine, and other outpatient medical services to individual patients and had offices in Union City, Paterson, and West New York, New Jersey. Comprehensive Healthcare & Medical Services, LLC (“Comprehensive Healthcare”), provided the same services in New York and Queens, New York.
Roncal conspired to commit health care fraud with the company’s CEO over a four-year period.
When working at Cardio-Med and Comprehensive Healthcare, Roncal held himself out to fellow employees and to patients as “Dr. Roncal.” He examined new patients as well as the CEO’s follow-up patients and ordered diagnostic tests. Roncal also diagnosed patients with medical conditions and diseases and prescribed courses of treatment, including surgery.
Roncal also falsified the accompanying medical records to create the illusion that the medical services were being provided by the companies’ CEO, a licensed physician and board-certified cardiologist. At the direction of the CEO and otherwise, Roncal forged the CEO’s signature on all paperwork associated with his unlawful services, including on prescription pads and patient charts. Roncal and the CEO enriched themselves by submitting the false billing claims to Medicare.
The count with which Roncal is charged carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
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Source- http://www.fbi.gov/charlotte/press-releases/2012/woman-sentenced-to-54-months-in-prison-for-involvement-in-a-1.5-million-medicaid-fraud-scheme
CHARLOTTE, NC—A Mt. Holly woman was sentenced to 54 months in prison and three years of supervised release for her role in a conspiracy to commit health care fraud and for money laundering charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Robert J. Conrad also ordered the defendant to pay restitution in the amount of $1,585,093 to the North Carolina Medical Assistance Program (Medicaid).
Erika Holland, 42, of Mt. Holly, pled guilty in September 2011 to one count of conspiracy to commit health care fraud and one count of money laundering. In April 2011, a federal grand jury in Charlotte indicted Holland on charges of defrauding Medicaid of over $1.5 million, and laundering the proceeds of her fraud by purchasing vehicles, a residence, and a timeshare. According to the indictment, plea documents, and court hearings:
From 2009 to September 2010, Holland, along with her co-conspirators Joanna Patronis, of Cramerton; and Giraud Hope, of Charlotte, filed false and fraudulent claims with Medicaid seeking reimbursement for mental and behavioral health services allegedly provided by Holland and/or her companies. The fraudulent claims were filed through either Hope’s company, Hope and Family Behavioral Resources (HFBR) or through Patronis’ company, A Time For Everything (ATE).
The false claims submitted to Medicaid misrepresented both the company and the therapist who provided the services and the types of services provided. Holland and her companies were not authorized by Medicaid to provide mental and behavioral health services and did not employ any therapists licensed to provide the claimed services. Yet Holland sought reimbursement for services allegedly rendered by her companies by fraudulently claiming that those services had been provided by HFBR and ATE. The co-conspirators falsely stated on these Medicaid claims that a licensed physician (identified as “Dr. L.D.”) had provided the services when, in fact, Dr. L.D. did not provide any of the services and had no professional association with Holland or her companies. Holland’s fraud scheme caused Medicaid to pay over $1.5 million in reimbursements for these fraudulent claims. Holland then spent the proceeds of this fraud on numerous vehicles, including a 2003 Hummer H2, a 2007 BMW 750LI, and a 2007 Infiniti QX56. Holland also purchased her residence in Mt. Holly and a timeshare in Kissimee, Florida with the proceeds of her fraud. During the course of the investigation of Holland, the United States Secret Service had seized the following property for forfeiture to the United States: $71,330 in funds, a 2003 H2 Hummer, a 2007 Infiniti QX56, a 2007 BMW 750LI, and a 2007 Mini Cooper.
In announcing the sentence, Chief Judge Conrad characterized the “theft of money from a fund for low-income recipients” as appalling and noted that the conduct was “egregious” and “deserving of just punishment.” In October 2011, Giraud Hope was sentenced to serve 15 months in prison for his involvement in the scheme. He will also serve three years under court supervision and was ordered to pay over $1.9 million in restitution to Medicaid.
Joanna Patronis, Holland’s other co-conspirator, pled guilty in April 2011 to one count of health care fraud conspiracy. Patronis has also admitted that her criminal conduct resulted in a loss of over $2,500,000 and has agreed to forfeit $2,700,000, including $46,857.57 in funds seized during the course of the investigation, a 2010 Toyota Rav-4, and her residence located in Cramerton. She faces a maximum statutory penalty of 10 years of imprisonment, a $250,000 fine, or both. A sentencing date for Patronis has not been set yet. “There are doctors, health care providers, and private companies who are honest and passionate about providing quality care to their patients. And then there are those who aren’t,” said U.S. Attorney Tompkins. “For those who belong in the second category, today’s sentencing should serve as a warning that together with our partners we will find them, prosecute them, and make sure they do not make another dime off of a government health program that is intended to assist low-income parents, children, seniors, and people with disabilities with their health care costs.” “Medicaid fraud diverts precious resources from those who need it most,” said HHS-OIG Special Agent in Charge Jackson. “Holland chose to live a lavish lifestyle on the expense of taxpayers, now she will serve prison time for her illegal scheme.” IRS-CI Special Agent Hammett stated, “Health care fraud is a serious offense. Those who believe they can defraud the government and get away with it will find that they will be caught. IRS-Criminal Investigation special agents will seek out those who commit fraud and make sure they do not profit from their misdeeds.”
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Source- http://www.justice.gov/usao/txs/1News/Releases/2012%20February/120229%20Vasquez.html
McALLEN, Texas – The owner of a purported health care resource center has pleaded guilty to one count of conspiracy in relation to a scheme to solicit and receive illegal kickbacks from area health care providers, United States Attorney Kenneth Magidson announced today.
Alicia Vasquez, of San Juan, Texas, was charged in a three-count indictment returned under seal Nov. 1, 2011, and unsealed Jan. 27, 2012. The indictment charged Vasquez, 51, with one count of conspiracy and two counts of soliciting and receiving kickbacks in violation of the federal anti-kickback statute. At a hearing this morning before U.S. District Judge Micaela Alvarez, Vasquez pleaded guilty to one count of conspiracy for her involvement in the scheme.
According to information presented in court this morning, from September 2009 through April 2011, Vasquez solicited numerous Medicare and Medicaid patients through a “health care resource center” she operated called David’s Star Loving Vision (DSLV). Vasquez would refer the patients to a variety of health care providers in Hidalgo and Cameron Counties including durable medical equipment (DME) companies, physicians and home healthcare agencies.
Over time, Vasquez referred the patients to these health care providers in exchange for a total of at least $70,000 in payments in violation of the anti-kickback statute. In turn, the providers billed hundreds of thousands of dollars to the Medicare and Medicaid programs as a result of the illegal referrals. Vasquez, and the providers to which she referred the beneficiaries, undertook a variety of measures to conceal Vasquez’s involvement with respect to the referrals. For example, one owner of a DME company paid kickbacks to Vasquez through a third-party – referred to in the indictment as “Person A.” The kickbacks were deposited into person A’s bank account, from where the money was later diverted to Vasquez.
Vasquez is scheduled for sentencing before Judge Alvarez on May 16, 2012, at 9:00 a.m. before Judge Alvarez. At that time, she will face up to five years in federal prison and a $250,000 fine for the conspiracy conviction. Vasquez was permitted to remain on bond pending sentencing.
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Source- http://www.justice.gov/opa/pr/2012/March/12-civ-272.html
Odyssey HealthCare, a subsidiary of Gentiva, has agreed to pay $25 million to resolve civil liability under the federal False Claims Act arising from its billing of claims for certain hospice services, the Justice Department announced today. Odyssey Healthcare currently provides hospice services in approximately 27 states, including Wisconsin. Odyssey was purchased by Gentiva Healthcare in 2010.
The Medicare hospice benefit is available for patients who elect palliative treatment for a terminal illness. Patients are eligible for palliative hospice care if they have a terminal diagnosis of six months or less if their disease runs its normal course. The majority of hospice services are billed at the routine care level. Medicare also pays for higher levels of care, including continuous home care. Continuous care is available when the patient is experiencing an acute crisis and his or her symptoms can only be controlled at home through the provision of skilled nursing services. The reimbursement rate for continuous care services is the highest rate available to a hospice and several hundred dollars a day more than the amount paid for routine services. Today’s settlement resolves allegations that Odyssey submitted false claims to the Medicare program for continuous home care services that were unnecessary or that were not performed in accordance with Medicare requirements between January 2006 and January 2009.
“The resolution of the related cases announced today underscores two, critically important components of our focused and effective work in addressing health care fraud,” said James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin. “First, it shows our abiding commitment to the legitimate medical and the financial interests of all of our constituents who are rightly interested in the sound, lawful administration of the Medicare Program. Second, it illustrates our strong support of the qui tam or “whistleblower” process through which private individuals–often employees of offending health care providers–courageously come forward to report on waste, fraud, and abuse in the handling of taxpayer monies and beneficial programs.”
“The federal government pays for the hospice care of Medicare patients to make them more comfortable during the last months of their lives. Yet it is alleged that Odyssey used a diagnosis of terminal illness as an opportunity to bill taxpayers for unnecessary services,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “The size of the settlement shows how seriously the government views Odyssey’s unlawful behavior, and the five-year Corporate Integrity Agreement will help assure that such fraud is not repeated.”
Allegations that Odyssey improperly billed for continuous care services were originally raised in three lawsuits filed against Odyssey under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. As a part of today’s resolution, the whistleblowers, all former employees of Odyssey, will receive payments totaling more than $4.6 million.
In addition to the $25 million payment, Odyssey entered a five year corporate integrity agreement with the United States Department of Health and Human Services Office of the Inspector General.
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Source- http://www.fbi.gov/neworleans/press-releases/2012/three-more-convicted-of-health-care-fraud-in-baton-rouge
BATON ROUGE, LA—United States Attorney Donald J. Cazayoux, Jr. announced that LINDA M. JACKSON, age 49, pled guilty yesterday before Chief U.S. District Court Judge Brian A. Jackson to conspiracy to commit health care fraud. The case arose from a multi-year health care fraud scheme involving a company known as A&A Durable Medical Supply, LLC (“A&A”), in Plaquemine, Louisiana, which JACKSON operated and managed. JACKSON’s guilty plea follows those entered by former A&A employees EUNICE SPARROW, age 68, and UNIECESCO SMITH, age 29, both of whom pled guilty last week to multiple counts of health care fraud.
According to the factual basis entered in connection with her guilty plea, from April 2007 through April 2009, JACKSON worked with others to defraud the Medicare program. JACKSON and others accomplished the scheme by knowingly submitting reimbursement claims to Medicare that falsely and fraudulently represented that: (1) certain equipment was medically necessary and had been ordered for the beneficiaries by their physicians; and (2) that the equipment reflected in the claims had in fact been provided to the beneficiaries. For example, JACKSON routinely submitted claims to Medicare seeking reimbursement for power wheelchairs knowing that A&A had not provided power wheelchairs to the beneficiaries and knowing that the beneficiaries’ physicians had not prescribed power wheelchairs for the beneficiaries. According to the stipulated factual basis, the intended loss from this one portion of JACKSON’s scheme exceeded $1 million. JACKSON also submitted approximately 60 false claims totaling more than $170,000 for a device called a “cranial cervical orthosis” knowing that A&A had not provided any of the devices to Medicare beneficiaries and that none of the devices had been prescribed by the beneficiaries’ physicians.
As a result of her guilty plea, JACKSON faces a maximum sentence of a term of imprisonment of 10 years and a fine. In addition, JACKSON has agreed to forfeit all property derived from the proceeds of her crime and to make full restitution.
SPARROW and SMITH—JACKSON’s mother and daughter, respectively—entered guilty pleas on February 22, 2012 to several counts of health care fraud. In their plea agreements, SPARROW and SMITH admitted that they knowingly aided and abetted the submission of JACKSON’s fraudulent Medicare claims by completing and signing false delivery tickets and other fraudulent documents at JACKSON’s direction. A&A kept the fraudulent documents in its patient files in an attempt to substantiate the claims it submitted to Medicare, and JACKSON later provided the false documents to an auditor who requested the patient files in the course of an investigation into A&A’s claims.
United States Attorney Donald J. Cazayoux, Jr. remarked, “Perpetrators of health care fraud increase the costs of care for us all. The public deserves a health care system free of those who seek personal gain through crime. This successful prosecution demonstrates our firm commitment to the aggressive and effective prosecution of Medicare fraud.”
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Source- http://www.fbi.gov/atlanta/press-releases/2012/doctor-banned-from-federal-health-care-programs-for-seven-years
ATLANTA—The United States Attorney’s Office announced today that it has reached a settlement with ROBERT M. RITCHEA, M.D., 49, of Phenix City, Alabama, to resolve allegations under the False Claims Act that RITCHEA submitted more than $2.2 million in false or fraudulent claims to Medicare. Pursuant to the settlement, RITCHEA will be excluded from payment from all federal health care programs for a period of seven years. The payment prohibition applies to RITCHEA, anyone who employs or contracts with him, and any hospital or other provider for which he provides services. RITCHEA will also pay the United States the proceeds from the sale of a second home and $5,000 immediately. In the settlement process, a defendant’s ability to pay is taken into consideration when determining the settlement amount.
Sally Quillian Yates, United States Attorney for the Northern District of Georgia, said, “Our office is committed to pursuing doctors who put money before the health and safety of their patients. Dr. Ritchea admitted to allowing an unlicensed medical assistant to inject patients with pain medications and billing Medicare for these injections. As a result he will be excluded from all federal health care programs for seven years.”
The civil settlement resolves a complaint filed by the United States against RITCHEA, United States v. Robert M. Ritchea, M.D., 1:10-cv-02410-JOF. The complaint alleges that RITCHEA violated the False Claims Act by improperly billing Medicare for unnecessary pain injections administered by an unlicensed medical assistant. As a condition of the settlement, RITCHEA admitted that he allowed the unlicensed medical assistant to administer at least 80% of the pain injections. He also admitted to both the Alabama State Board of Medical Examiners and the Georgia Composite State Board of Medical Examiners that the injections were unnecessary.
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 $6.6 billion.
This settlement also highlights another powerful tool to protect federal health care programs and beneficiaries and to hold accountable those that commit health care fraud—the exclusion authority of the United States Department of Health and Human Services Office of Inspector General (HHS-OIG). Section 1128 of the Social Security Act gives HHS-OIG the authority to exclude individuals and entities from participation in federal health care programs for fraud or other misconduct.
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Source- http://www.fbi.gov/newyork/press-releases/2012/manhattan-u.s.-attorney-announces-charges-against-36-individuals-for-participating-in-279-million-health-care-fraud-scheme
Preet Bharara, the United States Attorney for the Southern District of New York; Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”); and Raymond W. Kelly, the Police Commissioner of the City of New York (“NYPD”), announced today the unsealing of charges against 36 defendants involved in a systematic scheme to defraud private insurance companies of more than $279 million under New York’s no-fault automobile insurance law. The indictment includes racketeering charges against eight members and associates of a criminal organization consisting primarily of individuals of Russian descent who were the owners and controllers of fraudulent medical clinics (the “No Fault Organization”), as well as 10 licensed doctors and three attorneys. The alleged scheme identified today is the largest single no-fault automobile insurance fraud ever charged, and the first case of its kind to allege violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act.
All of the defendants were arrested this morning in connection with today’s charges. Thirty-five were taken into custody in New York and New Jersey and will be presented and arraigned in Manhattan federal court before U.S. Magistrate Judge Theodore H. Katz later this afternoon. One defendant was arrested in Duluth, Minnesota and will be presented tomorrow in federal court in the District of Minnesota.
Manhattan U.S. Attorney Preet Bharara said: “Today’s charges expose a colossal criminal trifecta, as the fraud’s tentacles simultaneously reached into the medical system, the legal system, and the insurance system, pulling out cash to fund the defendants’ lavish lifestyles. As alleged, the scheme relied on a cadre of corrupt doctors who essentially peddled their medical licenses like a corner fraudster might sell fake IDs, except those medical licenses allowed unlawful entry, not to a club or a bar, but to a multi-billion-dollar pool of insurance proceeds.”
FBI Assistant Director in Charge Janice K. Fedarcyk said: “Our investigation uncovered a pattern of lucrative fraud exploiting New York’s no-fault auto insurance system to the tune of more than a quarter-of-a-billion dollars. The criminal enterprise, while it lasted, was obscenely profitable. The scheme not only unjustly enriched the defendants and defrauded insurance companies. Auto insurance fraud is also a crime that indirectly victimizes every driver in New York.”
NYPD Commissioner Raymond W. Kelly said: “Our undercover officers were treated like thousands of other ‘patients’ receiving therapy, tests, and medical equipment they didn’t need. I want to congratulate the U.S. Attorney’s Office and the agents and detectives assigned to the joint FBI-NYPD Organized Crime Task Force for bringing this investigation to a successful conclusion.”
The following allegations are based on the unsealed indictment and other documents filed today in Manhattan federal court:
Under New York state law, every vehicle registered in the state is required to have no-fault automobile insurance, which enables the driver and passengers of a registered and insured vehicle to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault (the “No-Fault Law”). The No-Fault Law requires prompt payment for medical treatment, thereby obviating the need for claimants to file personal injury lawsuits in order to be reimbursed. Under the No-Fault Law, patients can assign their right to reimbursement from an insurance company to others, including medical clinics that provide treatment for their injuries. New York state law also requires that all medical clinics in the state be incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement under the No-Fault Law. Insurance companies will not honor claims for medical treatments from a medical clinic that is not actually owned, operated, and/or controlled by a licensed medical practitioner.
From at least 2007 through 2012, the No-Fault Organization has engaged in a massive and sophisticated scheme to defraud automobile insurance companies of hundreds of millions of dollars by, among other things, creating and operating medical clinics that provided unnecessary and excessive medical treatments in order to take advantage of the No-Fault Law. In order to mislead New York authorities and private insurers, the true owners of these medical clinics (“Clinic Controllers”), almost all of whom were also members and associates of a criminal organization consisting primarily of individuals of Russian descent, paid licensed medical practitioners, including doctors, to use their licenses to incorporate the professional corporations, through which the medical clinics billed the private insurers for the bogus medical treatments. These doctors effectively operated as “straw owners” of the clinics.
The Clinic Controllers paid thousands of dollars in kickbacks to runners who recruited automobile accident passengers to receive medically unnecessary treatments from the no-fault clinics. They also instructed the clinic doctors/straw owners to prescribe excessive and unwarranted referrals for various “modality treatments” for every patient they saw. The treatments included physical therapy, acupuncture, and chiropractic treatments—as many as five times per week for each—and treatments for psychology, neurology, orthopedics, and audiology. Clinic doctors also prescribed unnecessary MRI’s, x-rays, orthopedics, and medical supplies. The Clinic Controllers received thousands of dollars in kickbacks for patient referrals from the owners of the modality clinics (“Modality Controllers”), who were members and associates of the same criminal organization to which the members of the No-Fault Organization and Clinic Controllers belonged.
The Clinic Controllers also referred patients to personal injury lawyers who filed bogus lawsuits on behalf of the patients and coached them on what injuries to claim in order to get as many treatments as possible. The personal injury lawyers also paid the Clinic Controllers thousands of dollars in kickbacks for these referrals.
In order to conceal and disguise the millions of dollars in claims paid by the automobile insurance companies, the members of the No-Fault Organization laundered the money through shell companies and corrupt check-cashing services. Often, checks would be written from the No-Fault or Modality Clinics with the payee line left blank, and in amounts less than $10,000 in order to avoid potential financial institution reporting requirements and other scrutiny. The checks were then cashed through check-cashers who made the checks payable to shell companies they controlled in order to conceal the true nature and purpose of the checks. The cash was then returned to members of the No-Fault Organization to fund kickbacks and for their personal use. At other times, the members and associates of the No-Fault Organization paid themselves through their own shell companies and then used the criminal proceeds to fund expensive vacations and to purchase luxury goods.
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