34 Individuals Charged in $258 Million Medicare and Medicaid Fraud Schemes

DOJ News

34 Individuals Charged in $258 Million Medicare and Medicaid Fraud Schemes

Twenty-six individuals in the state of California, fourteen of whom were doctors or medical professionals, and eight individuals in Arizona and Oregon, were charged for their alleged involvement in Medicare and/or Medicaid fraud schemes totaling $258 million in fraudulent billings.

The charges allege that the defendants billed federal healthcare programs for services that were not medically necessary or were not actually provided to beneficiaries, including medically unnecessary cardiac treatments and testing and billing Medi-Cal, the California Medicaid program, for family planning services, testing, and prescriptions for patients that did not exist. The government also brought charges alleging various kickback schemes—in one scheme, the defendants allegedly paid commissions to obtain and bill for medically unnecessary compounded drugs (which were reimbursed at higher rates), failed to charge patient copays, and directed staff to use gift cards for those copayments to make it appear they had been paid. The cases will be prosecuted in the Central District of California.

The DOJ Press Release is here.

Compounding Pharmacy and Private Equity Firm to Pay $21.36 Million to Settle False Claims Act Allegations

Compounding pharmacy Diabetic Care Rx LLC d/b/a Patient Care America (PCA), two of its executives, and private equity firm Riordan, Lewis & Haden Inc. (RLH) agreed to settle allegations that they defrauded the TRICARE program, in violation of the False Claims Act, through a scheme to pay kickbacks to outside “marketers” in exchange for referrals of military members and their families. The government alleged that marketers paid telemedicine doctors who prescribed expensive pain and scar creams to patients regardless of whether they were medically necessary, and in some cases without even speaking to the patients.

The government also alleged that PCA and a marketer paid patient copayments through a sham charitable organization. RLH was implicated in the scheme because it allegedly sanctioned the plan to pay outside marketers and financed their kickbacks. PCA and RLH agreed to pay a combined $21,050,000, and PCA’s two executives will pay at least $300,000, and $12,788, respectively, based on the defendants’ ability to pay. The settlement resolves a qui tam lawsuit originally filed by two former PCA employees, in which the United States intervened. The defendants did not admit liability as part of the settlement.

The DOJ Press Release is here.

Hospital Administrator Sentenced to 10 Years in Prison for $16 Million Medicare Fraud Scheme

A hospital administrator was sentenced to ten years in prison for his role in a $16 million Medicare fraud scheme. The sentencing follows a five-day trial, after which the defendant was convicted of one count of conspiracy to receive health care kickbacks, two counts of violating the federal Anti-Kickback Statute, and one count of conspiracy to commit healthcare fraud.

The evidence presented at trial reflected that, from 2011 until 2013, the defendant and his co-conspirators engaged in a scheme to pay bribes and kickbacks—disguised as salary and transportation payments—to group home owners and patient recruiters in exchange for referrals of Medicare patients to medical facilities for partial hospitalization program (PHP) services, a form of intensive outpatient treatment for severe mental illness. The evidence also demonstrated that the defendant knew many patients did not qualify for and were not provided these services.

As part of his sentence, the defendant will also be required to pay $6,277,575.77 in restitution and forfeit $158,260.

The DOJ Press Release is here.

Health Care Physical Therapy Clinic Owner Pleads Guilty to Drug Diversion Scheme

The owner of Abyssinia Love Knot Physical Therapy L.L.C. pleaded guilty to one count of conspiracy to distribute controlled substances arising from an alleged drug diversion scheme.

As part of her guilty plea, the defendant admitted that she conspired to employ physicians who would write medically unnecessary prescriptions for controlled substances, including oxycodone and oxymorphone. The defendant also facilitated patient visits with doctors, and accepted payment from patients and/or patient recruiters, in exchange for physician visits where medically unnecessary prescriptions would be provided.

The defendant also admitted that Medicare beneficiaries were required to sign physical therapy documents to receive prescriptions for controlled substances, regardless of medical necessity. As part of her guilty plea, the defendant admitted she provided over 500,000 oxycodone pills. The defendant will be sentenced in the Eastern District of Michigan on Dec. 19, 2019. 

The DOJ Press Release is here.