Olalekan Sorunke Owner Of A Dallas Medical Equipment Supply Company Is Sentenced To 30 Months In Federal Prison On Health Care Fraud Conviction

Source- http://www.justice.gov/usao/txn/PressRelease/2013/MAY2013/may29sorunke_olalekan_hcf_sen.html

Defendant Also Ordered to Pay Nearly $700,000 in Restitution

DALLAS — Olalekan Sorunke, 40, of Rowlett, Texas, was sentenced today by U.S. District Judge Jorge A. Solis to 30 months in federal prison and ordered to pay $691,175 in restitution, following his guilty plea in February 2013 to one count of health care fraud, stemming from the operation of his business, Lincoln Medical Supply, Inc. (Lincoln), in Dallas. Judge Solis ordered that Sorunke surrender to the Bureau of Prisons on July 10, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, Lincoln was a durable medical equipment (DME) supply company. As its owner/operator, Sorunke maintained a valid Medicare group provider number to submit Medicare claims for DME. Sorunke submitted Medicare claims that were not medically necessary or were not provided to Medicare beneficiaries. In one instance, for example, in July 2009, Sorunke submitted a claim to Medicare for providing a heavy-duty wheelchair to a beneficiary, when he knew that this beneficiary did not need a wheelchair, much less a heavy-duty wheelchair. He fraudulently billed Medicare $7,689 for that claim.

In total, Sorunke’s scheme resulted in a loss of $691,175. Sorunke used the fraudulently obtained funds for his own personal use.

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Calvin Cantrell Estrich Arrested And Charged With Stealing Identities Of Children And Clinicians To Commit Medicaid Fraud

source- http://www.justice.gov/usao/ncw/pressreleases/2013/Charlotte-2013-05-28-estrich.html

CHARLOTTE, N.C. – A Charlotte man charged with defrauding Medicaid of at least $450,000 and stealing the identities of children and clinicians to commit the fraud was arrested in Charlotte today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

A federal grand jury returned the criminal indictment against Calvin Cantrell Estrich, 31, of Charlotte on May 23, 2013. The indictment charges Estrich with one count of health care fraud conspiracy, four counts of health care fraud, four counts of false statements in connection with health care matters, eight counts of aggravated identity theft, one count of money laundering and one count of making false statements to investigators. The indictment also includes a forfeiture allegation seeking a money judgment in the amount of at least $462,178.

U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID).

“Rooting out health care fraud and bringing to justice those looking to scam taxpayer-funded health care programs is a priority for this office,” said U.S. Attorney Tompkins. “Since its inception in 2010, our District’s Health Care Fraud task force has prosecuted a significant number of criminals who sought to benefit financially by falsely billing Medicare and Medicaid. We will continue to fight health care fraud through concentrated and sustained efforts and to aggressively safeguard precious taxpayer dollars.”

“Cases like this one send a strong signal that we won’t tolerate health care fraud in North Carolina,” said Attorney General Roy Cooper. “Our investigators and attorneys will continue to work closely with their federal counterparts to stamp out health care fraud and abuse, save taxpayers’ money, and protect patients.”

According to allegations in the indictment, from October 2009 through November 2010 Estrich and his co-conspirator, Joye Strong, participated in a scheme to defraud Medicaid by submitting reimbursements for medically unnecessary services. Estrich’s company, Everyday’s Blessing, was approved by Medicaid to provide Intensive In-Home Community Intervention Services, which are mental and behavioral services designed to stabilize living arrangements and prevent out-of-home therapeutic treatment for children and youth. The indictment alleges that Estrich and Strong stole and misused the identities of a nurse practitioner and two therapists in order to complete the necessary paperwork for Medicaid to approve services for Medicaid recipients to receive these services. According to the indictment, once Medicaid approved Everyday’s Blessing to provide services to these recipients based upon the fraudulent paperwork, Estrich and Strong sought and received reimbursement from Medicaid through Everyday’s Blessing for the medically unnecessary services. The indictment also alleges that in many instances, the Medicaid recipients did not receive any services at all.

For example, the indictment alleges that Estrich, aided and abetted by others, fraudulently billed Medicaid for services supposedly provided to juvenile Medicaid recipient, identified in the indictment as “J.R.” when, in fact, J.R. did not receive any services. Estrich and Strong, through Everyday’s Blessing, received over $24,000 in payments from Medicaid for these false services. Furthermore, Estrich unlawfully used J.R.’s Medicaid recipient identification number in order to obtain reimbursement pursuant to the fraud scheme.

The indictment further alleges that Estrich and Strong stole the identity of a therapist, identified in the indictment as “J.O.,” in order to obtain approval from Medicaid for fraudulent and medically unnecessary services. According to the indictment, J.O. provided her name and credentials to co-conspirator Strong when J.O. sought employment at another company operated by Strong. Thereafter, Estrich and Strong stole and misused J.O.’s identity by forging J.O.’s signature on paperwork for diagnostic and therapeutic services which J.O. did not perform.

According the indictment, Estrich and Strong obtained $462,178 in fraudulent payments from Medicaid pursuant to the fraud scheme. During the relevant time period, the indictment alleges that Estrich laundered the proceeds of the fraud scheme through cash withdrawals and debit card purchases, including a cash withdrawal in the amount of $15,093 in November 2010. Furthermore, the indictment alleges that when investigators interviewed Estrich about the fraud scheme in December 2012, Estrich made materially false and fraudulent statements to investigators.

Co-conspirator Joye Strong pleaded guilty to eight counts of health care fraud and two counts of money laundering in October 2011. Strong is awaiting sentencing on those charges. U.S. Attorney Tompkins notes that the guilty plea of one any other person is not relevant to the guilt of any indicted person.

Estrich made his initial appearance today in U.S. District Court and was released on bond. If convicted, Estrich faces a maximum of ten years in prison for the health care fraud conspiracy count and for each of the four counts of health care fraud. He faces a maximum prison term of five years for each of the four counts of making false statements in connection with health care matters. He also faces a mandatory consecutive prison term of two years for the eight aggravated identity theft counts, ten years on the one count of money laundering and five years on the one count of making false statements to investigators in a federal health care fraud investigation. Each of the counts charged in the indictment carries a maximum fine of $250,000.

An indictment is merely an allegation and Estrich is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.

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Doctor Amar Nath Bhandry Pleads Guilty To Defrauding Medicaid

Source- http://www.justice.gov/usao/okw/news/2013/2013_05_28_2.html

Oklahoma City, Oklahoma – AMAR NATH BHANDRY, M.D., 53, of Oklahoma City, has pled guilty to committing health care fraud, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

According to the superseding information, Dr. Bhandry submitted claims to Medicaid claiming reimbursement for services that he had not actually provided. Specifically, he filed claims for comprehensive psychiatric examinations between 45-50 minutes in duration when he visited with patients for only 10-20 minutes. Dr. Bhandry pled guilty earlier today to the superseding information.

At sentencing, Dr. Bhandry faces up to 10 years in prison and $250,000 fine. Sentencing will take place in approximately ninety days.

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ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal Liability and False Claims Act Allegations

Source- http://www.justice.gov/opa/pr/2013/May/13-civ-606.html

Pharmaceutical company ISTA Pharmaceuticals, Inc. pled guilty earlier today to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Justice Department announced today. U.S. District Court Judge Richard J. Arcara accepted ISTA's guilty pleas. The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom.

ISTA pled guilty in the Western District of New York to criminal charges that the company conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce. Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA). Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery. In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.

Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. The evidence showed that continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.

ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses. These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others. ISTA agreed that this conduct represented an intent to defraud under the law.

In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute. Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program. In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom. In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.

Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge.

ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs. The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma. The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs. The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.

"As today's global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. "Health care fraud in any form undermines the integrity of our health care system and can drive up costs for all of us."

"Today's resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public," said United States Attorney William J. Hochul, Jr. "The fact that ISTA offered doctors illegal inducements - such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions - makes the company's illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay."

"It is especially concerning when companies actively take steps to conceal improper conduct which may jeopardize public health," said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. "We will continue to work tirelessly with the Department of Justice and our law enforcement counterparts to uncover such conduct."

In addition to the criminal fines and asset forfeiture, ISTA's parent company, Bausch+Lomb, Incorporated (B+L), has agreed to maintain a Compliance and Ethics Program. B+L has agreed that it will maintain policies and procedures that: (1) prohibit the involvement of sales and marketing personnel and others on the businesses' commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse; (2) require sales agents to discuss only those product uses that are consistent with what is indicated on the product's approved package labeling and to forward requests for information regarding uses of B+L's products not approved by FDA to a Medical Affairs Professional; and (3) prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program. The Program also requires that B+L's President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L's Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L's prescription pharmaceutical products.

The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government's recovery. The civil lawsuits were filed in the Western District of New York and are captioned United States ex rel. Keith Schenker v. ISTA Pharmaceuticals, Inc. and United States, et al., ex rel. DJ PARTNERSHIP 2011, LLP v. ISTA Pharmaceuticals, Inc. As part of today's resolution, Mr. Schenker will receive approximately $2.5 million from the federal share of the civil recovery.

Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal healthcare programs. Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA's possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs. In June 2012, B+L acquired ISTA. Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services' Office of Inspector General, ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement. Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement. Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs. Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.

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Las Vegas Urology Practice Agrees To Pay U.S. Department Of Justice $1 Million To Settle Civil Health Care Fraud Allegations

Source- http://www.justice.gov/usao/nv/news/2013/20130521_lvu.html

LAS VEGAS – A local urology practice, Las Vegas Urology, LLP, has agreed to pay the United States Department of Justice $1 million to resolve civil allegations that it improperly billed Medicare, TRICARE, and other federal health care insurance programs, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

The United States contends that Las Vegas Urology engaged in improper billing between Jan. 1, 2005, and June 30, 2010, to Medicare, TRICARE, the Federal Employee Health Benefits Program, and the Railroad Retirement Medicare Program. In a settlement agreement effective May 17, 2013, the parties agreed to resolve the United States claims. In consideration of the $1 million payment and an integrity agreement entered into between the federal government and Las Vegas Urology, the federal government has agreed not to seek exclusion of Las Vegas Urology from federal health care programs. In addition, the settlement agreement states that it is neither an admission of liability by Las Vegas Urology nor a concession by the United States that its claims are not well founded.

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Paul Thomas Layman Sentenced in Miami to 111 Months for His Role in $63 Million Health Care Fraud Scheme

Source- http://www.justice.gov/opa/pr/2013/May/13-crm-591.html

A former health care clinic director and licensed therapist was sentenced in Miami to 111 months in prison today in connection with a health care fraud scheme involving defunct health provider Health Care Solutions Network Inc. (HCSN).

Acting Assistant Attorney General Mythili Raman of the Justice Department's Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Special Agent in Charge of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement.

Paul Thomas Layman, 66, of Miami, pleaded guilty on March 7, 2013, to conspiracy to commit health care fraud.

During the course of the conspiracy, Layman was employed as a substance abuse counselor, therapist and clinical director of HCSN’s Partial Hospitalization Program (PHP). A PHP is a form of intensive treatment for severe mental illness.

HCSN of Florida (HCSN-FL) operated community mental health centers at three locations. During his employment, Layman worked full time at all HCSN-FL locations in various capacities. According to court documents, Layman was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid. Layman also knew that many of the ALF referral patients were ineligible for PHP services because many patients suffered from mental retardation, dementia and Alzheimer's disease.

Court documents reveal that Layman was aware that HCSN-FL personnel were fabricating patient medical records. Many of these medical records were created weeks or months after the patients were admitted to HCSN-FL for purported PHP treatment and were utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and Florida Medicaid. During his employment at HCSN-FL, Layman signed fabricated PHP therapy notes and other medical records used to support false claims to government sponsored health care programs.

HCSN of North Carolina (HCSN-NC) operated one location in Hendersonville, N.C. At HCSN-NC, Layman served as the clinical director and assisted HCSN owner Armando Gonzalez in obtaining necessary licensing, credentials and Medicare authorizations for HCSN-NC. According to court documents, from 2008 through 2009, Layman purportedly supervised the therapists within the HCSN-NC PHP, including Alexandra Haynes, who was an unlicensed therapist purportedly performing PHP therapy to HCSN-NC patients. Gonzalez and Haynes were sentenced to 168 months and 70 months, respectively, in prison.

According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

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Personal Assistant And Beneficiary Sentenced For Fraud On The Medicaid Home Services Program

Source- http://www.justice.gov/usao/ils/News/2013/May/05212013_Geary%20Press%20Release.html

On May 21, 2013, Daniel Geary, 39, of Caseyville, IL, was sentenced in District Court in East St. Louis, IL, on one count of False Statement related to Health Care Matters, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.

Having been confined in county jail for four months, Daniel Geary was sentenced to time served, three (3) years of supervised release, a special assessment of $100, and ordered to pay restitution in the amount of $420 to the State of Illinois and the Center for Medicare and Medicaid Services. On the same offense on April 1, 2013, Cynthia Harmon, age 40, of Alton, IL also had been sentenced to time served, two (2) years of supervised release, a special assessment of $100, and ordered to pay restitution in the amount of $420. Daniel Geary and Cynthia Harmon, personal assistant and beneficiary, previously pled guilty to defrauding the Illinois Department of Human Services (DHS) Home Services Program, a Medicaid Waiver Program intended to prevent the unnecessary institutionalization of Medicaid beneficiaries who may be satisfactorily maintained at home. Both admitted to making a materially false statement in connection with the delivery of health care services by reporting on a Home Services Time Sheet sent to the Illinois Department of Human Services, Office of Rehabilitation Services, that Daniel Geary performed 44.5 hours of personal assistant work for Cynthia Harmon from February16 through March 15, 2012, even though each defendant knew that, because Harmon was incarcerated in the St. Louis County jail, the personal assistant services were not performed.

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U.S. Renal Care to Pay $7.3 Million to Resolve False Claims Act Allegations

Source- http://www.justice.gov/opa/pr/2013/May/13-civ-588.html

U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today. U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease. Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration. The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen. However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.

“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “We will continue to protect scarce Medicare dollars.”

“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland. “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

The allegations settled today arose from a lawsuit filed by Laura Davis against DCA 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. Ms. Davis will receive $1,314,000 as part of today’s settlement.

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U.S. Renal Care to Pay $7.3 Million to Resolve False Claims Act Allegations

Source- http://www.justice.gov/opa/pr/2013/May/13-civ-588.html

U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today. U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease. Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration. The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen. However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.

“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “We will continue to protect scarce Medicare dollars.”

“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland. “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

The allegations settled today arose from a lawsuit filed by Laura Davis against DCA 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. Ms. Davis will receive $1,314,000 as part of today’s settlement.

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$1.2 Million Settlement With Durable Medical Equipment Company, International Rehabilitative Sciences D/B/A RS Medical Resolves South Carolina False Claims Act Lawsuit

Source- http://www.justice.gov/usao/sc/news/5.16.13.rsmedical.html

Columbia, South Carolina -----United States Attorney Bill Nettles announced that the government has reached a settlement with RS Medical for $1,214,665.00 to resolve claims that employees of RS Medical in South Carolina and Illinois submitted claims to Medicare for Transcutaneous Electrical Nerve Stimulation (TENS) Units, conductive garments for TENS Units, back braces, cervical traction systems, muscle stimulators, and custom-fit knee braces (collectively “the durable medical equipment”) that (1) lacked physician orders; (2) lacked the required supporting documentation; and/or (3) lacked medical necessity.

The investigation in District of South Carolina began in February of 2011 when whistleblower Sally Balentine filed a qui tam lawsuit in federal court under the False Claims Act. The False Claims Act allows the government to bring civil actions against entities that knowingly use or cause the use of false documents to obtain money from the government or to conceal an obligation to pay money to the government. The lawsuit in this case was initially filed by Sally Balentine, an employee of RS Medical under the qui tam or whistleblower provision of the False Claims Act. This provision entitles a private person to bring a lawsuit on behalf of the United States, where the private person has information that the named defendant has knowingly violated the False Claims Act. Under the False Claims Act, the private person, also known as a “whistleblower,” is entitled to a share of the government's recovery. In this matter, the whistleblower will receive over $242,933 from the proceeds of the settlement. Additionally, she will receive $80,000 for her attorney fees and costs.

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Hunter A. Rigsby Convicted for Committing Health Care Fraud and Paying Kickbacks

Source- http://www.justice.gov/usao/ma/news/2013/May/RigsbyHunterconvicted.html

BOSTON – A former Orthofix territory manager was convicted today for health care fraud and paying kickbacks.

Hunter A. Rigsby, 33, of Knoxville, Tenn., pleaded guilty before U.S. District Judge F. Dennis Saylor IV to health care fraud and paying kickbacks.

Rigsby was a territory manager for Orthofix, Inc., a company that sold bone growth stimulator medical devices. Bone growth stimulators are used by patients who have broken bones or spinal fusions that are not healing properly. From 2005 through 2011, Rigsby sold Orthofix bone growth stimulators in Tennessee. Medicare only pays for “long bone” stimulators when at least 90 days have elapsed without clinically significant healing, and it only covers certain types of injuries. Rigsby was well-aware of these guidelines, having received training on these guidelines at Orthofix. On numerous occasions, doctors in Rigsby’s territory ordered bone growth stimulators that did not satisfy Medicare’s guidelines. For instance, some doctors prescribed the device before 90 days had not yet elapsed without any healing, and other doctors prescribed the device for patients who had injuries that were not covered under Medicare’s guidelines. When this occurred, Rigsby often forged the patient’s medical records to make it appear as though the claim was payable under Medicare’s guidelines, when in fact Medicare should not have paid the claim. For instance, Rigsby falsified doctors’ chart notes to make it appear as though Medicare’s 90-day rule was satisfied. Rigsby also deleted portions of physicians’ chart note that described patients’ injuries which were not covered by Medicare and changed the note to make it appear as though the patients had injuries that were covered. On some occasions, Rigsby submitted orders where the physician had not ordered a bone growth stimulator at all. Rigsby also forged physicians’ signatures on prescriptions and Medicare Certificates of Medical Necessity.

In July 2009, Orthofix fired Rigsby after discovering his fraud scheme. Immediately thereafter, Rigsby and Orthofix sales personnel devised a scheme to allow Rigsby to continue to submit bone growth stimulator orders to Orthofix through a new front company that Rigsby created. Rigsby took numerous steps to conceal his affiliation with the front company so that Orthofix compliance personnel would not detect that he was still doing business with the company. Rigsby continued to submit orders for stimulators, sending the orders in through separate individuals. Even though Rigsby had been fired for falsifying medical records, he continued to manipulate patient medical records and forge physicians’ signatures until Orthofix finally severed its relationship with him in 2011. Through his scheme, Rigsby caused Medicare and other federal insurance programs to pay more than $400,000 for bone growth stimulators that should not have been paid.

Rigsby also paid kickbacks to health care professionals to induce them to order Orthofix stimulators. For instance, Rigsby paid the person who was responsible for ordering stimulators at one of the largest medical practices in Tennessee. Rigsby approached this person and asked if he could pay this person in return for steering stimulator orders to Orthofix. The person agreed, and Rigsby left an envelope with $200 in cash at the person’s house. In another instance, Rigsby entered into an arrangement to pay a nurse in Morristown, Tenn., each time that the surgeon who employed her ordered an Orthofix stimulator. Rigsby left an envelope of cash, between $200-$300, in the back of the nurse’s truck after the surgeon began to order stimulators.

In addition to the Rigsby sentence, the Orthofix investigation has to date resulted in a number of felony charges against employees and contractors of Orthofix, including the following:
In December 2012, Orthofix was convicted of obstruction of a federal audit and ordered to pay $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
In January 2013, Tom Guerrieri, the former vice president of sales for Orthofix, was sentenced to eight months in prison and ordered to pay $50,000 in fines and forfeiture for paying kickbacks;
In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home confinement, and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
In January 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home confinement as part of a two year probation sentence, forfeiture of $40,000 and a $4,000 fine for committing health care fraud;
In January 2013, Mitchell Salzman, a former regional manager for Orthofix, was sentenced to one year of probation, with the first three months to be served in home confinement, and ordered to pay a $2,000 fine for committing perjury;
In January 2013, Michael McKay was sentenced to one year of probation, with the first three months to be served in home confinement, forfeiture of $10,000 and a fine of $3,000 for committing health care fraud; and
In February 2013, Brian Racey, a former Orthofix territory manager, was sentenced to one year of probation and ordered to pay a fine for committing health care fraud;

Judge Saylor scheduled sentencing for August 9, 2013. The statutory maximum penalty on the charge of health care fraud is 10 years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment. The statutory maximum penalty on the charge of paying kickbacks is five years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment.

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Twelve Los Angeles-area residents Accused Of Attempting To Bilk Medicare Out Of $22 Million Arrested As Part Of Nationwide Crackdown

Source- http://www.justice.gov/usao/cac/Pressroom/2013/069a.html

LOS ANGELES – Twelve Los Angeles-area residents – including California’s second-largest biller for chiropractic services, a physician’s assistant, and owners of durable medical equipment (DME) and ambulance companies – were taken into custody today in relation to seven criminal cases that allege they cumulatively submitted more than $22 million in false billings to Medicare.

The charges filed in Los Angeles are part of a nationwide “takedown” by Medicare Fraud Strike Force operations in eight cities that led to charges against 89 individuals for their alleged participation in schemes to collectively submit about $223 million in fraudulent claims to Medicare (for national press release and all related charging documents, see: http://www.justice.gov/opa/mfsf-pc-docs-2013.html).

The dozen defendants taken into custody are among 13 people charged in Los Angeles in cases that allege health care fraud. The 12 either were arrested this morning or self-surrendered to authorities after learning that they had been charged in federal court. All of those defendants are scheduled to be arraigned this afternoon. A thirteenth defendant is a fugitive.

Dr. Houshang Pavehzadeh, of the Sylmar Physician Medical Group, allegedly billed Medicare more than $1.7 million for chiropractic treatments he never performed. During the scheme, which ran from 2005 through 2012, Dr. Pavehzadeh, 40, of Agoura Hills, became the second-largest Medicare biller in California for chiropractic services – even though he was not in the United States when some of the alleged services were performed. In addition to being charged with health care fraud, Pavehzadeh is charged with aggravated identity theft related to Medicare beneficiaries whose information he used to bill Medicare as a part of the scheme. When investigators tried to conduct an audit of Pavehzadeh’s claims, he falsely reported to the Los Angeles Police Department that he had been carjacked and that patient files requested by the auditors had been stolen from his car. Pavehzadeh surrendered this morning, and he is scheduled to be arraigned with other Los Angeles-area defendants this afternoon in the Roybal Federal Building.

Nine defendants affiliated with DME companies were also charged in five separate indictments.

Olufunke Fadojutimi, 41, of Carson, a registered nurse; Ayodeji Temitayo Fatunmbi, 41, formerly of Carson, and now believed to be residing in Nigeria; and Maritza Velazquez, 40, of Las Vegas, were charged with health care fraud. The scheme allegedly revolved around Lutemi Medical Supplies, a DME company Fadojutimi owned and where Fatunmbi and Velazquez worked. According to the indictment in this case, Lutemi billed Medicare more than $8.3 million in claims, primarily for medically unnecessary power wheelchairs. Fadojutimi and Fatunmbi allegedly laundered Medicare funds in order to purchase fraudulent prescriptions for those power wheelchairs and pay illegal kickbacks to recruit Medicare beneficiaries. Fadojutimi was arrested this morning in Los Angeles, while Velazquez was arrested in Las Vegas. Fatunmbi is currently a fugitive being sought by federal authorities.

Susanna Artsruni, 45, of North Hollywood, and Erasmus Kotey, 76, of Montebello, a licensed physician’s assistant, allegedly worked together to commit health care fraud out of a medical clinic on Vermont Avenue where they both worked. Kotey allegedly prescribed medically unnecessary DME, including power wheelchairs, for Medicare beneficiaries. Many of those power wheelchair prescriptions were then used by Artsruni’s DME company, Midvalley Medical Supply, to support fraudulent claims to Medicare. In only four months, the clinic and Midvalley billed Medicare more than $525,000 for these fraudulent claims. Artsruni has previously been convicted of health care fraud and was on pretrial supervision at the time she allegedly laundered some of the proceeds of this fraud. Artsruni was arrested this morning, while Kotey self-surrendered.

Three other DME cases were also charged, alleging fraudulent Medicare billing for medically unnecessary power wheelchairs that were sometimes never even delivered. In one case, Akinola Afolabi, 53, of Long Beach, the owner of Emmanuel Medical Supply, allegedly submitted more than $2.6 million in in false and fraudulent billing to Medicare. In another case, Queen Anieze-Smith, 52, of Encino, and Abdul King-Garba, 47, of Westwood, the owners and operators of ITC Medical Supply, allegedly submitted more than $1.8 million in false and fraudulent billing to Medicare. In the third case, Clement Etim Aghedo, 53, of Fontana, the owner of Ace Medical Supply Company, allegedly submitted more than $1.8 in false and fraudulent claims to Medicare. Afolabi, Anieze-Smith, and King-Garba were all arrested this morning, while Aghedo self-surrendered.

In the seventh case brought as part of today’s takedown, three defendants affiliated with Gardena-based ProMed Medical Transportation, an ambulance company, were charged with submitting more than $5.9 million in false claims to Medicare between 2008 and 2011. ProMed’s owner, Yaroslav Proshak, 45, of Valley Village; general manager Sharetta Wallace, 35, of Inglewood; and office manager and biller Sergey Mumjian, 40, of West Hollywood, submitted claims for medically unnecessary transportation services and then created fake documentation purporting to support those claims. Proshak, Wallace, and Mumjian were arrested this morning.

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Hunter A. Rigsby was Convicted for Health Care Fraud

Source- http://www.justice.gov/usao/ma/news/2013/May/RigsbyHunterconvicted.html

BOSTON – A former Orthofix territory manager was convicted today for health care fraud and paying kickbacks.

Hunter A. Rigsby, 33, of Knoxville, Tenn., pleaded guilty before U.S. District Judge F. Dennis Saylor IV to health care fraud and paying kickbacks.

Rigsby was a territory manager for Orthofix, Inc., a company that sold bone growth stimulator medical devices. Bone growth stimulators are used by patients who have broken bones or spinal fusions that are not healing properly. From 2005 through 2011, Rigsby sold Orthofix bone growth stimulators in Tennessee. Medicare only pays for “long bone” stimulators when at least 90 days have elapsed without clinically significant healing, and it only covers certain types of injuries. Rigsby was well-aware of these guidelines, having received training on these guidelines at Orthofix. On numerous occasions, doctors in Rigsby’s territory ordered bone growth stimulators that did not satisfy Medicare’s guidelines. For instance, some doctors prescribed the device before 90 days had not yet elapsed without any healing, and other doctors prescribed the device for patients who had injuries that were not covered under Medicare’s guidelines. When this occurred, Rigsby often forged the patient’s medical records to make it appear as though the claim was payable under Medicare’s guidelines, when in fact Medicare should not have paid the claim. For instance, Rigsby falsified doctors’ chart notes to make it appear as though Medicare’s 90-day rule was satisfied. Rigsby also deleted portions of physicians’ chart note that described patients’ injuries which were not covered by Medicare and changed the note to make it appear as though the patients had injuries that were covered. On some occasions, Rigsby submitted orders where the physician had not ordered a bone growth stimulator at all. Rigsby also forged physicians’ signatures on prescriptions and Medicare Certificates of Medical Necessity.

In July 2009, Orthofix fired Rigsby after discovering his fraud scheme. Immediately thereafter, Rigsby and Orthofix sales personnel devised a scheme to allow Rigsby to continue to submit bone growth stimulator orders to Orthofix through a new front company that Rigsby created. Rigsby took numerous steps to conceal his affiliation with the front company so that Orthofix compliance personnel would not detect that he was still doing business with the company. Rigsby continued to submit orders for stimulators, sending the orders in through separate individuals. Even though Rigsby had been fired for falsifying medical records, he continued to manipulate patient medical records and forge physicians’ signatures until Orthofix finally severed its relationship with him in 2011. Through his scheme, Rigsby caused Medicare and other federal insurance programs to pay more than $400,000 for bone growth stimulators that should not have been paid.

Rigsby also paid kickbacks to health care professionals to induce them to order Orthofix stimulators. For instance, Rigsby paid the person who was responsible for ordering stimulators at one of the largest medical practices in Tennessee. Rigsby approached this person and asked if he could pay this person in return for steering stimulator orders to Orthofix. The person agreed, and Rigsby left an envelope with $200 in cash at the person’s house. In another instance, Rigsby entered into an arrangement to pay a nurse in Morristown, Tenn., each time that the surgeon who employed her ordered an Orthofix stimulator. Rigsby left an envelope of cash, between $200-$300, in the back of the nurse’s truck after the surgeon began to order stimulators.

In addition to the Rigsby sentence, the Orthofix investigation has to date resulted in a number of felony charges against employees and contractors of Orthofix, including the following:
In December 2012, Orthofix was convicted of obstruction of a federal audit and ordered to pay $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
In January 2013, Tom Guerrieri, the former vice president of sales for Orthofix, was sentenced to eight months in prison and ordered to pay $50,000 in fines and forfeiture for paying kickbacks;
In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home confinement, and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
In January 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home confinement as part of a two year probation sentence, forfeiture of $40,000 and a $4,000 fine for committing health care fraud;
In January 2013, Mitchell Salzman, a former regional manager for Orthofix, was sentenced to one year of probation, with the first three months to be served in home confinement, and ordered to pay a $2,000 fine for committing perjury;
In January 2013, Michael McKay was sentenced to one year of probation, with the first three months to be served in home confinement, forfeiture of $10,000 and a fine of $3,000 for committing health care fraud; and
In February 2013, Brian Racey, a former Orthofix territory manager, was sentenced to one year of probation and ordered to pay a fine for committing health care fraud;

Judge Saylor scheduled sentencing for August 9, 2013. The statutory maximum penalty on the charge of health care fraud is 10 years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment. The statutory maximum penalty on the charge of paying kickbacks is five years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment.

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Dana Gonzalez Community Mental Health Center Program Coordinator Sentenced to 70 Months for Role in $63 Million Fraud Scheme

Source- http://www.justice.gov/opa/pr/2013/May/13-crm-552.html

WASHINGTON – A former program coordinator at the defunct health provider Health Care Solutions Network Inc. (HCSN) was sentenced in Miami to 70 months in prison today for her role in a $63 million fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Special Agent in Charge of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement after sentencing by U.S. District Judge Cecilia M. Altonaga.

Dana Gonzalez, 43, of High Point, N.C., pleaded guilty on March 6, 2013, to conspiracy to commit health care fraud. In addition to the prison sentence, Gonzalez was also sentenced to three years of supervised release and ordered to pay $19,428,120 in restitution.

During the course of the conspiracy, Gonzalez was employed as a therapist and program coordinator of HCSN’s Partial Hospitalization Program (PHP). A PHP is a form of intensive treatment for severe mental illness.

According to court documents, HCSN of Florida (HCSN-FL) operated community mental health centers at two locations. Gonzalez was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid.

Gonzalez admitted that she routinely fabricated medical records for purported mental health treatment that were used to support false and fraudulent claims to health care benefit programs, including Medicare and Medicaid. Gonzalez admitted that she routinely fabricated these medical records, despite knowing that many of the ALF referral patients were ineligible for PHP services because many patients suffered from mental retardation, dementia and Alzheimer's disease. Gonzalez, an unlicensed clinical social worker intern at the time, also admitted to providing unlicensed therapy to PHP patients when licensed therapists were absent.

In total, Gonzalez admitted that during her employment at HCSN, she and her co-conspirators submitted approximately $46,959,975 in false and fraudulent claims. According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

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Dr. John N. Heary Sentenced To 2 1/2 Years In Prison For Health Care Fraud

Source- http://www.justice.gov/usao/ohn/news/2013/10mayheary.html

A Medina chiropractor was sentenced to 30 months in prison for overbilling Medicare and insurance companies more than $1.8 million for medical equipment and treatment that were not medically necessary, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.

Dr. John N. Heary, 39, previously pleaded guilty to seven counts of health care fraud.

“This doctor took advantage of programs designed to provide care and support for the old and the sick,” Dettelbach said. “Our office and the Justice Department are committed to rooting out health care fraud in all its forms.”

“Most medical professionals endeavor to provide quality health care services and submit proper claims for payment to the Medicare program” said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “This doctor chose to exploit Medicare and other insurers for illegal personal gain and paid the price for his criminal acts. The OIG will continue to work with our law enforcement partners to combat fraud in the health care system and protect vital taxpayer dollars.”

Heary did business under his name and two corporate entities. HealthSource of Medina was the operating name of Heary’s chiropractic practice until October 2009. Medina Health & Wellness Center, Inc. was the corporate name under which Heary sold durable medical equipment, according to court documents.
Both entities were located at 433 West Liberty Street, Medina, Ohio, 44256, according to court documents.

Heary provided custom-molded ankle-foot orthotics, or “boots”, to patients who did not need them and wrote false diagnoses to justify the billing. He billed Medicare and insurance anywhere from $2,770 to $4,300 for each pair of boots, according to court documents.

He also routinely provided the most expensive back braces without any demonstration of medical necessity or any pursuit of a less costly alternative. He billed Medicare and insurance anywhere from $995 to $1,250 for each back brace, according to court documents.

When patients questioned the necessity of this medical equipment, Heary told them tha they were part of a “free package deal” and would be covered by their insurance, according to court documents.

Hearly also billed for supervised physical therapy often when the patients were not supervised. He also billed for an hour’s worth of physical therapy when, at most, patients did a half hour, according to court documents.

Heary submitted more than $1.8 million in fraudulent claims to Medicare, Anthem Blue Cross and Blue Shield, Medical Mutual of Ohio and the Ohio Bureau of Worker’s Compensation, according to court documents.

The insurance programs reimbursed Heary for more than $812,000. He will repay that amount in restitution, according to court documents.

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Raymond Arias and Emelitza Arias Clinic Owners Sentenced for Roles in $13.3 Million Medicare Fraud Scheme

Source- http://www.justice.gov/opa/pr/2013/May/13-crm-526.html

Miami residents Raymond Arias, 42, and his wife, Emelitza Arias, 25, have been sentenced in Detroit to 100 months and 12 months in prison, respectively, for their participation in a $13.3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service’s Office of Inspector General’s (OIG) Chicago Regional Office, made the announcement after sentencing by U.S. District Paul D. Borman of the Eastern District of Michigan.

The Ariases were also sentenced to two years of supervised release following their respective prison terms. At sentencing on May 7, 2013, the court ordered Raymond Arias to pay $5.4 million in restitution. Today at sentencing, the court ordered Emelitza Arias to pay $531,883 in restitution, jointly and severally. The defendants agreed to forfeit approximately $40,000 seized by federal agents during the investigation.

The Ariases pleaded guilty on Oct. 17, 2012, to one count of conspiring to commit health care fraud. According to the plea documents, beginning in approximately 2009, Raymond Arias opened Elite Wellness where he submitted claims to Medicare for infusion therapy treatments that were never rendered. In three months, Elite Wellness submitted in excess of $10 million in claims to Medicare. Emelitza Arias joined the scheme by opening a second clinic, Carefirst Physical Therapy & Rehabilitation Center, which submitted approximately $940,000 in claims to Medicare for infusion therapy treatments that were never rendered.

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James N. Hood and Cynthia Marsalis Hood Sentenced For Health-Care Fraud

Source- http://www.justice.gov/usao/mn/jameshoodsentenced.html

MINNEAPOLIS—Earlier today in federal court in Minneapolis, a North Oaks couple was sentenced for committing health-care fraud, specifically making false statements to garner, county, state, and federal benefits and assistance for their disabled children. James N. Hood, age 69, was sentenced to 42 months in federal prison and ordered to pay a $200,000 fine on one count of mail fraud, one count of health care fraud, and one count of theft of public money. His wife, Cynthia Marsalis Hood, age 55, was ordered to serve three years of probation and pay a $300,000 fine on one count of mail fraud and one count of making a false statement for use in determining rights to Social Security benefits. The couple was also ordered to pay restitution in the total amount of $483,312.82 to the agencies victimized by this crime. The Hoods were charged on October 1, 2012, and pleaded guilty on October 24, 2012.

In sentencing the couple, U.S. District Court Judge Joan N. Ericksen reiterated that this was not a victimless crime. She said these programs were meant for people in financial need, and because of the wrongdoing of the Hoods and other fraudsters, these programs could become at risk. She also said that the couple clearly knew right from wrong and took this action for their own personal gain.

Following today’s sentencing, Daniel Seymour, Resident Agent in Charge of the Social Security Administration-Office of Inspector General’s (“SSA-OIG”) St. Paul Office, said, “SSA-OIG worked with federal, state, and local law enforcement partners to bring the investigation of James and Cynthia Hood to a successful conclusion. That investigation revealed that the Hoods, despite owning more than $10 million in investments, property and more, stole more than $80,000 in Supplemental Security Income (“SSI”) payments from the federal government. SSI provides a base-level, safety net income for uninsured aged, blind, or disabled individuals with very limited income or resources. The successful prosecution of this case demonstrates what can be accomplished when law enforcement partners work together to combat fraud, waste, and abuse of taxpayer dollars. SSA-OIG is gratified to see this case brought to justice, and is committed to continuing to protect SSA programs from fraud.”

The court documents on file in this case provide that during a five-year period, from January 2006 to April 2011, the couple stole approximately $400,000 in state and federal Medicaid money in addition to the $80,000 in Social Security benefits noted above. To that end, James Hood prepared false federal income tax returns that Cynthia Hood joined him in signing. Those returns were the basis of subsequent benefit applications. In addition, the couple offered false information in the benefit applications themselves, during related in-person interviews, and through income-update forms.

“Our publicly funded programs are meant to serve those in need and every dollar stolen is a dollar taken from a struggling family. Today’s sentencings send a clear message that fraud, waste, and abuse of public funds is not a victimless crime and will not be tolerated in Minnesota,” said Minnesota Department of Human Services Inspector General Jerry Kerber. “Today’s sentencings are the result of an on-going collaborative effort between federal, state, and county governments to fight fraud and abuse in health care and together we will continue to enforce the integrity of public programs.”

Following Hurricane Katrina in 2005, the Hood family, residents of New Orleans at the time, visited several states and eventually decided that Minnesota provided a high quality of life and the best health care and educational resources for their disabled children. After they moved to Minnesota, they applied for a variety of aid on behalf of those children, including, but not limited to federal Social Security supplemental income benefits, State Medical Assistance, Cost-Effective Health Insurance, and Community Alternatives for Disabled Individuals. They also obtained medical insurance assistance from Louisiana.

Eligibility for many benefit programs is based on the applicant’s disabilities and, for children, the parents’ income and resources as well as their financial contributions. To receive Social Security Supplemental Security Income benefits, for example, a single applicant cannot own more than $2,000 in income and assets, excluding a house and vehicle. To secure benefits for themselves, the Hoods falsified government documents and lied to government officials.

Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health and Human Services-Office of Inspector General for the region that includes Minnesota, said of the case, “The Hoods seem to have forgotten that Medicaid exists for the country’s most needy citizens, not to enrich those who have achieved financial security. We will continue to work with our federal, state, and local law enforcement partners to ensure that these health care dollars are protected, and criminals who would defraud taxpayers are held accountable.”

During all times relevant to this case, James Hood was the sole heir to family estates and held substantial stock in AT&T, General Electric, and Exxon Mobil, among other companies. His dividend income totaled as much as $156,000 in a given year. He also maintained more than 65 bank accounts, which netted up to $183,000 in interest income annually. Moreover, he owned Iowa farmland and received farm-related payments from the U.S. Department of Agriculture’s Farm Service Agency as well as the State of Iowa. In 2005, the farm yielded Hood income of $187,910.98, but no farm-related values or incomes were reported in his benefit applications or income updates. Likewise, he failed to disclose significant financial gifts received from family trusts. During much of this time, James Hood also served as a professor at Tulane University.

Yet, in 2005, the couple applied for Medical Assistance and, in their application, listed only James Hood’s teaching salary and a small amount of dividend income. Moreover, when they applied for health insurance assistance, they failed to disclose that they were simultaneously seeking and receiving insurance assistance from the State of Louisiana.

In addition, Cynthia Hood repeatedly made false statements to the SSA in support of her children’s continued eligibility for Social Security Supplemental Security Income. Specifically, in 2006, she stated that her husband lived in Louisiana. She falsely reported that she did not own any homes, vehicles, stocks, bonds, or property. And she reported that she only had one bank account with a balance of $1,400. In fact, at the time, Cynthia Hood held at least 16 bank accounts jointly with James Hood. Later, she reported to the SSA that her Minnesota household only consisted of herself and her three children, claiming her husband lived in Iowa. In truth, her husband was living with her and financially supported the household.
In 2007, the couple submitted a renewal application with the Minnesota Health Care Program, which stated that James Hood was on unpaid leave from Tulane. In that document, the only income indicated was the children’s Social Security disability benefits. Similar statements were also made thereafter.

Ramsey County Attorney John Choi said, “I am grateful for the hard work that my staff put into investigating and confirming the facts of this case prior to handing it onto the U.S. Attorney’s Office. We take fraud very seriously and are especially thankful for the cooperative working relationship with the (Minnesota) Department of Human Services in this investigation.”

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