Lawrence S. Duran and Marianella Valera Plead Guilty to Orchestrating $200 Million Medicare Fraud Scheme

Source- http://www.justice.gov/opa/pr/2011/April/11-crm-480.html

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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