In the continued prosecution of the mental health company, American Therapeutic Corporation, its management company Medlink Professional Management Group Inc, and various owners, doctors, therapists and other participants to a fraudulent Medicare billing scheme resulting in over $200 million in medically unnecessary services, the Department of Justice,on November 30, 2011, announced that Joseph Williams, owner and operator of Avondale Manors Retirement Home and the Diversified Marketing Group Inc., in Pompano Beach Florida, pled guilty to receiving kickbacks from American Therapeutic Corporation (“ATC”).

In this particular part of the Medicare billing scheme, Mr. Williams received monetary kickbacks from ATC in exchange for delivering patients to ATC to receive “partial hospitalization program services” for which the patients were ineligible to receive.  ATC paid Mr. Williams $30.00 per patient for each day the patient attending ATC.

Mr. Williams also pled guilty to fraudulently billing Medicaid for services allegedly provided at his Avondale Retirement Homes.  Mr Williams paid the owners and operators of halfway houses for Medicaid enrollees’ personal identifier information. Mr. Williams used that information to bill Medicaid for services the patients never received.

Mr. Williams is facing a maximum prison term of ten years and a $250,000 fine for each count.

This week three cases involving the fraudulent billing of Medicare for services or supplies that were never provided illustrate that Medicare Fraud is pervasive nationwide.

In Louisville, Kentucky authorities are tracking down Rodolfo Bouza owner of Newberg Services Inc., for fraudulently billing Medicare for $750,000 for bandages and durable medical equipment that were never produced.  In court documents Bouza’s scheme allegedly started in Miami, Florida and spread nation wide.

In Kittery, Maine Peter Ensinger was convicted for billing Medicare and other insurance companies for products that were never delivered to the patients, billing for more expensive products than the product that was actually delivered, and for continuing to bill for the product after the patient had returned the equipment.

In Humble, Texas Lula Thurman pleaded guilty to bilking Medicare and Medicaid of $483,833 by utilizing special modifier codes established for replacing medical equipment lost or damaged during a catastrophe or disaster such as Hurricane Katrina.  Thurman, owner of LT’s Faith-N-Action provided her customers new wheelchairs utilizing this code even though the customers did not qualify to receive the equipment under that code.

On Tuesday October 11, 2011, the Department of Justice sentenced Mr. Bassey Monday Idiong, of Humble, Texas, to thirty-three months in prison for his role in a Medicare Fraud scheme.

The fraud involved billing  Medicare for expensive orthotics referred to as “arthritis kits” that were medically unnecessary.  Each arthritis kit cost approximately $4,000.  According to the Department of Justice’s press release dated October 12, 2011, court documents showed that Mr. Idiong billed Medicare for two such kits for a beneficiary that only had one leg.

Additionally, Mr. Idiong paid patient recruiters kickbacks in exchange for Medicare beneficiary names for whom Mr. Idiong would submit billing to Medicare.

In total Mr. Idiong, through his company B.I. Medical Supply L.L.C. billed Medicare approximately $846,000 in fraudulent charges.

In addition to Mr. Idiong’s prison term, he was also ordered to pay $527,023 in restitution.

As discussed in previous blogs, the home health industry is blatantly ripping off Medicare to the tune of hundreds of millions of dollars.  The Medicare Fraud Strike Force is slowly making inroads into this area of fraud.  With continued funding, and successful prosecution, this Strike Force may actually decrease the incidence in fraud in this health field industry.

The Medicare Strike Force in Florida is HOT, HOT, HOT!

In another banner week for the Florida Medicare Strike Force, the Department of Justice announced three new prosecutions of Medicare Fraud, totalling approximately $225 million. The three cases noted below not only demonstrate the astonishing monetary amounts prevalent in these health care fraud cases, but also demonstrate a disturbing trend in the perpetration of the fraud:  the recruiting of Medicare beneficiaries through the use of kickbacks and bribes in order to submit false claims.

In the three reported cases, all three schemes included paying Medicare beneficiaries kickback and bribes to obtain said beneficiaries billing information in order to submit claims for services that were either medically unnecessary or never provided.

In the first case reported on Monday September 19, 2011, on the Department of Justice’s (DOJ) website, Marianella Valera, owner of American Therapeutic Corporation, was found guilty of orchestrating a $205 million Medicare Fraud scheme.  Between 2002 and October 2010, Valera and her cohorts submitted false claims for treatment of severe mental illness for patients who did not qualify for such treatment, as such, the treatments were medically unnecessary or not provided.  In addition, as part of the scheme, kickbacks and bribes were paid to Medicare beneficiaries for their billing information in order to submit the false claims for the services that were medically unnecessary or never provided.

In the second case reported on Monday September 19, 2011, on the DOJ’s website, Adrian Chalarca was convicted of Medicare Fraud for submitting false claims between 2009 and 2010 for physical therapy services that were never provided.  As in the trend noted above, Chalarca and his co-conspirators paid kickbacks and bribes to Medicare beneficiaries to obtain their billing information.  They used that billing information to submit claims totaling $757,654 for services that were never provided.

The third case reported September 21, 2011, on the Department of Justice’s website, ten people in Miami conspired to fraudulently bill Medicare for $25 million in home health services.  The ten people worked for ABC Home Health Inc., and Florida Home Health Providers Inc.  In addition to falsifying records for Medicare beneficiaries to make it appear the patients qualified for such services, the ten people paid said beneficiaries kickbacks in order to use their information to bill for services that were either medically unnecessary or never provided.

According to a USA Today article printed on September 2, 2011, government health care fraud prosecution, in the first eight months of 2011, was 85% higher than last year.  This rise is attributed to increased funding and improvements to investigative tools such as the creation of HEAT task force – discussed in previous blogs.

If the first two weeks of September 2011 are an indication, these numbers are going to continue to rise and quickly.  On September 2, there were two reports of Medicare fraud convictions.  The first one out of Miami Florida, where Jasmine Williams of Thirdage.com reported that a Miami area nurse pled guilty to Medicare fraud charges for home health services that were either medically unnecessary or never provided.  Between 2006 and 2009, this nurse, Farah Perez, recruited Medicare beneficiaries who allowed the Florida Home Health Care Providers, Inc. to bill for medicare services.  In exchange for these referrals, Nurse Perez received kickbacks from the home health company.

The second story reported September 2, 2011, comes from Detroit, where Robert Snell of detnews.com reported the prosecution of eighteen people in Detroit for Medicare fraud.  In what appears to be a disturbing trend in health care prosecution – fraudulent billing for home health services – these eighteen people were prosecuted for billing Medicare for home health services that were not medically necessary or even provided.  This particular scheme included billing for psychotherapy services for persons who were dead.

The Medicare Strike Task force, part of HEAT,  announced today, September 8, 2011,  its indictment of 91 people nationwide who fraudulently billed Medicare to the amount of 295 million.  The accused include doctors, nurses and other health care professionals who fraudulently billed for a wide spectrum of medical goods and services including home health care services.  In Houston, Texas two people are responsible for $62 million in false billing for home health care services and durable medical equipment.  In another trend in Medicare fraud, the durable medical equipment equates to wheelchairs.  As in the other two cases mentioned above, these Houstonians are accused of providing Medicare benificiaries’ information to home health service companies in exchange for kickbacks.  The home health service companies then billed Medicare for services that were medically unnecessary or never provided.

As is evident in these three reports of health care fraud, and in other posts from The Healthcare Fraud Blog, fraud is rampant in the home health service industry.  The most common fraudulent billing is for wheelchairs and services that are not medically necessary or were never provided.  Hopefully with continued success and funding the government’s task force will be able to identify fraudulent billing before it reaches the dizzy proportions such as the indictment reported today.

Estimates are that healthcare fraud costs the taxpayers between 60 to 100 billion dollars a year. Regardless the exact cost, the loss is simply too staggering for the federal government to continue to absorb. And continue it does, on Tuesday June 7, 2011 there were three instances of health care fraud reported in the news. The first case was reported from Atlanta, Georgia where a psychologist pleaded guilty to two counts of health care fraud for billing, between July 2007 and October 2009, for counseling services to patients in nursing homes, which he did not actually provide. What makes this case most egregious is the fact that a number of the patients he continually billed for were in fact deceased.

The second case involves the City of Dallas, Texas. The City will pay 2.5 million dollars to settle a case regarding allegations that the City fraudulently billed Medicare and Medicaid for ambulance services provided in response to 911 calls between the years 2006 through 2010. The City allegedly required that all the billing for ambulances dispatched in response to 911 calls be coded at the highest levels of reimbursement regardless of the actual services provided.

Finally, the third case also takes place in Texas. An orthodontist in Amarillo billed for services that he did not provide. Between the years 2008 and 2010, his assistants performed the services that were billed for while he was out of town.

What, if anything, is being done to prevent such fraud, waste and abuse of the government health care systems that results in such exorbitant losses to the taxpayers? In 2009, the Department of Justice and the Department of Health and Human Services, Office of the Inspector General responded by forming the Health Care Fraud Prevention and Enforcement Action Team (HEAT). HEAT is teams of federal investigators whose mission it is to crack down on persons and entities, as mentioned above, from perpetrating fraud against the government health care systems. HEAT’s criminal investigations and resources are in addition to the civil federal qui tam cases and recoveries under the federal False Claims Act. Currently the teams are active in the Baton Rouge, Brooklyn, Detroit, Houston, Los Angeles, Miami-Dade and Tampa Bay areas. With a new mission, adequate funding, and cooperation between local, state and federal health care agencies, the goal is to prevent further fraud from occurring while increasing the amount of monies recovered from existing fraudulent activity.

Were you aware that fraud and abuse accounts for almost ten percent of total Government Medicaid and Medicare spending on healthcare, or approximately $120 billion per year? The potential harm caused by fraud in the Medicaid/ Medicare healthcare industry cannot be overstated. There are six types of qui tam cases often pursued in the area of Medicaid / Medicare healthcare fraud. They include:

1. Fraudulent Billing
2. Anti-Kick Back
3. Self-Referral
4. Best Price
5. Best Value
6. Off-Label Marketing

The types of False Claims Act qui tam claims involving Medicaid / Medicare healthcare vary depending on the level of care needed and provided. Under the category of "Fraudulent Billing," there are five potential areas in which qui tam cases arise in the area of “treatment issues” for which Medicare or Medicaid claims are submitted. They are:

1. Total Neglect or No Services
2. Worthless Services
3. Inadequate Services and Products
4. Standard of Care
5. Aggressive Patient Treatment

Other areas of billing fraud may involve misrepresentation of credentials, upcoding of services, unbundling of services, and misrepresentation of patient data or populations.

Today we will expound on the treatment issue of Total Neglect or No Services Provided. The most obvious case of FCA liability imposed on a physician for fraudulent billing occurs when he submits a claim for services he did not provide. For example, a physician submitted reimbursement claims to Medicare for surgeries he never performed. The Government sued to recover for payment of thirty-one false claims, and the court found him liable.

Check back next month when we will explain the treatment issues, "Worthless Services" and "Inadequate Services" as they relate to Medicare / Medicaid fradulent billing qui tam cases.

Late last month federal authorities in a healthcare fraud strike force moved to shut down a massive Medicare fraud operation in Miami. Four people were arrested, two of whom were top officials at American Therapeutic Corporation, a leading chain of community mental health centers and charged them with Medicare fraud. It’s alleged the Miami company preyed on patients with severe dementia to bill $200 million for services it never delivered. American Therapeutic Corp is among the nation’s largest chain of community mental health centers licensed by Medicare.

The ATC case is part of an ongoing push by federal officials to crack down on widespread Medicare and Medicaid fraud. Since its inception in 2007, the strike force has indicted more than 825 individuals nationwide. According to Assistant Attorney General Lanny Breuer, the ATC case was the largest fraudulent billing scheme ever prosecuted by the strike force.

These arrests come just one week after an Armenian-American crime group was charged in New York with operating phantom healthcare clinics that tried to cheat the federal program out up to $163 million, which US authorities claimed was the “the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise.”

“Medicare and Medicaid fraud are problems for our country’s health care system”, says attorney and partner Joel Androphy of Berg & Androphy. “Criminal and civil sanctions are necessary.”

In the previous fiscal year, the department of Health and Human Services reported winning and settling over $1.63 billion worth of fraud cases in court. In addition to this fraud money returned, the Health Care Fraud and Abuse Control Program, within the HHS, reported the transfer of $2.51 billion in new funds to the Medicare Trust Fund. A total of 583 defendants were convicted on health care fraud-related charges.

On the whole, $2.576 billion was deposited with the Department of the Treasury and the Centers for Medicare and Medicaid Services. The money was gained through criminal fraud penalties, civil monetary penalties, and gifts and bequests made toward the funds.

The Office of Inspector General excluded a total of 2,556 individuals and entities from the healthcare sphere during the previous year. These were based on criminal convictions for crimes related to Medicare and Medicaid and other healthcare programs, and also expanded to patient abuse or neglect.

This week a Pennsylvania doctor who admitted to over $1 million in false insurance claims submitted to Medicare and private insurers for over 5 years was sentenced to a year in prison. The doctor, John Kristofic, age 62, already paid $3.3 million in retribution to the government following his admission of guilt in January of this year.

Dr. Kristofic was found guilty for submitting false claims for services never rendered between 2003 and 2008. The doctor had been accused of healthcare fraud before, but had never been found guilty by a court until this week’s verdict. Chief U.S. District Judge Donetta Ambrose pointed out that when a doctor such as Kristofic commits healthcare fraud, it’s a national cost and everyone suffers, particularly in today’s tough economic climate. “It’s cheating… It’s stealing.” Ambrose said.

In 1991 Dr. Kristofic had a brush with the law when he was convicted of withholding assets on a federal form. After that incident, he only lost his medical license for a month. Now, it’s likely that the internal medicine specialist never be allowed to practice medicine again.

As harsh as this punishment will be for Kristofic, it’s neither as harsh as it could have been (the maximum sentence for this level of fraud is 3 years) nor undeserved.