• “Compound King” and Wife Sentenced in $21 Million Health Care Fraud Scheme; Fugitive Sought

    Justice 018

     

    A Houston pharmacist and his wife were sentenced today for their roles in an approximately $21.8 million Department of Labor (DOL) - Office of Workers Compensation Programs and Federal Employees Compensation Act fraud scheme.

    George Philip Tompkins, 75, of Houston, Texas, the self-proclaimed “Compound King” and former owner of Piney Point Pharmacy, was sentenced to 10 years in prison. Marene Kathryn Tompkins, 68, also of Houston, the former vice president of Piney Point Pharmacy, was sentenced to 30 days of home confinement and three years of supervised release. Both were sentenced by U.S. District Judge Sim Lake of the Southern District of Texas, who presided over the trial of George Thompkins and the guilty plea of Marene Tompkins. Judge Lake also ordered George Tompkins to pay $12,300,381.36 in restitution (and forfeiture) and Marene Tompkins to pay $950,745.10 in restitution (and forfeiture).

    On March 10, 2020, after a six-day trial, George Tompkins was convicted by a jury of conspiracy to pay and receive kickbacks, conspiracy to commit health care fraud, conspiracy to commit money laundering, 11 counts of health care fraud, and three counts of wire fraud. Kathryn Tompkins pleaded guilty on Jan. 3, 2020, to one count of conspiracy to pay kickbacks.

    According to the evidence at trial, George Tompkins and others billed the DOL approximately $21.8 million for medically unnecessary compound gels and creams that were predicated on illegal kickback payments. George Tompkins and Anoop Chaturvedi, 48, a legal permanent resident from India who remains a fugitive on related charges, created the scheme to generate compounded pain cream prescriptions and bill health care programs for injured state and federal employees. George Tompkins and Chaturvedi used separate entities—including George Tompkins’s company, Wellington Advisors—to receive and launder the proceeds of their crimes. Further evidence presented at trial showed that George Tompkins sought to disguise illicit kickback payments as legitimate “marketing” expenses and continued to ship patients compound gels and creams even after patients repeatedly complained they did not want them.    

    Marene Tompkins pleaded guilty before trial. As part of her guilty plea, she admitted that she conspired with her husband and others to pay illegal kickbacks as part of the scheme.

    George and Marene Tompkins were charged in a superseding indictment in November 2018 along with Chaturvedi. Chaturvedi is considered a fugitive and a warrant remains outstanding for his arrest in connection with the charges. Anyone with information about his whereabouts is asked to contact the U.S. Postal Service - Office of Inspector General (USPS-OIG) at 1-888-877-7644.

    A federal criminal indictment is merely an accusation. Chaturvedi is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

    USPS-OIG, DOL-OIG, IRS-Criminal Investigation, U.S. Department of Homeland Security-OIG, and Department of Veterans Affairs-OIG, conducted the investigation. Assistant U.S. Attorney Julie Redlinger charged the case and, with Trial Attorneys Leslie Garthwaite and Devon Helfmeyer of the Criminal Division’s Fraud Section, provided substantial assistance in its prosecution. Trial Attorneys Drew Pennebaker and Sara Clingan of the Fraud Section tried the case and continue to prosecute it.

    The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the Health and Human Services (HHS) Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

    Source

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  • 11 Defendants Plead Guilty in $300 Million Healthcare Fraud

    Justice 010

     

    Just two months after being charged, all 11 defendants implicated in the $300 million Spectrum/Reliable healthcare fraud have pleaded guilty, announced U.S. Attorney for the Northern District of Texas Chad E. Meacham.

    Ten defendants, including two medical doctors, were indicted February 9. An eleventh defendant was charged on March 16.

    Six of the original ten defendants – Laredo-based internal medicine doctor Eduardo Canova, family medicine doctor Jose Maldonado, nurse practitioner Keith Wichinski, Reliable Labs cofounder Abraham Phillips, marketing firm owner Juan David Rojas, and marketing employee Laura Ortiz – filed plea papers on February 11, just two days after being indicted. The final defendant – Reliable Labs cofounder Biby Kurian – filed plea papers on April 6 and entered her plea on April 13.

    “The swift resolution of this case is a testament to both our office and to the investigative agencies that worked diligently to ensure our case was airtight,” said U.S. Attorney Chad Meacham. “We cannot allow physicians’ judgement to be clouded by financial considerations.”

    “This proactive investigation identified an illegal kickback conspiracy that resulted in substantial evidence and a guilty plea from each defendant,” said Dallas FBI Special Agent in Charge Matthew J. DeSarno. “I commend our partners and the Northern District of Texas for their meticulous work in unraveling the schemes perpetrated by these defendants, and for their work to protect American taxpayers and the integrity of our healthcare system.”

    According to court documents, the founders of several lab companies, including Unified Laboratory Services, Spectrum Diagnostic Laboratory, and Reliable Labs LLC, paid kickbacks to induce medical professionals to order medically unnecessary lab tests, which they then billed to Medicare and other federal healthcare programs.

    The medical professionals -- including Dr. Canova, Dr. Maldonado, and Mr. Wichinski – accepted the bribes and ordered millions of dollars’ worth of tests.

    Meanwhile, Unified, Spectrum, and Reliable disguised the kickbacks as legitimate business transactions, including as medical advisor agreement payments, salary offsets, lease payments, and marketing commissions.

    The labs, through marketers, paid doctors hundreds of thousands of dollars for “advisory services” which were never performed in return for lab test referrals. They also paid portions of the doctors’ staff’s salaries and a portion of their office leases, contingent on the number of lab tests they referred each month. In some instances, lab marketers even made direct payments to the provider’s spouse. (When the labs threatened one provider that payments would cease if he didn’t refer more tests, he immediately increased his lab referrals, averaging approximately 20 to 30 referrals per day.)

    Knowing they could disguise additional kickbacks using a provider-ownership model, the founder of Spectrum and Unified, Jeffrey Madison, convinced the co-founders of Reliable to convert Reliable into a physician-owned lab. Reliable offered physicians ownership opportunities only if those physicians referred an adequate number of lab tests. In some cases, they made advance disbursement payment to physicians in an effort to appease the physician and ensure he would not send samples to other labs.

    As a result of these kickbacks, laboratories controlled by the defendants were able to submit more than $300 million in billing to federal government healthcare programs.

    In plea papers, Dr. Maldonado admitted he received more than $400,000 in kickbacks for ordering more than $4 million worth of lab tests; Dr. Canova admitted he received more than $300,000 in kickbacks for ordering more than $12 million worth of lab tests.

    Defendants’ pleas are as follows:

    • Jeffrey Paul Madison, founder of Unified Laboratory Services and Spectrum Diagnostic Laboratory – conspiracy to pay and receive healthcare kickbacks and a substantive count of paying and receiving healthcare kickbacks (two counts)

    • Mark Christopher Boggess, chief operating officer for Spectrum and Unified – misprison (concealment) of a felony

    • Biby Ancy Kurian, co-founder of Reliable Labs, LLC – conspiracy to pay kickbacks

    • Abraham Phillips, co-founder of Reliable Labs, LLC – conspiracy to pay kickbacks

    • Dr. Jose Roel Maldonado, family medicine doctor based in Laredo – conspiracy to solicit and receive illegal kickbacks

    • Dr. Eduardo Carlos Canova, internal medicine specialist based in Laredo – conspiracy to solicit and receive illegal kickbacks

    • Keith Allen Wichinski, board-certified nurse practitioner based in San Antonio – conspiracy to solicit or receive kickbacks

    • David Michael Lizcano, owner of DCLH, a marketing firm engaged by Unified, Spectrum, and Reliable – conspiracy to pay and receive healthcare kickbacks and a substantive count of paying and receiving healthcare kickbacks (two counts)

    • Laura Ortiz, sister of David Lizcano and employee at his marketing firm – conspiracy to pay and receive healthcare kickbacks

    • Juan David Rojas, owner of Rojas & Associates, another marketing firm engaged by Unified, Spectrum, and Reliable – conspiracy to pay and receive healthcare kickbacks

    • Sherman Kennerson, investor in Unified (charged via criminal information) – conspiracy to pay kickbacks

    Under the applicable statutes, Mr. Madison and Mr. Lizcano face up to 15 years each in federal prison. Mr. Kennerson, Ms. Ortiz, Mr. Phillips, Ms. Kurian, Dr. Maldonado, Dr. Canova, Mr. Wichinski, and Mr. Rojas face up to five years; Mr. Boggess faces up to three years.

    “The expeditious resolution of this matter is a testament to the thorough investigation and valuable collaboration between investigative partners and prosecutors,” said Miranda L. Bennett, Special Agent in Charge for the Office of Inspector General of the U.S. Health and Human Services. “We will continue working with our partners to protect federal health care programs and the beneficiaries who depend on these programs for treatment and care.”

    “As the investigative arm of the DoD Office of Inspector General, the Defense Criminal Investigative Service (DCIS) and our colleagues work hard to hold accountable those who undermine Federal health care programs such as TRICARE, “said Acting Special Agent in Charge Gregory P. Shilling of the DCIS Southwest Field Office. "Safeguarding TRICARE not only protects our warfighters, their families, and retirees, but it also preserves valuable taxpayer resources."

    The Federal Bureau of Investigation’s Dallas Field Office – Fort Worth Resident Agency conducted the investigation with the assistance of the U.S. Department of Health and Human Services’ Office of Investigations, the Defense Criminal Investigative Service (DCIS), and the Veterans Affairs’ Office of Inspector General. Assistant U.S. Attorney P.J. Meitl is prosecuting the case.

    Source

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  • 13 Defendants Indicted In $5.4 Million Health Care Fraud Conspiracy

    Justice 007

     

    Acting United States Attorney W. Anders Folk today announced charges against 13 defendants in a multi-million dollar health care fraud conspiracy. The defendants made their initial appearances yesterday before Magistrate Judge David T. Schultz in U.S. District Court.

    According to the allegations in two separate indictments, 13 defendants are charged with participating in a scheme to defraud the Medicaid program. The scheme involved mental health practitioners and interpreters who were associated with Live Better, LLC, a patient services company with offices in Roseville and Minneapolis, and Multicultural Counseling Clinic (“MMCC”), a counseling clinic with offices in St. Paul, Brooklyn Park, and Burnsville. As part of the scheme, the health practitioners and interpreters would submit fraudulent claims through their respective employers for services purportedly provided to Medicaid recipients. In reality, neither the mental health services nor the ancillary interpretation services were rendered. Some defendants participated in this scheme for nearly three years. As a result of the false and fraudulent claims, the Medicaid program paid Live Better and MMCC a total of more than $5.4 million.

    The two separate indictments charge defendants OKACH OKWAYOO KWOT, 51, ELIJAH S. KOLLIE, 62, ABDIRAHMAN YONIS, 33, ALPHONSO VASCO JOHNSON, 58, ILYAS ABDI FARAH, 38, ANAB ARTAN AWAD, 50, AYAN ALI MOHAMUD, 41, ELIFAA HENRY KINYAIYA, 45, VARBAR B. KANNEH, 30, ESKENDER M. YOUSUF, 39, HODAN ABDI HASHI, 52, OMAR ALI OSMAN, 28, and UBAH HASSAN HAGI, 43, with conspiracy and wire fraud.

    This case is the result of an investigation conducted by the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and the Minnesota Attorney General Office’s Medicaid Fraud Control Unit.

    This case is being prosecuted by Assistant U.S. Attorney Angela M. Munoz.

    The charges contained in the indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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  • 20 Months in Prison for Memphis Area Man Offering Kickbacks

    Justice 003

     

    Sought TRICARE Beneficiaries to Receive Expensive Compounded Drugs

    LITTLE ROCK-United States District Judge Brian S. Miller sentenced Bradley Fly, 36, of Germantown, Tenn., to 20 months in federal prison for violating the Anti-Kickback Statute. In July 2019, Fly pleaded guilty to offering two TRICARE beneficiaries’ money in exchange for signing up to receive expensive compounded drugs.

    At sentencing, the United States introduced evidence that Fly bribed two people: his longtime friend (then a Marine reservist), plus an Army National Guardsman, whom Fly solicited while seated courtside at a Memphis Grizzlies game. Fly then facilitated prescriptions for both men and their wives, for which TRICARE paid over $500,000, earning himself over $180,000 in commission.

    Judge Miller heard testimony from the Marine reservist and from a Special Agent with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) that the prescriptions were part of a larger network of prescription generation, including recruiters whom Fly paid for TRICARE beneficiary information and a group of doctors whom Fly used to sign prescriptions without consulting patients.

    “There is no room for kickbacks in the healthcare marketplace,” said Acting United States Attorney Jonathan D. Ross. “Serious penalties and prison await those, like Mr. Fly, who fail to abide by the law. This office and its partners at the FBI and HHS-OIG are committed to rooting out such criminal conduct.”

    “Mr. Fly paid kickbacks generating fraudulent claims to line his pockets without concern for the health and welfare of the patients,” said Miranda L. Bennett, Special Agent in Charge of the HHS-OIG Dallas Region. “We will continue working with our law enforcement partners to pursue individuals defrauding federal health care programs.”

    “By defrauding TRICARE, Mr. Fly disgracefully cheated U.S. Veterans, their families, and American taxpayers,” said FBI Little Rock Acting Special Agent in Charge Jason Van Goor. “We are grateful for our state and federal partners who help us both investigate these cases and protect the financial integrity of our nation’s health care systems.”

    In addition to the 20-month prison sentence, Fly was sentenced to three years of supervised release. The investigation was conducted by HHS-OIG and the FBI and prosecuted by Assistant United States Attorney Alexander D. Morgan.

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  • AG FERGUSON: Mesh Manufacturer Boston Scientific will Pay More Than $8.8 Million for Failing to Disclose Risks of its Transvaginal Mesh Devices

    Justice 030

     

    OLYMPIA — Attorney General Bob Ferguson today announced that Boston Scientific, a medical device manufacturer, will pay more than $8.8 million to Washington for misrepresentations and failure to include serious risks in the instructions and marketing materials for surgical mesh devices.

    Ferguson’s office led the multistate case against Boston Scientific, Washington’s third resolution in the last three years against companies that produce surgical mesh devices. Including today’s funds, Ferguson has garnered approximately $20 million for Washington women who received transvaginal mesh.

    “Boston Scientific’s deception caused women to suffer in deeply personal ways,” Ferguson said. “I hope this money will provide some measure of relief to the thousands of Washington women who live with the undisclosed side effects of these devices every day.”

    In addition to the monetary payment, Boston Scientific must implement legally enforceable corporate reforms that will prevent the company’s harmful conduct from continuing in the future. These corporate reforms include mandatory training for independent contractors, agents, and employees that sell, market or promote mesh, clear disclosures about complications to health care providers, and clear descriptions of complications in terms reasonably understandable to a patient in marketing materials intended to reach patients.

    Washington led a coalition of 48 attorneys general in filing today’s resolution. Washington’s $8.83 million is part of a total nationwide recovery of nearly $188.7 million.

    The money will be added to a larger restitution fund for women who received transvaginal mesh devices, established after Johnson & Johnson paid $9.9 million to Washington on the eve of trial in April of 2019 over the company’s failure to disclose the serious risks of their surgical mesh devices. Ferguson added to that fund in September of 2020 when mesh device manufacturer Bard paid $2.38 million to Washington for similar conduct.

    All women who received transvaginal mesh implants in Washington are eligible to receive funds from the recovery. Between all major transvaginal mesh manufacturers in the United States, tens of thousands of Washingtonians were implanted with transvaginal mesh devices and will be eligible to receive restitution. Attorney General Ferguson’s restitution fund is separate from and not related to any recovery Washingtonians receive in a personal injury lawsuit or class action lawsuit regarding surgical mesh devices. Many lawsuits have been filed across the country regarding these devices.

    So far, Washington has directed more than $11 million to Washington women who received transvaginal mesh devices as the result of an initial claims process after the Johnson & Johnson and Bard recoveries.

    The Attorney General’s Office will announce a second formal claims process in the future. Due to privacy protections, the Attorney General’s Office does not know the identity of the many women implanted with transvaginal mesh in Washington state. Consequently, the Attorney General’s Office cannot reach out to all affected women directly. Affected women who would like to be part of the second claims process can submit their contact information at www.WAAGMeshSettlement.com to receive a claims form when the process opens. For questions about the mesh fund, please email This email address is being protected from spambots. You need JavaScript enabled to view it. for more information. If you have previously submitted a claim at WAAGMeshSettlement.com, we already have your information, and you do not need to do anything further. Depending on the number of new claims, those who have previously received money from the fund may be eligible for additional restitution.

    Background

    Boston Scientific began manufacturing transvaginal mesh devices in the early 2000s. The devices were implanted through the vagina and used to treat two conditions — pelvic organ prolapse, when organs shift from their normal position, and stress urinary incontinence. These conditions are non-life-threatening and can be treated via multiple, surgical and non-surgical methods.

    The devices, made of polypropylene, are permanently implanted into the body to hold up falling organs. Removing the mesh is extremely difficult, and in some instances, impossible.

    Tens of thousands of Washington women, and millions of women worldwide were implanted with devices manufactured by Boston Scientific, Bard, Johnson & Johnson and others.

    Ferguson asserts Boston Scientific failed to adequately disclose serious and life-altering risks [link to complaint] of its transvaginal mesh devices, such as rigid scarring and mesh shrinkage, chronic pain, a heightened risk of infections, and voiding dysfunction, among other complications.

    Boston Scientific knew that some of the most serious risks it failed to include — chronic pain, infections and more — were associated with the use of its mesh devices. It also knew that the impact of these reactions would exponentially increase due to the difficulty of removing the mesh once implanted.

    Boston Scientific no longer markets or sells transvaginal mesh for pelvic organ prolapse, but continues to sell the devices for stress urinary incontinence.

    Details of injunctive terms

    As part of today’s resolution, Boston Scientific is legally required to meet strict injunctive terms for its transvaginal mesh devices, including the following:

    • Boston Scientific must describe complications in terms reasonably understandable to a patient in marketing materials that are intended to reach patients or consumers.
    • Boston Scientific must inform health care providers of significant complications when providing training regarding procedures for insertion and implantation.
    • When submitting a clinical study or clinical data for publication, Boston Scientific must disclose its role as a sponsor and any author’s potential conflict of interest.
    • Boston Scientific cannot cite any clinical study, clinical data, or preclinical data regarding mesh, for which it has not complied with the disclosure requirements in the injunction.
    • Boston Scientific must register all company-sponsored clinical studies regarding mesh with ClinicalTrials.gov.
    • Boston Scientific must adequately inform and train independent contractors, agents, and employees who sell, market, or promote mesh regarding their obligations to report all patient complaints and adverse events to the company.

    Assistant Attorneys General Daniel Allen and Breena Roos and Paralegal Khalid Ali are leading the case for Washington.

    Source

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  • Agawam Man Charged with Defrauding VA Hospitals by Failing to Inspect Medical Gas Systems

    Justice 013

     

    BOSTON – A vendor for several Veterans Affairs medical facilities was charged yesterday in connection with a scheme to profit by billing for, but failing to perform, critical medical gas inspections at VA facilities.

    Chester Wojcik, 49, of Agawam, Mass., was charged with one count of wire fraud.

    It is alleged that from May 29, 2014, through March 5, 2015, Wojcik, as the owner of Alliance Medical Gas Corporation, engaged in a scheme to defraud the VA by creating false invoices and reports for medical gas inspections that never took place. Medical gas supply systems deliver piped gases, including compressed air, oxygen, nitrous oxide, nitrogen, and carbon dioxide, to operating rooms, recovery rooms and patient rooms. Medical gas supply systems must be inspected and maintained regularly to ensure the safety of patients and medical professionals. Wojcik allegedly failed to perform, and then lied about, scheduled inspections of medical gas systems at VA facilities in Sioux Falls, SD, Tuskegee AL, and Montgomery, AL. Wojcik was allegedly paid $8,981 by the VA for services that his company did not perform.

    The charge of wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000 or twice the gross gain or loss from the offense. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

    United States Attorney Andrew E. Lelling; Jeffrey Stachowiak, Acting Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office; and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. Assistant U.S. Attorney Elysa Q. Wan of Lelling’s Health Care Fraud Unit is prosecuting the case.

    The details contained in the charging document are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

    Source

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  • Agawam Man Pleads Guilty to Defrauding VA Hospitals by Failing to Inspect Medical Gas Systems

    Justice 004

     

    BOSTON – A vendor for several Veterans Affairs medical facilities pleaded guilty today to a scheme to profit by billing for, but failing to perform, critical medical gas inspections at VA facilities.

    Chester Wojcik, 49, of Agawam, Mass., pleaded guilty to one count of wire fraud. U.S. District Court Judge Mark G. Mastroianni scheduled sentencing for Nov. 19, 2020.

    From May 29, 2014, through March 5, 2015, Wojcik, as the owner of Alliance Medical Gas Corporation, engaged in a scheme to defraud the VA by creating false invoices and reports for medical gas inspections that never took place. Medical gas supply systems deliver piped gases, including compressed air, oxygen, nitrous oxide, nitrogen and carbon dioxide to operating rooms, recovery rooms and patient rooms. Medical gas supply systems must be inspected and maintained regularly to ensure the safety of patients and medical professionals. Wojcik failed to perform, and then lied about, scheduled inspections of medical gas systems at VA facilities in Sioux Falls, S.D., Tuskegee, Ala. and Montgomery, Ala. Wojcik was paid $8,981 by the VA for services that his company did not perform.

    The charge of wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000 or twice the gross gain or loss from the offense. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

    United States Attorney Andrew E. Lelling; Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office; and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. Assistant U.S. Attorney Elysa Q. Wan of Lelling’s Health Care Fraud Unit is prosecuting the case.

    Source

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  • Agawam Man Sentenced for Defrauding VA Hospitals by Failing to Inspect Medical Gas Systems

    Justice 019

     

    BOSTON – A vendor for several Veterans Affairs medical facilities was sentenced today for defrauding the VA by creating false invoices and reports for medical gas inspections that never took place.

    Chester Wojcik, 49, of Agawam, Mass., was sentenced by U.S. District Court Judge Mark G. Mastroianni to two years of probation. In August 2020, Wojcik pleaded guilty to one count of wire fraud.

    Wojcik, as the owner of Alliance Medical Gas Corporation, engaged in a scheme from May 29, 2014, through March 5, 2015 to defraud the VA by creating false invoices and reports for medical gas inspections that never took place. Medical gas supply systems deliver piped gases, including compressed air, nitrous oxide, nitrogen and carbon dioxide into operating rooms, recovery rooms and patient rooms. Medical gas supply systems must be inspected and maintained regularly to ensure the safety of patients and medical professionals, and to prevent gas leaks, explosions and other safety hazards. Wojcik failed to perform scheduled inspections of medical gas systems at VA facilities in Sioux Falls, S.D., Tuskegee, Ala. and Montgomery, Ala. and later lied to VA facilities and federal investigators about the offense. Wojcik was paid $8,981 by the VA for services that his company did not perform.

    United States Attorney Andrew E. Lelling; Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office; and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. Assistant U.S. Attorney Elysa Q. Wan of Lelling’s Health Care Fraud Unit prosecuted the case.

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  • Air Force Veteran pleads guilty in scams to fleece other Veterans

    Justice 059

     

    An Air Force Veteran in Portsmouth, Va., has pleaded guilty in federal court to charges of wire fraud and aggravated identity theft in connection with various schemes to scam Veterans, according to Department of Justice officials.

    Rita Copeland, 59, operated an organization called “Veteran Services of the Commonwealth,” claiming to provide caregiving, contracting, and rental assistance services to Veterans from 2016 through 2020, according to a court document filed with the U.S. District Court for the Eastern District of Virginia. She also at times operated a contracting business.

    Copeland is an Air Force Veteran, according to court documents and the Department of Veterans Affairs Office of Inspector General, which was involved in the investigation. According to the National Guard Bureau, her last period of service was from August, 1990 to October, 1996, when she was a teletype operator in the Air National Guard. She served briefly in the Air Force Reserve from February to August, 1990. Before that, she was on active duty from 1984 to 1990, serving in a communications squadron.

    She’s accused of convincing a number of Veterans to apply for grants through the Department of Veterans Affairs that are supposed to be used for designated improvements to the Veterans’ residences, then failing to complete some of the work and failing to return the funds. The court document states she used expired or falsified contractor’s licenses in order to entice victims to hire her for home improvements.

    Copeland, who is scheduled to be sentenced on Aug. 27, faces a maximum sentence of 20 years for wire fraud; and a mandatory consecutive term of two years for aggravated identity theft, according to Justice officials.

    “This defendant has been brought to justice for orchestrating numerous fraudulent schemes against Veterans who honorably served their country,” said Raj Parekh, acting U.S. Attorney for the Eastern District of Virginia, in a statement announcing the guilty plea. “For those who steal, misappropriate, and divert funds that belong to our country’s Veterans, this case sends a strong message that you will be prosecuted and held accountable for your inexcusable conduct.”

    Parekh, the FBI’s Norfolk Field Office and the VA Inspector General made the announcement after Senior U.S. District Judge Henry E. Hudson accepted the plea.

    In one case, according to the court document: Copeland began a “purported caregiver relationship” with a Veteran and moved in to a residence with the Veteran. She convinced the Veteran, described only as “B.E.” to apply for a Home Improvements and Structural Alterations grant from the VA, and it was approved. Copeland used some of the grant money for her own benefit, contrary to the designated purpose. She also diverted some of B.E.’s income and retirement payments to her checking account, and applied for and received a $10,000 loan in B.E.’s name, without permission.

    In another case, according to the court document: A married couple paid Copeland about $95,938 in checks, and she fraudulently got other money from the couple, including payments for travel, credit card purchases and bank account transfers. The Veteran applied for grant money from the VA and received $3,400, and signed a contract with Copeland to do the work. She received the money but failed to complete all the work, and didn’t return any money.

    Copeland, according to court documents, offered to help Veterans find housing; and Veterans paid rent and deposits to Copeland, who agreed to act as intermediary with owners. However, Copeland used the money for herself, and this resulted in eviction of various tenants. In some cases, she gave landlords checks for rent or other payments, and then stopped payment on the checks.

    Copeland “used or purported to use actual, perceived or fabricated programs of the Department of Veterans Affairs in order to entice victims to provide the defendant with funds,” the court document stated.

    A search of Charity Navigator and the Better Business Bureau website found no references to Veteran Services of the Commonwealth.

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  • Alabama Doctor Sentenced for Conspiracy to Distribute a Controlled Substance

    Justice 020

     

    An Alabama doctor and her husband were sentenced Tuesday to 52 and 30 months in prison, respectively, for prescribing and dispensing controlled substances without a legitimate medical purpose and outside the course of professional practice.

    Elizabeth Korcz, M.D., 48, and Matthew Korcz, 47, both of Hoover, pleaded guilty to conspiracy to distribute and dispense a controlled substance on Dec. 16, 2020. According to court documents, the defendants admitted to providing dangerous doses of hydrocodone to patients who were not examined by a medical professional and while Dr. Korcz was absent from their clinic. The defendants owned and operated Hoover Alt MD, a purported medical clinic with an in-house dispensary. The defendants did not employ registered nurses or other qualified medical professionals, despite Dr. Korcz’s absences. The defendants admitted to allowing hydrocodone to be dispensed from their in-house dispensary while Dr. Korcz was out of state on multiple occasions.

    “Doctors who abuse their position of trust to unlawfully prescribe opioids for profit are fueling our country’s epidemic,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “The devastation to our communities caused by that betrayal of trust requires just punishment, as the court imposed.”

    “It is disheartening when trusted medical professionals are engaged in the diversion of controlled substances,” said Special Agent in Charge Brad L. Byerley of the Drug Enforcement Administration (DEA). “Doctors have an obligation to ensure that prescription medications are getting into the hands of legitimate patients. This investigation is the result of DEA’s continued commitment to hold accountable those who participate in illegally dispensing controlled substances in our communities.”

    “Health care professionals should be trusted and not exploit their profession to line their pockets,” said Special Agent in Charge Johnnie Sharp Jr of the FBI’s Birmingham Field Office. “I applaud the sentence handed down that holds the Korczs accountable for their greed, fraud and deceit. The FBI and our law enforcement partners will continue to root out fraud in the health care industry at every level and protect the public from their illegal and potentially deadly schemes.”

    The DEA and FBI investigated the case.

    Trial Attorney Devon Helfmeyer of the Criminal Division’s Fraud Section and Assistant U.S. Attorney J.B. Ward of the Northern District of Alabama prosecuted the case.

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  • Albany Woman Charged with Burglarizing Albany VA Building

    Justice 020

     

    ALBANY, NEW YORK – Jamie Varieur, age 42, of Albany, was arrested today and charged with burglarizing a dwelling at the Albany Stratton Veterans Affairs Medical Center (VAMC).

    The announcement was made by United States Attorney Carla B. Freedman; Christopher Algieri, Special Agent in Charge of the Northeast Field Office for the United States Department of Veterans Affairs Office of Inspector General; and Chief Eric Hawkins, Albany Police Department.

    According to the complaint, on August 22, 2021, Varieur broke into and entered the Fisher House, a home on VA property where military and Veteran families can stay while a loved one is in the hospital, where she stole various items from the kitchen. The charge in the complaint is merely an accusation. The defendant is presumed innocent unless and until proven guilty.

    The charge filed against Varieur carries a maximum sentence of 15 years in prison, a fine of up to $5,000, and a term of supervised release up to 3 years. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.

    Varieur appeared today in Albany before United States Magistrate Judge Daniel J. Stewart, and was detained pending further proceedings.

    This case is being investigated by the U.S. Department of Veterans Affairs Office of Inspector General, the Albany Police Department, and the Veterans Affairs Police Service at the Albany VAMC, with assistance from the New York State Police, and is being prosecuted by Assistant U.S. Attorney Alexander P. Wentworth-Ping.

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  • AlixaRx LLC agrees to pay $2.75 million to resolve allegations that it improperly dispensed controlled substances at long-term care facilities

    Justice 004

     

    ATLANTA – AlixaRx, LLC, a national provider of pharmacy services to long-term care facilities, has agreed to pay the United States $2.75 million to resolve allegations that it violated federal law by, among other things, allowing opioids and other controlled substances to be dispensed without valid prescriptions between January 1, 2014 and December 13, 2017.

    “The requirements of the Controlled Substances Act exist to ensure that dangerous drugs are not abused or diverted outside the DEA’s closed system of distribution,” said Acting U.S. Attorney Kurt R. Erskine. “As this settlement makes clear, these requirements are not optional, and our office will vigorously pursue claims against registrants that place their own bottom line over the safety of our citizens.”

    “AlixaRx, LLC spun a web of deception when it engaged in unlawful dispensing practices by abusing the emergency prescription provisions of the Controlled Substance Act,” said the Special Agent in Charge of the DEA Atlanta Field Division Robert J. Murphy. “Such behavior allows for substances to be diverted and sold on the black market with no true measure of accountability. This civil penalty is a proactive step that DEA Diversion and its law enforcement partners can take to discourage other healthcare providers from engaging in such behavior.”

    “The opioid epidemic has devastated communities, families, and individuals across our country. Health care providers who fail to secure these powerful drugs as required do a tremendous disservice to our society and will be held accountable for their actions,” said Special Agent in Charge Derrick L. Jackson of HHS-OIG. “Working closely with our law enforcement partners, our oversight agency will continue to investigate such allegations to protect federal health care programs and the public.”

    “This resolution sends a message that there are rules to be followed when dispensing controlled substances,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “The FBI and our law enforcement partners make it a priority to protect patients from being supplied drugs without valid prescriptions.”

    AlixaRx is a pharmacy company that dispenses prescription drugs, including controlled substances, to long-term care facilities, primarily through on-site automatic dispensing units (“ADUs”). AlixaRx supplied these ADUs with drugs through seven regional hubs located throughout the country. Each hub, as well as each ADU, was separately registered with the DEA as a pharmacy able to dispense controlled substances.

    The Government alleged that AlixaRx violated the federal Controlled Substances Act (“CSA”) in its dispensing pursuant to purported “emergency prescriptions.” In nearly all circumstances, Schedule II controlled substances require a written prescription by a physician, and refills are not permitted by law. The CSA allows pharmacists to dispense Schedule II controlled substances, such as opioid pain medications, without a written prescription only in true emergency situations and, even then, only for the quantity of drugs necessary to treat the patient during the emergency period. Emergency prescriptions must promptly be reduced to writing and signed by an authorizing physician within seven days of issuance. Failure to meet these requirements results in an illegal dispensing of controlled substances without a valid prescription.

    The Government’s investigation revealed that AlixaRx routinely abused the emergency prescription provisions of the CSA by requesting and obtaining verbal “emergency” refills from prescribers, in the absence of any true emergency. Instead, the company used these purported emergency prescriptions to effectuate simple refills of the patients’ medications. Moreover, AlixaRx routinely failed to obtain written prescriptions within seven days after the verbal authorization. Rather than disclose these violations to the DEA as required by law, AlixaRx engaged in a nationwide scheme to cover up its violations by obtaining backdated prescriptions from the prescribing physicians, in many cases over a year after the controlled substances were dispensed.

    Finally, the Government resolved allegations that AlixaRx submitted false claims to Medicare for invalid emergency prescriptions, as discussed above. The Government also resolved claims that AlixaRx billed Medicare Part D for claims that had already been reimbursed through claims paid to long-term care facilities under Medicare Part A.

    The settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia by a former pharmacist at AlixaRx’s Atlanta hub under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.

    This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the Drug Enforcement Administration’s Diversion Control Division, Atlanta Field Office, the Department of Health and Human Services – Office of the Inspector General, the Federal Bureau of Investigation, and the Defense Criminal Investigative Service.

    The case was handled by David A. O’Neal, Assistant U.S. Attorney and Opioid Coordinator for the Northern District of Georgia.

    The case is captioned United States ex rel. Gharavi v. AlixaRx LLC et al., 1:17-CV-00455-JPB. The claims resolved by this settlement are allegations only and there has been no determination of liability.

    Source

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  • Arch Family Dentistry Office Managers Charged with Healthcare Fraud

    Justice 029

     

    HAMMOND- Justyn Arch, age 34, and Trystan Arch, age 31 both of Valparaiso, Indiana were charged with healthcare fraud by way of a single count Grand Jury Indictment which was unsealed today, announced Acting U.S. Attorney Gary T. Bell.

    According to documents in this case, Arch Complete Family Dentistry, with offices located in Chesterton, Crown Point, and briefly in Knox, Indiana, was an authorized Indiana Medicaid provider of dental procedures. In October 2017, Justyn Arch, Vice President of Arch Complete Family Dentistry, also managed the Crown Point office. Trystan Arch managed the Chesterton office.

    The Indictment alleges that Justyn and Trystan Arch executed a scheme to defraud Indiana Medicaid by causing false and fictitious entries in patient files. The false entries showed that Arch dentists performed dental surgery when in fact no surgery had been performed. The claims totaled more than $350,000 in false and fictitious claims to Indiana Medicaid.

    The United States Attorney’s Office emphasizes that an Indictment is merely an allegation and that all persons are presumed innocent until, and unless proven guilty in court.

    If convicted, any specific sentence to be imposed will be determined by the Judge after a consideration of federal statutes and the Federal Sentencing Guidelines.

    This case is a result of an investigation by the Federal Bureau of Investigation, Indiana Attorney General’s Office Medicaid Fraud Control Unit, Internal Revenue Service-Criminal Investigation Division and U.S. Department of Health and Human Services with the assistance of the Porter County Prosecutor’s Office. This case is being prosecuted by Assistant United States Attorney Philip C. Benson.

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  • Arkansas Man Charged in $100 Million COVID-19 Health Care Fraud Scheme

    Justice 021

     

    A federal grand jury in the Western District of Arkansas returned an indictment yesterday charging an Arkansas man who owned or managed numerous diagnostic testing laboratories with health care fraud in connection with over $100 million dollars in false billings for urine drug testing, COVID-19 testing, and other clinical laboratory services.

    According to court documents, Billy Joe Taylor, 42, of Lavaca, engaged in a scheme between February 2017 and May 2021 in connection with diagnostic laboratory testing, including urine drug testing and tests for respiratory illnesses during the COVID-19 pandemic, that were medically unnecessary, not ordered by medical providers, and/or not provided as represented. According to the indictment, Taylor controlled and directed multiple diagnostic laboratories, and used those labs to submit more than $100 million in false and fraudulent claims to Medicare. The indictment alleges that Taylor obtained medical information and private personal information for Medicare beneficiaries, and then misused that confidential information to repeatedly submit claims to Medicare for diagnostic tests that were not ordered by medical providers and were not actually performed by the laboratories. Taylor allegedly then used the proceeds of the fraud to live a lavish lifestyle, including purchasing numerous luxury automobiles, including a Rolls Royce Wraith, as well as real estate, jewelry, guitars, and other luxury clothing and items.

    Taylor is charged with 16 counts of health care fraud, and one count of engaging in a monetary transaction in criminally-derived property. Taylor was previously charged by criminal complaint in May 2021. The defendant is scheduled for his arraignment on Nov. 23 before U.S. Magistrate Judge Mark E. Ford of the U.S. District Court for the Western District of Arkansas. Each of the counts is punishable by a maximum penalty of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

    Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney David Clay Fowlkes for the Western District of Arkansas; Special Agent in Charge James A. Dawson, of the FBI’s Little Rock division; Special Agent in Charge Miranda Bennett of the Department of Health and Human Services-Office of Inspector General (HHS-OIG), Dallas Regional Office; and Special Agent in Charge Christopher Altemus of the IRS-Criminal Investigation, Dallas Field Office, made the announcement.

    The FBI, HHS-OIG, and IRS-Criminal Investigation are investigating the case.

    Senior Litigation Counsel Jim Hayes and Trial Attorney D. Keith Clouser of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force and Assistant U.S. Attorney Kenneth Elser of the U.S. Attorney’s Office for the Western District of Arkansas are prosecuting the case.

    Source

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  • Associate Medical Director of Baltimore County, Maryland Pain Management Practice Sentenced to Federal Prison for Accepting Kick-Backs

    Justice 036

     

    Baltimore, Maryland – U.S. District Judge George L. Russell, III sentenced Howard Hoffberg, M.D., age 65, of Reisterstown, Maryland, today, to eight months in federal prison, followed by one year of supervised release, for conspiracy to violate the anti-kickback statutes, in connection with a scheme to accept payments from a pharmaceutical company in exchange for prescribing a fentanyl-based drug.

    The sentence was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office; Assistant Special Agent in Charge Orville O. Greene of the Drug Enforcement Administration, Baltimore District Office; Special Agent in Charge Maureen Dixon, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; and Chief Melissa R. Hyatt of the Baltimore County Police Department.

    According to his guilty plea, Howard Hoffberg, is a doctor and was licensed to practice medicine in the State of Maryland. He served as the Associate Medical Director and part-owner of Rosen-Hoffberg Rehabilitation and Pain Management (the “Practice”). The Practice’s Medical Director was Norman Rosen, who worked primarily at the Practice’s Towson, Maryland locations. Hoffberg principally worked at the Practice’s location in Owings Mills, Maryland, but at times also was at the Practice’s locations in Towson, Maryland.

    Hoffberg was a Medicare provider and submitted claims to Medicare, which is federal healthcare program. In September 2011, Hoffberg certified to Medicare that he would comply with Medicare rules and regulations, including that he would refrain from violating the federal anti-kickback statute. Further, in August 2013, Hoffberg certified to the U.S. Food and Drug Administration (“FDA”), as part of his ability to prescribe drugs known as Transmucosal Immediate Release Fentanyl (“TIRF”) drugs, that: (a) he understood TIRF drugs are indicated only for the management of breakthrough pain in cancer patients; (b) he understood that TIRF drugs can be abused by patients; and (c) he understood that one TIRF drug is not interchangeable with another TIRF drug.  

    As detailed in his plea agreement, starting in June 2012, Hoffberg solicited and received kickbacks and bribes for himself in the form of payments from Insys Therapeutics, Inc. (“Insys”) (a pharmaceutical company) and related entities. In January 2012, the FDA approved Insys’s application to sell and market a TIRF drug named Subsys to treat cancer patients experiencing break-through pain, which is a sudden onset of pain in cancer patients that cannot be controlled with their usual treatment regimen. Subsys is a potent opioid designed to rapidly enter a patient’s bloodstream upon being sprayed under the tongue. Subsys contains fentanyl, which is a synthetic opioid pain reliever that has a high potential for abuse and addiction.

    According to the plea agreement, because of the limited number of cancer patients experiencing breakthrough pain who fit the FDA-approved criteria, Insys devised an illegal kickback and bribery scheme to induce Hoffberg and others to prescribe Subsys off-label for conditions other than breakthrough pain in cancer patients. In order to conceal and disguise that kickbacks and bribes were being paid to Hoffberg to prescribe Subsys, Insys falsely designated the payments to Hoffberg as “honoraria” for purportedly providing educational programs about Subsys (the “Speakers Bureau Program”). Hoffberg admitted that his participation in the Speakers Bureau Program was a sham. Hoffberg often made these presentations at high-end restaurants, and to staff at the Practice and/or to persons who could not even prescribe controlled substances. Hoffberg knew that these presentations were not designed to promote any bona fide educational initiative about Subsys but rather were required to receive the honoraria.

    Hoffberg was paid $66,600 by Insys and knew that these payments were kickbacks and bribes that were paid, at least in part, to induce Hoffberg to prescribe, or in exchange for Hoffberg prescribing, Subsys. As part of the scheme, through January 2018 Hoffberg prescribed Subsys to patients of the Practice who were not suffering from cancer, some of whose insurance coverage was paid for, in whole or in part, by a federal healthcare program. Further, Hoffberg admitted that he switched several other patients to Subsys from another fentanyl-based drug because of the kickbacks he received from Insys, even though he previously certified that TIRF drugs were not interchangeable.

    United States Attorney Erek L. Barron commended the FBI, the DEA, HHS-OIG, and the Baltimore County Police Department for their work in the investigation.   Mr. Barron thanked Assistant U.S. Attorney Jason D. Medinger, who prosecuted the case.

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  • Atlanta man arraigned for embezzling over $200,000 from his disabled father’s VA account

    Justice 013

     

    ATLANTA – William Dorsey, Jr., has been arraigned for embezzling over $200,000 from his father’s beneficiary account funded by the U.S. Department of Veterans Affairs (VA.)

    “We must be diligent in protecting our elderly citizens, especially our veterans,” said U.S. Attorney Byung J. “BJay” Pak. “We are focused on preventing and punishing the exploitation and abuse of our most vulnerable citizens.”

    “Fiduciaries assume a solemn duty to care for veterans who served their country through their military service and now are unable to care for themselves. The VA Office of Inspector General is dedicated to working with our law enforcement partners to ensure that any fiduciary who embezzles VA funds intended to provide necessary support to our nation’s disabled veterans is held responsible,” said David Spilker, Special Agent in Charge, VA Office of Inspector General.

    According to U.S. Attorney Pak, the charges, and other information presented in court: On May 10, 2010, William Dorsey, Jr., signed a fiduciary agreement agreeing to manage the benefit payments provided by the VA to his father, William Dorsey Sr., a 67-year-old disabled Vietnam veteran diagnosed with Alzheimer’s Disease and dementia. According to medical records from the secure medical center where he resides, William Dorsey, Sr., is wheel-chair bound, cannot communicate, and requires total assistance with his daily activities.

    As part of the fiduciary agreement, Dorsey, Jr., agreed to spend the VA benefit funds only for his father’s daily needs, to never comingle funds, to never withdraw cash from the account, and to keep accurate records and receipts. However, by the time he was removed as fiduciary seven years later in May 2017, banking records indicate all of these conditions had been violated, including the direct transfer of money from his father’s account to his own personal account. According to a financial analysis conducted by the VA, over $200,000 remains unaccounted for.

    During this same time period, nursing staff reported that Dorsey, Sr., only needed approximately $50-$100 to cover expenses each month, and that William Dorsey, Jr., commonly provided items of inferior quality, such as used oversized clothing and half empty bottles of shampoo. According to one social worker supervisor, the attending nurses felt compelled on occasion to buy “basic necessities” for Dorsey, Sr., out of their own pocket.

    William Dorsey, Jr., 42, ofAtlanta,Georgia, was arraigned before U.S. Magistrate Judge Alan J. Baverman. Members of the public are reminded that the indictment only contains charges. The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.    

    This case is being investigated the U.S. Department of Veterans Affairs, Office of the Inspector General, Criminal Investigations Division.

    Assistant U.S. Attorney Scott McAfee is prosecuting the case.

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  • Attorney General James Announces Sentencing Of Man Who Stole Money Intended For Veterans

    Justice 003

     

    Michael Erber was also Convicted of Stealing Approximately $200,000 in Lottery Winnings

    From a Veteran Who Sought Housing Assistance

    BROOKLYN – Attorney General Letitia James announced the sentencing of Michael Erber (“Erber”), 62, of Brooklyn for stealing money intended to pay the rent of homeless New York City Veterans from four Community Based Organizations. Erber was sentenced to a term of imprisonment of 10 ½-21 years. On January 21, 2020, Erber was convicted after a jury trial of four counts of Grand Larceny in the third Degree and one count of Scheme to Defraud in the First Degree. Erber was also convicted of one count of Grand Larceny in the Second Degree for stealing lottery winnings from a disabled Veteran.

    “Stealing money that is earmarked for our homeless Veterans is truly an immoral and reprehensible act,” said Attorney General James. “This individual stole money directly from the hands of non-profits, and denied homeless Veterans access to desperately-needed shelters and a safe place to call home. We will never tolerate such actions, and I will continue to do everything within my power to hold those who take advantage of vulnerable communities accountable."

    According to evidence produced during trial in Supreme Court, Kings County, Erber operated an organization known as MAG-V, a New York not-for-profit. MAG-V recruited homeless Veterans with promises of housing and job training, posting fliers with numerous homeless shelters and community based organizations. Erber also personally recruited Veterans and case managers from these organizations.

    As the evidence proved, after selecting Veterans in need of housing, MAG-V entered into master lease agreements with landlords in Brooklyn and The Bronx, and then Mag-V subleased with the Veterans. MAG-V then obtained federal funding intended for homeless Veterans or Veterans at risk of becoming homeless, for their rental payments from Community Based Organizations (“CBOs”) in New York City. Unbeknownst to the CBOs or the Veterans, Erber did not pay the landlords any of the funds provided by the CBOs to pay the rent where the Veterans were housed. As a result of this scheme Erber stole more than $3,000 each from four separate CBOs, more than $67,000 in total.

    In addition to stealing money from the CBO’s, the Attorney General’s Office presented evidence that the defendant stole money directly from the individual Veterans who were being housed by Mag-V. The federal funding from the CBO’s was meant as start-up money to help get the Veterans out from the streets and shelters and into stable housing, enabling them to eventually start paying rent on their own. After the CBO’s ended their funding assistance, the Veterans paid rent money directly to Erber, but again, Erber pocketed the rent money and did not pay the landlords. As a result, all of the Veterans were evicted for non-payment of rent.

    The jury also convicted Erber of Grand Larceny in the Second Degree, for stealing $200,000 from John Pickett, a disabled Veteran, who won a lottery jackpot in 2015. According to Mr. Pickett’s testimony and evidence, after he won the lottery, Mr. Pickett was constantly pressured by Erber to invest the lottery winnings with MAG-V. In exchange, Erber promised the Veteran a paid position on MAG-V’s board of directors and offered to help him find permanent housing, as well as a paid job with Mag-V, none of which Erber ever did. Based on these false pretenses, Erber stole approximately $200,000 from the Veteran.

    Based on bank records produced at trial, the Attorney General’s Office demonstrated Erber spent more than $110,000 on rental cars and more than $41,000 to buy a car.

    The defendant was sentenced by Judge Donald Leo in Kings County Supreme Court Part 16. The defendant has two prior felony convictions.

    The Attorney General’s Office thanks the Veterans Affairs Office of the Inspector General (VA OIG) for their assistance on this case.

    “This sentencing sends a clear message that VA OIG and our law enforcement partners will vigorously pursue anyone who seeks to victimize vulnerable Veterans and their families who are deserving of VA benefits,” said VA OIG Acting Special Agent in Charge Jeffrey Stachowiak. “We appreciate the efforts of the VA’s Management Review Service for referring this matter to us and the New York State Office of Attorney General for successfully prosecuting this case to achieve this important outcome.”

    The investigation was conducted by Investigator Walter Lynch, under the supervision of Deputy Chief John McManus, and with the assistance of Deputy Chief Auditor Sandy Bizzarro. The Investigations Division is led by Chief Investigator John Reidy.

    The case was prosecuted by Assistant Attorney Generals Nazy Modiri from the Real Estate Enforcement Unit and Russell Satin from the Public Integrity Bureau, under the supervision of Public Integrity Chief Travis Hill. Assisting on the case was Legal Support Analyst Jack Jones and Senior Legal Support Analyst Rachel Demma. The Criminal Justice Division is led by Chief Deputy Attorney General for Criminal Justice José Maldonado.

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  • Authorities: Fayetteville Veteran faked war injury to get VA benefits

    Justice 003

     

    A Fayetteville man was sentenced Tuesday to five years on probation and ordered to repay more than $900,000 he fraudulently obtained to the Department of Veterans Affairs, authorities said.

    Willie Dosher Cain, 73, a U.S. Army Veteran and former Fayetteville police officer, told VA officials that, as a result of shrapnel wounds sustained in Vietnam in 1965, he had suffered the loss of use of both legs, as well as loss of bowel and bladder control. He said he was unable to perform daily activities, such as dressing and bathing, without assistance and was dependent on a wheelchair or motorized scooter for mobility.

    Federal investigators determined, however, that Cain played basketball, danced and attended social events when he was supposedly injured. He even bought a condominium at Carolina Beach on the third floor of a building with no elevator, they said.

    Cain pleaded guilty last June to embezzlement. In addition to repaying the benefits he wasn't entitled to, U.S. District Judge Thomas Schroeder ordered that he forfeit $155,000, a modified 2018 Toyota Sienna van and a mobility scooter and perform 250 hours of community service. In a related civil forfeiture action, he also forfeited the Carolina Beach condo, authorities said.

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  • Baton Rouge Laboratory Owner and Florida Woman Charged with Scheme to Pay and Receive Health Care Kickbacks as Part of National Enforcement Action

    Justice 019

     

    The Medicare Fraud Strike Force (“MFSF”) is part of a joint initiative between the U.S. Department of Justice, U.S. Department of Health and Human Services and state Medicaid Fraud Control Units to reduce and prevent Medicare and Medicaid fraud through enhanced interagency cooperation. Its purpose is to focus on the worse offenders in fraud, in the highest intensity regions, using data analysis techniques to identify abnormal billing levels in health care fraud “hot spots,” i.e., cities with unusually high levels of billing and other fraud. The U.S. Department of Justice currently maintains 15 strike forces operations in 24 federal districts and has charged more than 4,600 defendants who have collectively billed federal health care programs and private insurers for approximately $23 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

    As part of the recent National Enforcement Action, Acting United States Attorney Ellison C. Travis announced new charges against two individuals for health care related crimes in Baton Rouge. On September 9, 2021, a federal grand jury returned a seven-count indictment charging Terry Steven Wilks, Jr., age 39, of Greenwell Springs, Louisiana, and Leslie Amanda McHugh, age 36, of Riverview, Florida, with conspiracy to defraud the United States and to pay and receive kickbacks, offering and paying kickbacks, and soliciting and receiving kickbacks.

    According to the indictment, Wilks was the owner of Acadian Diagnostic Laboratories, LLC, a clinical laboratory based in Baton Rouge that provided diagnostic testing services, including urine drug testing. Acadian was enrolled as a Medicare and a TRICARE provider. McHugh was formerly a registered nurse licensed in the State of Florida. The indictment alleges that in 2015, the Florida Board of Nursing revoked McHugh’s nursing license, and in 2016, Medicare excluded her from participation in all federal health care programs. According to the indictment, despite her exclusion and subsequent purported termination from Acadian, Wilks continued to pay McHugh to refer doctors’ orders and specimens to Acadian for urine drug testing in exchange for kickback payments. These payments were allegedly made in cash, as well as funneled through a company created by Wilks. The indictment alleges that from August 2017 to April 2018, Wilks and McHugh caused Acadian to submit approximately $549,580 in claims to Medicare and $17,612 in claims to TRICARE for laboratory testing services that were referred by McHugh in exchange for kickback payments.

    Acting U.S. Attorney Ellison Travis stated, “My office will continue to work tirelessly with our outstanding federal, state and local partners to identify and bring justice to those who commit healthcare related crimes. This takedown was a team effort, and I commend the excellent work performed by our prosecutors and the men and women of the agencies involved.”

    “Today's indictment sends a clear message to individuals like Terry Wilks and Leslie McHugh who engage in kickback schemes which defraud health care programs that they will be held accountable. Mr. Wilks and Ms. McHugh took advantage of a system set up to help patients get much-needed government assistance and instead benefitted themselves," said FBI New Orleans Special Agent in Charge Douglas A. Williams, Jr. "We would like to thank our state and federal partners with the Medicare Fraud Strike Force for their strong partnership and unrelenting pursuit of justice."

    Miranda L. Bennett, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General, Dallas Region, stated: “Today’s indictment is yet another example of our commitment to vigorously defend the Medicare Trust Fund. Paying and receiving kickbacks for referrals undermines federal health care programs. We will continue to pursue those who conduct fraudulent kickback schemes to safeguard the beneficiaries of these programs.”

    “I applaud my Medicaid Fraud Control Unit and our partners at the U.S. Attorney’s Office for their efforts to end criminal activity, especially when it is being perpetuated by people who are supposed to be taking care of our State’s vulnerable,” said Attorney General Jeff Landry.

    This matter is being investigated by HHS-OIG, the FBI, and the Defense Criminal Investigative Service and was brought as part of the MFSF, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana. The case is being prosecuted by Assistant United States Attorney Kristen L. Craig and Department of Justice Trial Attorney Justin M. Woodard.

    NOTE: An indictment is an accusation by a grand jury. The defendant is presumed innocent until and unless adjudicated guilty at trial or through a guilty plea.

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  • Bay City Vascular Surgeon Pleads Guilty in Connection with Defrauding Medicare, Medicaid, And Blue Cross Blue Shield Of $19.5 Million

    Justice 006

     

    BAY CITY - A vascular surgeon from Bay City, Michigan pleaded guilty today to participating in a scheme to defraud Medicare, Medicaid, and Blue Cross/Blue Shield out of approximately $19.5 million, announced United States Attorney Dawn N. Ison.

    Ison was joined in the announcement by Acting Special Agent in Charge Joshua Hauxhurst of the FBI’s Detroit Division and Special Agent in Charge Mario Pinto of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

    Pleading guilty was Dr. Vasso Godiali, 59.

    According to the plea agreement, Godiali began knowingly defrauding the three medical insurers in approximately 2009 and did so by causing the submission of false billing to all three insurers. As evidenced in the plea agreement, Godiali’s false and fraudulent billing includes admissions related to claims for the placement of stents in dialysis patients and for the treatment of arterial blood clots. Godiali admitted that he billed for the placement of multiple stents in the same vessel, and prepared medical records purporting to document the medical necessity justifying that billing. In fact, Godiali did not place those stents, and he admitted to billing the insurers for services never rendered while preparing materially inaccurate medical records to justify the fraudulent billing. With respect to arterial blood clots, the plea agreement documents a similar pattern of misconduct. Godiali acknowledged that his medical records would describe encountering occluded arteries that would appear to justify the performance of arterial thrombectomies. In fact, as Godiali admitted that he often encountered no such occlusions, performed no such thrombectomies, and thus billed insurers for services never rendered while preparing false medical records to justify the fraudulent claims.

    “The scale of Dr. Godiali’s fraud is stunning and his willingness to illegally enrich himself at the expense of our district’s taxpayers and policyholders is egregious.” said U.S. Attorney Ison. “Brazen schemes like this have no place in our district, and today’s guilty plea reflects my office’s commitment to holding medical providers accountable when they abuse society’s trust by engaging in such misconduct.”

    “When Dr. Godiali submitted claims for medical services that were never provided, he violated the trust of his patients and defrauded taxpayer-funded health care programs,” said Special Agent in Charge Mario M. Pinto. "HHS-OIG agents will continue to work with our law enforcement partners to identify and investigate medical providers who prey on beneficiaries and steal from federal health care programs."

    “Today’s guilty plea should send a clear message to all health care providers that health care fraud is a federal crime that carries serious consequences and will not be tolerated,” said Josh P. Hauxhurst, Acting Special Agent in Charge of the FBI in Michigan. “In partnership with federal, state, and private sector partners, the FBI will work diligently to identify these fraud schemes and hold parties who execute them accountable.”

    Sentencing is set for September 15, 2022. Godiali faces up to ten years’ imprisonment and the forfeiture of $19.5 million. Under the terms of the plea agreement, Godiali will be required to pay $19.5 in restitution to Medicare, Medicaid, and Blue Cross Blue Shield of Michigan. A civil forfeiture case against approximately $39.9 million seized from accounts controlled by Godiali remains pending.

    The case was investigated by Special Agents of the HHS and FBI, with cooperation and assistance from the Michigan Attorney General’s Office, Michigan Department of Health and Human Services - Office of Inspector General.

    The case is being prosecuted by Assistant U.S. Attorneys John K. Neal, Philip A. Ross, and Craig F. Wininger with assistance from the Michigan Attorney General’s Health Care Fraud Division.

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  • Behavioral Health Provider Pays $273K to Settle Improper Billing Allegations

    Justice 010

     

    Leonard C Boyle, Acting United States Attorney for the District of Connecticut, today announced that TODAY’S YOUTH LLC and its owners, Maurice Stuckey and Joyce Anderson, have entered into a civil settlement agreement with the federal and state governments in which they will pay $273,000 to resolve allegations that they caused overpayments to be paid by the Connecticut Medicaid Program.

    Today’s Youth is a healthcare organization that provides in-home family therapy and counseling in the greater Hartford area. The government’s allegations against Today’s Youth, Stuckey and Anderson arise out of improper billing for behavioral health services.

    Today’s Youth is enrolled in the Connecticut Medical Assistance Program (“CMAP”), which includes Connecticut’s Medicaid program, as a “Behavioral Health Clinician Group.” The State of Connecticut Department of Social Services (“DSS”) contracted with Today’s Youth to provide behavioral health services to Medicaid beneficiaries. DSS does not allow licensed behavioral health clinicians in independent practice to submit claims for services provided by unlicensed individuals, even if the individuals are working toward licensure and supervised by a licensed individual. The DSS Provider Manual for Licensed Behavioral Health Clinicians in Independent Practice explicitly states, “The department shall not pay for…services provided by anyone other than the provider.”

    The government alleges that despite clear guidance from the Medicaid program, Today’s Youth, Stuckey and Anderson routinely submitted claims to Medicaid for behavioral health services as if a licensed behavioral health clinician performed the services when, in fact, an unlicensed provider performed the services. As a result, Medicaid paid Today’s Youth for behavioral health services that the U.S. and Connecticut would not have paid for had they known unlicensed individuals provided the services.

    To resolve its liability, Today’s Youth will pay $273,000 to the federal and state governments for conduct occurring between January 1, 2014 and September 1, 2019.

    This matter was investigated by the Office of Inspector General for the U.S. Department of Health and Human Services. The case is being prosecuted by Assistant U.S. Attorney Anne F. Thidemann and by Assistant Attorney General Michael E. Cole of the Connecticut Office of the Attorney General.

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  • Bergen County Man Charged with Conspiring to Steal More Than $7.8 Million Worth of HIV Medication from Veterans Affairs Medical Center

    Justice 004

     

    NEWARK, N.J. – A Bergen County, New Jersey, man was charged for his role in stealing prescription HIV medication from the pharmacy of the East Orange VA Medical Center, U.S. Attorney Craig Carpenito announced today.

    Wagner Checonolasco, a/k/a “Wanny,” 33, of Lyndhurst, New Jersey was charged by criminal complaint with conspiracy to steal government property, specifically HIV medication. Checonolasco had his initial appearance by videoconference before U.S. Magistrate Judge Cathy L. Waldor and was released on $250,000 unsecured appearance bond.

    According to documents filed in this case and statements made in court:

    From January 2018 through November 2019, Checonolasco conspired with another person to steal prescription HIV medication from the Veterans Affairs Medical Center (VAMC) in East Orange, New Jersey. The conspirator, who was employed as a pharmacy procurement technician at the VAMC pharmacy, placed large orders for HIV medication, purportedly on behalf of VAMC. After the medication was delivered, the conspirator stole it. Checonolasco and the conspirator met, frequently at the conspirator’s residence, so that Checonolasco could purchase the stolen HIV medication, which he then sold. Checonolasco and the conspirator conspired to steal $7.85 million worth of HIV medications.    

    The charge of conspiracy to steal government property is punishable by a potential penalty of five years in prison and fine of a $250,000, or twice the gross gain or loss from the offense, whichever is greater.

    U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, and the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office, under the direction of Special Agent in Charge Christopher F. Algieri, with the ongoing investigation leading to the charges.

    The government is represented by Assistant U.S. Attorney Nicole F. Mastropieri of the Health Care Fraud Unit in Newark.

    The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

    Source

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  • Bhaskar Patel Sentenced in Kickback and Bribery Scheme in Connection with Government Contracts

    Justice 003

     

    The Office of the United States Attorney for the District of Vermont announced that Bhaskar Patel, 69, of Horseheads, New York, was sentenced Friday in federal district court in connection with a kickback and bribery scheme conducted in connection with federal energy savings performance contracts (“ESPCs”). While employed by Schneider Electric Buildings America (“Schneider”), Patel unlawfully solicited and accepted $2,536,119.19 in bribes and kickbacks associated with ESPCs from subcontractors to Schneider. According to the Information filed in the case, the scheme ran from June 6, 2011 through April 19, 2016, involved dozens of bribes and kickbacks from eight subcontractors to Schneider, and included amounts ranging from $6,231 to $136,990.19.

    “Mr. Patel’s conduct was motivated by a corrupt culture and greed, and I am proud of our prosecutors, staff, and federal law enforcement partners that investigated this complex fraud and convicted Mr. Patel,” said Christina E. Nolan, United States Attorney for the District of Vermont. “This scheme ran for years, swindled millions of dollars, and betrayed the trust expected of government contractors when they receive American taxpayer dollars and have the honor of working with the federal government. The U.S. Attorney’s Office is committed to fighting the financial scourge imposed by procurement fraud and will vigorously enforce our criminal laws against those responsible for this conduct.”

    According to the Information, Patel accepted illegal kickbacks and bribes in connection with a $70 million project for the United States Coast Guard (“USCG”) in Aguadilla, Puerto Rico; a $24.7 million project for the United States Department of Agriculture (“USDA”) in Albany, California; a $12.6 million project for the United States General Services Administration (“GSA”) in St. Croix, U.S. Virgin Islands; a $21.8 million project for GSA in San Juan, Puerto Rico and St. Thomas, U.S. Virgin Islands; a proposed project of $42.4 million for work on the VA medical centers in Vermont, Massachusetts, Rhode Island, and Maine; and a $114.3 million project for the U.S. Navy for work on the Naval base in Coronado, California.

    For each contract named in the Information, Patel, a Senior Project Manager, was authorized and directed by Schneider to obtain bids from subcontractors and recommend for selection the subcontractors that would be awarded a contract under an ESPC. Schneider further authorized and directed Patel to -- post-selection of a subcontractor -- negotiate change orders, price changes, and oversee and manage subcontractors. Patel knew subcontractors provided gratuities with the intent of obtaining favorable treatment from Patel and Schneider in connection with existing and/or future ESPC contracts awarded by various government agencies to Schneider.

    Patel pleaded guilty to one count of accepting illegal kickbacks in connection with federal contracts, a violation of 41 U.S.C. §§ 8702 and 8707, and one count of accepting bribes in connection with federal contracts, a violation of 18 U.S.C. § 666. Chief Judge Geoffrey W. Crawford on Friday sentenced Patel to a term of three years of probation with conditions of supervised release and entered a forfeiture judgment of $2,536,119.19.

    “Federal energy savings performance contracts are intended to save VA money. Bribery and other corrupt acts by contractors instead divert and waste precious dollars intended for our nation’s Veterans,” said VA-OIG Special Agent-in-Charge Christopher F. Algieri. “The VA Office of Inspector General will continue to work with our partners in the law enforcement community to prevent this type of fraud and hold any wrongdoers accountable.”

    USDA-OIG Special Agent-in-Charge Bethanne M. Dinkins commented, “We appreciate the commitment of the U.S. Attorney’s Office and the cooperative efforts of our law enforcement partners throughout this significant investigation. Mr. Patel’s sentence sends a strong message regarding the benefit of working across agency lines to protect the integrity of the procurement process throughout Government. The USDA Office of Inspector General will continue to dedicate resources to investigate those who unlawfully solicit and accept bribes and kickbacks involving USDA contracts.”

    Acting Special Agent-in-Charge, Tim Westfall, Naval Criminal Investigative Service, Northeast Field Office said: “Fraud is not a victimless crime, and puts our armed forces at greater risk. The American taxpayers are also victims as the flagrant and wrongful misuse of American taxpayer dollars not only erodes the public trust but also jeopardizes the Department of Navy’s efforts to obtain the best technology, services, and equipment for our brave men and women in uniform.   By conspiring to manipulate the contracting process through lies and deceit, those involved have drained significant resources from the Navy and have made it harder for legitimate companies that play by the rules.”

    “Federal contractors must be above board in their dealings. The U.S. General Services Administration Office of Inspector General will continue to aggressively pursue those who engage in bribery and kickback schemes,” added Special Agent-in-Charge, Luis Hernandez.

    The United States is represented in this matter by Assistant U.S. Attorney Owen C.J. Foster. Bhaskar Patel is represented by David Haas, Esq., of Haas Law in Orlando, Florida; and Heather Ross, Esq., of Sheehey, Furlong & Behm PC in Burlington, Vermont.

    Source

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  • Bristol, Tennessee Man Sentenced for Healthcare Kickback Scheme

    Justice 014

     

    ABINGDON, Va. – A Bristol, Tennessee man was sentenced today to three months of home confinement for conspiring with another man to pay and receive kickbacks. In addition to home confinement, he will pay $56,000 in monetary penalties and will be permanently excluded from participating in federal healthcare programs.

    According to court documents, John Paul Linke, 58, conspired to receive and pay kickbacks to encourage urine drug screen testing performed by a lab in Florida. Some of the testing referred to the lab was paid for by Medicare, Virginia Medicaid, and TennCare. Co-conspirator Michael Olshavasky, of Miami, Florida, will be sentenced on September 22, 2021.

    “The defendant’s diversion of critical federal and state funds that were needed to target the opioid crisis for his own greed is unconscionable,” Acting U.S. Attorney Bubar stated today. “We will continue to prioritize prosecuting health care fraud cases, and that we will continue to work closely with the Virginia Attorney General’s Office, and our other critical federal and state partners, to bring such providers to justice.”

    “Healthcare providers who use kickback schemes like this one are not only defrauding our healthcare system, but they’re also stealing from Virginia taxpayers just to line their own pockets,” said Attorney General Herring. “Virginians trust their healthcare providers to make the best decisions for their patients without monetary gain or outside influence. I want to thank my Medicaid Fraud Control Unit for their work on this case as well as our local, state, and federal partners for their ongoing collaboration on cases where individuals try and defraud our Medicaid and Medicare systems.”

    “Those who seek to profit off the opioid crisis through illegal schemes make the problem worse,” said Special Agent in Charge Mark S. McCormack, FDA Office of Criminal Investigations Metro Washington Field Office. “We will continue to investigate and bring to justice those who, through their dishonesty, jeopardize the public health.”

    Between November 30, 2015, and May 30, 2016, Linke was employed at an office-based opioid treatment program that used medication-assisted treatment for patients suffering from substance use disorder. In exchange for being paid $5,000 per month, Linke arranged for the clinic to send urine drug screen samples to the laboratory in Florida where Olshavasky worked. These payments were disguised as commissions paid to Linke as an “independent sales representative” for Olshavsky’s company, Encore Holdings LLC. Olshavasky paid Linke at least $16,000 through Encore Holdings to direct WRC’s drug screening business to the Florida lab, although Linke was not actually an independent sales representative for Encore, and he did not act as such.

    The Virginia Medicaid Fraud Control Unit, the Drug Enforcement Administration, the Food and Drug Administration Office of Criminal Investigations, the Department of Health and Human Services—Office of Inspector General, the Tennessee Bureau of Investigation, and the Virginia State Police investigated the case.

    Special Assistant United States Attorney Janine M. Myatt and Assistant United States Attorneys Randy Ramseyer and Whit Pierce prosecuted the case for the United States.

    Source

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  • Brockton Urology Agrees to Pay $100,000 to Resolve Allegations that it Violated the False Claims Act

    Justice 008

     

    Physician practice located in North Easton

    BOSTON – The U.S. Attorney’s Office has reached a $100,000 settlement with Brockton Urology Clinic LLC (Brockton Urology), a physician practice located in North Easton, to resolve allegations that it violated federal health care laws resulting in false claims to Medicare.

    As detailed in the settlement agreement, in 2011, Brockton Urology entered into an agreement with a Massachusetts hospital which obligated Brockton Urology to administer a “Prostate Cancer Center of Excellence” at said hospital. However, as Brockton Urology admits, the hospital never created a Prostate Cancer Center of Excellence and Brockton Urology never provided a physician to serve as the director of a Prostate Cancer Program. Yet from April 2011 through December 2017, the hospital paid Brockton Urology purportedly pursuant to the agreement and Brockton Urology referred patients to the hospital.

    The United States contends that this course of conduct constitutes an unlawful financial relationship between Brockton Urology, a party that referred health services, and the hospital, the entity that billed Medicare for those services. Through this violation of the law, Brockton Urology caused the submission of false claims to Medicare.

    “Strict adherence to federal laws and regulations concerning the administration of our health care system is critical,” said United States Attorney Rachael S. Rollins. “These safeguards are designed to protect the United States government from waste, fraud, and abuse. Our Office and its law-enforcements partners are vigilant in our efforts to stop anyone—hospitals, corporations, and even physician practices—that might be cutting corners and failing to follow our health care laws.”

    “This settlement sends a clear message that these types of financial arrangements will not be tolerated. We will continue to work with our law enforcement partners to ensure that all medical providers properly follow health care rules and regulations,” said Phillip M. Coyne, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of Inspector General. “I appreciate the partnership with the Massachusetts U.S. Attorney’s Office in identifying and prosecuting this type of fraud.”

    “The False Claims Act exists to protect the wallets of hard-working taxpayers,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “This settlement with Brockton Urology is a result of our continued efforts to protect the integrity of our health care programs for the patients who depend on them.”

    U.S. Attorney Rollins, HHS-OIG SAC Coyne and FBI SAC Bonavolonta made the announcement today. The Department of Defense’s Office of the Inspector General also provided assistance. Assistant U.S. Attorneys Charles B. Weinograd and Jessica J. Weber of Rollins’s Affirmative Civil Enforcement Unit handled the matter.

    Source

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  • Business Owner Sentenced for Fraud Scheme

    Justice 021

     

    Construction Firms Received $346 Million for Contracts Set Aside for Veterans, Minorities

    KANSAS CITY, Mo. – An Olathe, Kansas, man who conspired with others to control construction businesses that received hundreds of millions of dollars in federal government contracts, was sentenced in federal court today for defrauding the government with respect to contracts set aside for service-disabled Veterans and certified minorities.

    “This contractor not only defrauded the government, but cheated to get contracts that should have gone to firms led by disabled Veterans and minority owners,” said U.S. Attorney Teresa Moore. “His greed and deception allowed him to enrich himself at the expense of disabled Veterans and minority owners. After forfeiting more than $5.5 million to the government and being sent to prison, he has learned the hard way that crime doesn’t pay.”

    Matthew C. McPherson, 45, was sentenced by U.S. District Judge Roseann Ketchmark to two years and four months in federal prison without parole. McPherson also has forfeited to the government $5,516,786, which represents his share of the fraud proceeds.

    “Today’s outcome demonstrates the commitment of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) and our law enforcement partners to protect the integrity of the DoD procurement process and the Small Business Administration set-aside programs intended to help smaller and/or disadvantaged businesses," said Special Agent in Charge Michael C. Mentavlos, DCIS Southwest Field Office. “We will continue to aggressively investigate and hold those accountable that take advantage of the U.S. government and taxpayer.”

    “Today’s sentencing sends a clear message that contractors unjustly enriching themselves at the expense of our nation’s Veterans will not be tolerated,” said Acting Special Agent in Charge Gavin McClaren with the VA Office of Inspector General’s Central Field Office. “We thank the U.S. Attorney’s Office and our outstanding law enforcement partners for their efforts in this joint investigation.”

    “McPherson’s sentence sends a strong message that IRS-Criminal Investigation and its federal partners are committed to leveling the playing field when federal contracts are involved,” said IRS-CI Special Agent in Charge Tyler Hatcher, St. Louis Field Office. “The government established unique programs designed to help small disadvantaged businesses gain a foothold in the awarding of government contracts. McPherson lied about being qualified for these contracts and used nominees to further his crime.” Hatcher added, “These crimes have a significant negative impact on small disadvantaged businesses.”

    On June 3, 2019, McPherson pleaded guilty to one count of conspiracy to commit wire fraud and major program fraud. McPherson admitted that he participated in a conspiracy from September 2009 to March 2018 to obtain contracts set aside by the federal government for award to small businesses owned and controlled by Veterans, service-disabled Veterans, and certified minorities. McPherson, who is neither a certified minority nor a Veteran, was the owner of an established construction company in Topeka, Kan. (identified in court documents as Business C) that was not entitled to compete for those federal contracts.

    McPherson and his co-conspirators controlled and operated Zieson Construction Company. The business was formed on July 9, 2009, with Stephon Ziegler, 61, of Weatherby Lake, Mo. – an African-American service-disabled Veteran – as the nominal owner. Zieson’s primary business was obtaining federal construction contracts set aside for award to small businesses owned and controlled by service-disabled Veterans or certified minorities. However, Ziegler did not control the day-to-day operations or the long-term decision making of Zieson. McPherson and his co-conspirators actually controlled and operated Zieson, and received most of the profits from Zieson through the respective business entities.

    Between 2009 and 2018, Zieson was awarded approximately 199 federal contracts set aside for award to small businesses, minority-owned small businesses, and Veteran-owned small businesses for which the government paid Zieson approximately $335 million. McPherson and his co-conspirators, through their business entities, received approximately $4,183,920 each from Zieson by using false and fraudulent invoices.

    Ziegler pleaded guilty on May 21, 2019, to making a false statement to the U.S. Department of Veteran Affairs. Ziegler is scheduled to be sentenced on Jan. 20, 2022.

    In 2014, when Zieson was growing too large to compete for small business contracts, McPherson and his co-conspirators used the minority status of another Zieson employee, Native American Rustin Simon, 45, of Smithville, Mo., to set up Simcon Corp as a small business in the state of Missouri. Simcon’s business, like Zieson’s, was to obtain federal construction contracts set aside for award to qualified small businesses. In reality, McPherson and his co-conspirators managed and controlled Simcon. Simcon was awarded a $4,423,638 contract in July 2016 from the U.S. Air Force and a $6,911,404 contract in September 2016 from the U.S. Army.

    Zieson and Simcon used the same employees and shared office space and equipment. Zieson and Simcon were located in a building owned by an LLC that was controlled by McPherson and his co-conspirators. Zieson purported to subcontract work to Simcon (which Simcon did not actually perform) to establish alleged past performance and profitability. This allowed Simcon to claim experience and financial strength to successfully compete for federal set-aside contracts. McPherson and his co-conspirators each received approximately $319,866 from Simcon using false and fraudulent invoices.

    Simon pleaded guilty on June 19, 2019, to two counts of making material false statements to the Small Business Administration and awaits sentencing.

    McPherson also caused Business C to submit false and fraudulent invoices to Zieson in order to hide and receive profits from the scheme.

    Co-defendant Patrick Michael Dingle,50 of Parkville, Mo., pleaded guilty on Sept. 13, 2020, and awaits sentencing. Dingle pleaded guilty to one count of conspiracy to commit wire and major program fraud. Dingle also pleaded guilty, in a separate case, to one count of filing a false tax return.

    This case was prosecuted by Assistant U.S. Attorney Paul S. Becker and former Assistant U.S. Attorney Stacey Perkins Rock. It was investigated by the Department of Veterans Affairs, Office of Inspector General; the Department of Defense Criminal Investigative Service; the U.S. General Services Administration, Office of Inspector General; the U.S. Small Business Administration, Office of Inspector General; the Army Criminal Investigation Command, Major Procurement Fraud Unit; the Department of Agriculture, Office of Inspector General; IRS-Criminal Investigation; the U.S. Secret Service; the Air Force Office of Special Investigations, Procurement Fraud; the Naval Criminal Investigative Service; the Defense Contract Audit Agency - Operations Investigative Support (OIS); the U.S. Department of Labor, Office of Inspector General; and the Department of Labor, Employee Benefits Security Administration (EBSA).

    Source

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  • Camden County Man Sentenced to One Year in Prison for Theft of Government Funds with Stolen Electronic Benefits Machine

    Justice 025

     

    CAMDEN, N.J. – A Camden man was sentenced today to 12 months in prison for his role today in a scheme to steal hundreds of thousands of dollars in government funds using fraudulently procured electronic benefits transfer (EBT) cards, Acting U.S. Attorney Rachael A. Honig announced.

    Luciano Estevez, 51, previously pleaded guilty by teleconference before U.S. District Judge Renee Marie Bumb to an information charging him with one count of conspiracy to defraud the United States and one count of defrauding the U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP). Judge Bumb imposed the sentence today in Camden federal court.

    Formerly known as the Food Stamps program, SNAP is administered by the USDA to assist low-income individuals and families with the purchase of groceries and food items. SNAP recipients receive EBT cards, similar to commercial debit cards, to make food purchases. Retailers authorized to accept SNAP benefits have EBT terminals to process the food purchases. Food purchases are made by swiping the EBT card at the terminal, and having customers enter a Personal Identification Number (PIN). The EBT terminal verifies the PIN, determines whether the customer’s account balance is sufficient to cover the proposed transaction, and informs the retailer whether the transaction should be authorized or denied. The amount of the purchase is deducted electronically from the SNAP benefits reserved for the customer and the purchase amount is credited to the retailer’s designated bank account.

    According to documents filed in this case and statements made in court:

    Estevez and others targeted low-income individuals who possessed or had access to EBT cards, and unlawfully purchased the cards from these individuals in exchange for cash and controlled substances. Two confidential sources working with law enforcement engaged in 43 controlled transactions involving EBT cards totaling more than $40,500, which they exchanged for cash and controlled substances, including prescription opioids.

    The defendants used the unlawfully procured EBT cards to purchase bulk goods and food items from large national superstores. These goods and food items were then resold in small convenience and grocery stores owned or affiliated with the defendants or their associates, resulting in a profit for the defendants. Hundreds of EBT cards fraudulently procured by the defendants were used at these superstores, resulting in the misappropriation of approximately $150,000 in government funds.

    Estevez also unlawfully procured an EBT terminal registered to a superstore in Philadelphia, Pennsylvania, to use at his small grocery store in Camden, which was not registered as a lawful SNAP merchant in the USDA program. Through this terminal, the scheme netted approximately $110,000 in SNAP funds.

    In addition to the prison term, Judge Bumb sentenced Estevez to three years of supervised release and ordered him to pay $155,091 in restitution.

    Acting U.S. Attorney Honig credited special agents of the U.S. Department of Agriculture-Office of Inspector General, Northeast Region, under the direction of Special Agent in Charge Bethanne M. Dinkins; the U.S. Department of Health and Human Services-Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; the FBI Philadelphia Field Office, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll in Philadelphia; and the Camden County Police Department, under the direction of Chief Gabriel Rodriguez.

    The government is represented by Assistant U.S. Attorney Christina O. Hud of the U.S. Attorney’s Office’s Criminal Division in Camden.

    Source

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  • Cardinal Health Agrees to Pay More than $13 Million to Resolve Allegations that it Paid Kickbacks to Physicians

    Justice 007

     

    BOSTON – Ohio-based pharmaceutical distributor, Cardinal Health, Inc., has agreed to pay $13,125,000 to resolve allegations that it violated the False Claims Act by paying “upfront discounts” to its physician practice customers, in violation of the Anti-Kickback Statute.

    The Anti-Kickback Statute prohibits pharmaceutical distributors from offering or paying any compensation to induce physicians to purchase drugs for use on Medicare patients. When a pharmaceutical distributor sells drugs to a physician practice for administration in an outpatient setting, the distributor may legally offer commercially available discounts to its customers under certain circumstances permitted by the Office of Inspector General for the Department of Health and Human Services (HHS-OIG). HHS-OIG has advised that upfront discount arrangements present significant kickback concerns unless they are tied to specific purchases and that distributors maintain appropriate controls to ensure that discounts are clawed back if the purchaser ultimately does not purchase enough product to earn the discount. According to facts that the company has acknowledged in the settlement agreement, Cardinal Health, Inc. failed to meet these requirements because the upfront discounts it provided to its customers were not attributable to identifiable sales or were purported rebates which Cardinal Health’s customers had not actually earned.

    “Cardinal Health recruited new customers by offering and paying cash bonuses in violation of the Anti-Kickback Statute and False Claims Act. Kickback schemes, such as this one, have the potential to pervert clinical decision-making and are detrimental to our federal health care system and taxpayers,” said United States Attorney Rachael S. Rollins. “We commend Cardinal Health for resolving this matter cooperatively.”

    “Pharmaceutical distributors are expected to play by the rules and not engage in illegal arrangements,” said Phillip M. Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Working with our law enforcement partners, we will continue to investigate kickback schemes that threaten the integrity of our federal health care system, no matter how those schemes are disguised.”

    “Cardinal Health thought it hit upon a surefire moneymaker by paying kickbacks to doctors, which cost health benefit programs millions of dollars in potentially fraudulent claims,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Anyone involved in, or entertaining, similar activity should know that health care fraud is a priority for the FBI, and we will pursue anyone trying to profit from this country’s vital health care system.”

    The False Claims Act settlements resolve allegations originally brought in lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement, the relators will receive approximately $2.6 million of the recovery.

    U.S. Attorney Rollins, HHS-OIG SAC Coyne and Boston FBI SAC Bonavolonta made the announcement today. Assistant U.S. Attorneys Evan Panich and Lindsey Ross of Rollins’ Affirmative Civil Enforcement Unit handled the matter.

    Source

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  • Cardiologist Dinesh Shah Pays $2 Million To Resolve False Claims Act Allegations Relating to Excessive Testing

    Justice 005

     

    DETROIT - An Oakland County Cardiologist, Dinesh M. Shah, M.D. and his practice, Michigan Physicians Group, P.C. (MPG) have paid the United States $2 million to resolve allegations that they violated the False Claims Act by knowingly billing federal healthcare programs for diagnostic testing that was either unnecessary or not performed. MPG is a Michigan professional corporation with primary offices located in Berkley and Livonia, Michigan, and with administrative offices, labs, and testing sites at other locations within the metropolitan Detroit area. Shah is a practicing cardiologist and the sole owner of MPG.

    This settlement resolves allegations that from 2006 to 2017, Shah and MPG knowingly billed government programs, including Medicare, Medicaid, and TRICARE, for unnecessary diagnostic testing. The investigation focused on the provision of a group of diagnostic tests, which included Ankle Brachial Index and Toe Brachial Index tests, known as ABI/TBIs, which were routinely performed on patients without first being ordered by a physician and without regard to medical necessity. The ABI compares blood pressure in the ankle to blood pressure in the arm to determine how well blood is flowing from the heart to the feet. The TBI is an additional measure to assess blood pressure readings at the toes.

    The investigation also focused on the provision of unnecessary Nuclear Stress Tests. The United States alleged that Shah was routinely ordering, and MPG was providing, unnecessary Nuclear Stress Tests to some patients. During a Nuclear Stress Test, a small amount of radioactive tracer is injected into a vein, after which it is detected by a special camera that produces images used to evaluate blood flow to the heart.

    This settlement comes after a years-long investigation by the Office of Inspector General for the United States Department of Health and Human Services and the Defense Health Agency acting on behalf of the TRICARE Program. The State of Michigan Attorney General’s Office participated in the settlement as the State of Michigan was a named plaintiff in one of the cases.

    “Subjecting patients to unnecessary testing in order to fill one’s pockets with taxpayer funds will not be tolerated. Such practices are particularly concerning because overuse of some tests can be harmful to patients,” said Acting U.S. Attorney Saima Mohsin. “With these lawsuits and the accompanying resolution, Dr. Shah and Michigan Physicians Group are being held to account for these exploitative and improper past practices.

    “Physicians commit to providing and billing for only medically necessary services when they choose their profession and participate in federally funded health care programs,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & human Services, Office of Inspector General – Chicago Region. “To deviate from that commitment and potentially place their patient’s health and safety at risk as well as limited tax payer resources is unacceptable. The OIG will continue to work with our federal, state and local partners to ensure that patients and tax payer dollars are protected.”

    In addition to the civil settlement agreement, Dinesh Shah and MPG simultaneously entered into an Integrity Agreement with the Office of Inspector General for the United States Department of Health and Human Services, which provides for some oversight of Shah and MPG’s billing practices for a three-year period.

    The settlement resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by two separate whistleblowers, Arlene Klinke and Khrystyna Mala, both former employees of MPG. The False Claims Act permits private parties to file suit on behalf of the United States and to share in any recovery.

    The matter was handled by Assistant United States Attorneys Leslie Wizner and Lynn Dodge.

    The two qui tam cases are docketed as United States ex rel. Arlene Klinke v. Dinesh Shah, M.D. and Michigan Physicians Group, Civil Action No. 10-cv-10726 (E.D. MI), and United States and State of Michigan ex rel. Khrystyna Mala v. Michigan Physicians Group, P.C. Dinesh Shah, M.D. Alka Shah, M.D., Rita Shah, M.D. and Tatiana Shcherbich, Civil Action No. 12-cv-10732 (E.D. MI).

    Source

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  • Catholic Medical Center Agrees to Pay $3.8 Million to Resolve Kickback-Related False Claims Act Allegations

    Justice 017

     

    CONCORD – United States Attorney John J. Farley announced today that Catholic Medical Center (CMC) has agreed to pay $3.8 million to resolve allegations that it violated the civil False Claims Act by providing free call coverage services to a cardiologist to induce patient referrals, in violation of the Anti-Kickback Statute.

    According to the settlement agreement, the United States asserted that CMC, a hospital in Manchester, paid its own cardiologists to cover for, and to be available to provide medical services for, another cardiologist’s patients when she was on vacation or otherwise unavailable. The United States further alleged that CMC provided these call coverage services at no charge. The cardiologist who received the free call coverage referred millions of dollars in medical procedures and services to CMC over the decade in which the free services were provided. Because CMC submitted claims for payment to Medicare, Medicaid, and other federal health care programs for the services referred by the cardiologist, the United States alleged that these claims were the result of unlawful kickbacks.

    “The False Claims Act and the Anti-Kickback Statute protect patients and federal health care programs from fraud and abuse by removing the corrupting influence of money,” said U.S. Attorney Farley. “When patients are referred for medical services, those referrals should be based solely on medical need and not affected by financial considerations. We work closely with our law enforcement partners to protect the integrity of federal health care programs and we will use all appropriate enforcement tools to combat health care fraud in New Hampshire.”

    “Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars. As today’s settlement makes clear, the FBI will aggressively investigate those who seek to bolster their bottom line by paying illegal kickbacks—whether directly or indirectly—to circumvent safeguards designed to protect the integrity of federal health care programs,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division.

    “Today’s settlement sends a clear message that these types of financial arrangements will not be tolerated. We will continue to work with our law enforcement partners to ensure that all medical providers properly follow health care rules and regulations,” said Phillip M. Coyne, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of Inspector General. “I appreciate the partnership with the New Hampshire U.S. Attorney's Office in identifying and prosecuting this type of fraud.”

    "Protecting TRICARE, the health care program for active-duty military personnel, retirees, and dependents, is a top priority for the Department of Defense Office of Inspector General's Defense Criminal Investigative Service (DCIS)," said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. "When health care facilities submit claims to TRICARE for services that are driven by financial reasons and not strictly medical ones, it undermines the integrity of the TRICARE program. Today's settlement agreement demonstrates the DCIS' ongoing commitment to work with the U.S. Attorney's Office, District of New Hampshire, to investigate health care fraud."

    The Anti-Kickback Statute makes it illegal for a hospital to pay physicians in exchange for referrals of government insured health care programs, such as Medicare, Medicaid, or Tricare. It arose out of congressional concern that remuneration given to those who can influence health care decisions would result in the provision of medically unnecessary services, or services of poor quality or otherwise harmful to patients.

    The False Claims Act permits whistleblowers to file civil lawsuits alleging that false claims have been submitted to the United States. This False Claims Act settlement resolves allegations originally brought in a lawsuit filed by a whistleblower, David Goldberg, M.D., a former CMC employee, who is represented by Douglas, Leonard & Garvey, P.C. As part of the settlement the whistleblower will receive a portion of the settlement amount.

    CMC did not admit liability as part of this settlement agreement.

    This case was investigated by the Office of Inspector General of the U.S. Department of Health and Human Services, the Office of Inspector General of the Department of Defense, and the Federal Bureau of Investigation. The case was handled by Assistant U.S. Attorney Raphael Katz.

    Source

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  • Center City Doctor Pleads Guilty to Illegally Distributing Controlled Substances and Filing False Tax Returns and Agrees to Pay $4 Million to Resolve Civil and Related Allegations

    Justice 012

     

    PHILADELPHIA, PA – Acting United States Attorney Jennifer Arbittier Williams announced that Stephen Padnes, M.D., 79, of Glenside, Pennsylvania, a physician formerly licensed in Pennsylvania, entered a guilty plea before United States District Court Judge Gene E.K. Pratter on criminal charges of illegally distributing controlled substances and filing false tax returns.

    Williams also announced that Padnes has agreed to pay $2 million to settle a civil lawsuit brought by the United States seeking penalties and damages against him. The settlement resolves allegations that Padnes prescribed opioids without a legitimate medical purpose in violation of the Controlled Substances Act and False Claims Act (the “Civil Action”). The resolution of the Civil Action also excludes Padnes from participating in the Medicare program for at least ten years.

    Padnes has also entered into a settlement agreement with the United States whereby he has agreed to the civil forfeiture of over $1.8 million in cash seized from his home as proceeds of unlawful prescribing (the “Forfeiture Action”).

    The Drug Enforcement Agency has also rescinded Padnes’s licenses to prescribe controlled substances.

    Criminal Guilty Plea

    Earlier today, Padnes pled guilty to the criminal indictment, which charged him with illegally prescribing Schedule II controlled substances, oxycodone and methadone, on seven occasions between December 21, 2015 and June 29, 2016, without any medical necessity and outside the usual course of medical practice. It also charged that Padnes underreported the income earned by his medical practice, the Psychosomatic Medicine and Pain Rehabilitation Center, Inc., to the Internal Revenue Service by more than $700,000 for calendar years 2012, 2013, and 2014. Padnes faces a maximum possible sentence of 149 years’ imprisonment and has agreed to pay $301,219 in restitution to the IRS.

    $2 Million Settlement of the Civil Action and Exclusion from Medicare

    Padnes has agreed to pay an additional $2 million to settle the government’s allegations against him in the Civil Action brought pursuant to the Controlled Substances Act and the False Claims Act. Padnes has also agreed to be excluded from participating as a provider in the Medicare program for at least ten (10) years.

    The Civil Action alleges that Padnes violated the Controlled Substances Act by issuing prescriptions on hundreds of occasions for Schedule II opioids in 2014, 2015, and 2016 without a legitimate medical purpose. The government alleges numerous instances where Padnes accepted cash payments, hundreds of dollars each, in exchange for prescriptions for high doses of opioids without maintaining medical records in the normal course of medical practice, physical exams, reevaluations, and/or monitoring of the effectiveness of the opioids he prescribed.

    The government alleges numerous examples where Padnes regularly prescribed the equivalent of over 1,000 milligrams of morphine per day to certain purported patients in exchange for cash. In one example, the government alleges that Padnes issued prescriptions for so many opioids to a patient that the patient would have needed to consume nearly 70 pills, the equivalent of 4,000 milligrams of morphine, every day. For reference, the Centers for Disease Control and Prevention’s guidance on opioid prescribing for chronic pain patients urges caution when patients are prescribed more than the equivalent of 50 milligrams of morphine per day and should usually not be prescribed greater than the equivalent of 90 milligrams of morphine every day. https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes%2F65%2Frr%2Frr6501e1er.htm#recommendations

    The government also alleges that Padnes violated the False Claims Act because Medicare and Medicaid paid to fill thousands of prescriptions that Padnes issued without a legitimate medical purpose, causing a loss to these programs exceeding $1 million.

    The Controlled Substances Act provides for penalties for each prescription issued without a legitimate medical purpose up to $25,000 for violations on or before November 2, 2015 and up to $64,820 per violation after November 2, 2015. The False Claims Act allows for damages treble the government’s loss and civil penalties between $5,500 and $11,000 for each false claim presented on or before November 2, 2015 and between $11,181 and $22,363 for each false claim presented after November 2, 2015.

    Civil Forfeiture of $1,864,545

    On August 12, 2019, the United States filed a civil forfeiture complaint seeking the forfeiture of $1,864,545 cash seized from the defendant’s home during the execution of a search warrant in 2016. The government alleges that cash was the proceeds from Padnes’s unlawful medical practice from at least 2010 to 2016. The government alleges that, during that time, the vast majority of the defendant’s “patients” paid up to approximately $500 in cash for prescriptions for controlled substances, including Schedule II opioids such as oxycodone and methadone, that he wrote outside the usual course of medical practice and without a legitimate medical purpose. The cash was discovered in suitcases and a dresser located in a bedroom in the defendant’s home.

    * * *

    “Our community continues to cope with the tragic and deadly consequences of the opioid epidemic,” said Acting United States Attorney Williams. “A small number of corrupt doctors put greed before their oath, abused their positions of trust, and fanned the flames of the epidemic by pumping untold millions of illicit opioid pills onto our streets without a legitimate medical purpose simply to enrich themselves. As this case demonstrates, we will bring the full force of the federal government to find, investigate, and prosecute such wrongdoing criminally and civilly,” said Williams. “To any prescriber who may be tempted to sell opioid prescriptions without a legitimate medical purpose, be warned: it is not worth it. We will find you, we will prosecute you, and we will make you pay,” said Williams.

    Williams continued, “This parallel criminal and civil prosecution represents exceptional professionalism and teamwork of the Criminal, Civil, and Forfeiture units of this Office and our dedicated law enforcement partners over the course of this complex case. I wish to specifically commend the FBI, DEA, the Department of Health and Human Services, and the Internal Revenue Service for their investigative work,” said Williams.

    “Dr. Padnes routinely prescribed dangerous amounts of opioids without any medical necessity in exchange for cash, making him no different than a drug dealer on the street,” said Thomas Hodnett, Acting Special Agent in Charge of the DEA’s Philadelphia Field Division. “I want to thank our partners at HHS, IRS, and the FBI; working together we were able to pursue criminal charges and civil violations against rogue doctors like Padnes that have contributed to the opioid epidemic.”

    “As a consequence, for prescribing opioids without medical necessity, Mr. Padnes will be excluded from participating in the Medicare program for at least ten years,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services. “Working closely with our law enforcement partners and the criminal and civil divisions of the U.S. Attorney’s Office, HHS-OIG will continue to protect the integrity of government health care programs.”

    “Today’s guilty plea sends a message to all professionals that no one is above their responsibility to pay taxes,” said Yury Kruty, Acting Special Agent in Charge, Philadelphia Field Office. “All income, legally or illegally earned, is taxable. IRS-Criminal Investigation will always work with our law enforcement partners and provide our financial expertise to stop individuals from illegally distributing controlled substances to the American public.”

    “Stephen Padnes admits abusing his prescribing privileges for profit,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Doctors willing to illegally distribute and prescribe opioids to enrich themselves only deepen the drug epidemic that continues to ravage our area. That’s why the FBI is so determined to shut down unscrupulous medical professionals engaged in drug diversion. I encourage the public to report any information about prescription abuse to us or our law enforcement partners.”

    The investigation was conducted by the Philadelphia Field Division of the Drug Enforcement Administration, the U.S. Department of Health and Human Services, Office of Inspector General, Internal Revenue Service Criminal Investigation, and the Federal Bureau of Investigation Health Care Fraud Task Force, which includes agents from the FBI, Pennsylvania Attorney General’s Office, and HHS-OIG.

    For the United States Attorney’s Office, the criminal case is being prosecuted by Assistant United States Attorney Jerome Maiatico, the civil Controlled Substances Act and False Claims Act matter was prosecuted by Assistant United States Attorney Charlene Keller Fullmer and former Assistant United States Attorney John T. Crutchlow, and the civil forfeiture matter is being prosecuted by Assistant United States Attorney Maria M. Carrillo.

    Except for those facts admitted to in the guilty plea, the claims resolved by the civil settlements are allegations only, and there has been no determination of liability.

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  • Central Medical Systems, LLC, Alan Trent Harley and Joan Harley Agree to Pay $600K to Settle False Claims Act Liability

    Justice 013

     

    Orlando, FL –United States Attorney Roger B. Handberg announces today that Central Medical Systems, LLC, Joan Harley, and Alan Trent Harley have agreed to pay the United States $600,000 to resolve allegations that they violated the False Claims Act by participating in a scheme to defraud Medicare.

    The United States previously intervened in a civil whistleblower lawsuit against Central Medical Systems and Alan Trent Harley on January 18, 2018, and later filed an amended complaint adding Joan Harley, Arthur Wright, and Meddex Solutions, LLC, as defendants, alleging the defendants conspired to make false claims to the United States in violation of the False Claims Act.

    The civil lawsuit and settlement relate to the submission of claims for wound care supplies sold by Central Medical Systems. According to the lawsuit, Alan Trent Harley would routinely change quantities of items while billing and manipulated orders in Central Medical Systems’ billing software. This allegedly resulted in Central Medical Systems seeking and receiving inflated Medicare payments for more expensive products than were provided to patients or for products that were never provided at all.

    The government’s suit also alleges that, after the United States intervened in the lawsuit, Central Medical Systems and Alan Trent Harley conspired with Joan Harley (his wife), Arthur Wright, and Meddex Solutions to fraudulently submit Central Medical Systems’ claims through Meddex Solutions in an attempt to bypass Medicare’s suspension of payments to Central Medical Systems.

    Alan Trent Harley pleaded guilty to one count of wire fraud on November 30, 2020, and was sentenced to 15 months’ imprisonment. According to court documents in that criminal case, Harley co-founded Central Medical Systems in 1986. As president and sole active owner of the business, Harley was responsible for submitting claims to Medicare on behalf of Central Medical Systems. From at least 2011 through 2015, Harley knowingly defrauded the government of more than $870,000 by submitting fraudulent claims to Medicare. Although his employees provided him with accurate data about which wound care supplies were sent, and in what quantities, Harley frequently changed that data (with respect to both product type and quantities) before submitting claims to Medicare, in order to obtain fraudulently higher reimbursements from Medicare.

    The United States previously entered into a civil settlement agreement with Arthur Wright and Meddex Solutions, effective June 1, 2021, under which they agreed to pay the United States $77,741.93, to resolve the False Claims Act allegations against them in this case.

    “This is another example of our office’s commitment to prosecute those – individual or corporate – who seek to exploit Medicare for their personal gain, and at the expense to taxpayers,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “We will continue to use all available resources at our disposal to pursue those who defraud our nation’s federal healthcare programs.”

    “Health care professionals are required to follow Medicare rules and accurately bill for services provided. Fraudulently billing Medicare for personal gain cheats millions of people who fund the program and contributes to the soaring cost of health care,” stated Omar Perez Aybar, Special Agent in Charge with the Department of Health and Human Services, Office of Inspector General. “Working closely with our law enforcement partners, we will continue to pursue those who exploit government health care programs.”

    The settlement resulted from a lawsuit originally filed in the United States District Court for the Middle District of Florida by Relator Jael Cancel. Ms. Cancel sued under the qui tam, or whistleblower, provisions of the False Claims Act that permit a private citizen to sue on behalf of the United States for false claims and to share in the recovery. The Act also allows the United States to intervene and prosecute the action. The United States intervened in this matter and litigated the case. Ms. Cancel will receive $144,000 of the proceeds from the civil settlement with Central Medical Systems, Alan Trent Harley, and Joan Harley.

    The United States’ intervention in and settlement of this matter illustrates its emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

    This settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Middle District of Florida and the HHS Office of Inspector General. Assistant United States Attorney Jeremy R. Bloor led the investigation.

    The case is captioned United States ex rel. Cancel v. Central Medical Systems, LLC et al., Case No. 6:14-cv-512-ORL-28TBS. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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  • CEO Sentenced to Prison in $150 Million Health Care Fraud, Opioid Distribution, and Money Laundering Scheme

    Justice 025

     

    Proceeds of the fraud were used to fund private jet flights, courtside tickets to the NBA Finals, and purchase of luxury automobiles, jewelry and real estate

    The chief executive officer of a Michigan and Ohio-based group of pain clinics and other medical providers was sentenced today to 15 years in prison for developing and approving a corporate policy to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids.

    Mashiyat Rashid, 40, of West Bloomfield, Michigan, was the CEO of the Tri-County Wellness Group of medical providers in Michigan and Ohio. In addition to the prison sentence, Rashid was also ordered to pay over $51 million in restitution to Medicare, as well as forfeiture to the United States of property traceable to proceeds of the health care fraud scheme, including over $11.5 million, commercial real estate, residential real estate, and a Detroit Pistons season ticket membership.

    Rashid pleaded guilty in 2018 to one count of conspiracy to commit health care fraud and wire fraud, and one count of money laundering. Twenty-one other defendants, including 12 physicians, have been convicted thus far, including four physicians who were convicted after a one-month trial in 2020. Rashid is the second defendant to be sentenced.

    According to court documents, from 2008 to 2016, Rashid was the CEO of the Tri-County Wellness Group, where the clinics had a policy to offer patients, some of whom were suffering from legitimate pain and others of whom were drug dealers or opioid addicts, prescriptions of Oxycodone 30 mg, but forced the patients to submit to unnecessary back injections in exchange for the prescriptions.

    Testimony at the trial established that in some instances the patients experienced more pain from the shots than from the pain they had purportedly come to have treated; that audible screams from patients were observed throughout the clinics; and that some patients developed adverse conditions, including open holes in their back. Patients, including patients who were addicted to opioids, who told the doctors that they did not want, need, or benefit from the injections, were denied medication by the defendants and their co-conspirators until they agreed to submit to the expensive and unnecessary injections. The evidence further established that the defendants repeatedly performed these unnecessary injections on patients, as Tri-County was paid more for facet joint injections than any other medical clinic in the United States.

    The evidence at trial showed that the Tri-County clinics valued making money over patient care. The Tri-County clinics intentionally targeted the Medicare program and recruited patients from homeless shelters and soup kitchens. Evidence at trial indicated that Rashid only hired physicians who were willing to disregard patient care in the pursuit of money. Rashid incentivized the physicians to follow the Tri-County protocol of offering opioid prescriptions and administering unnecessary injections by offering to split the Medicare reimbursements for these lucrative procedures. The specific injections used had nothing to do with the medical needs of the patients but were instead selected to be administered because they were the highest-paying injection procedures. A former Tri-County employee testified at the trial of Rashid’s co-defendants that the practices at the clinic were “barbaric.”

    Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Saima Shafiq Mohsin of the Eastern District of Michigan; Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services’ Office of Inspector General’s (HHS-OIG’s) Chicago Region; Special Agent in Charge Timothy Waters of the FBI’s Detroit Field Office; and Special Agent in Charge Sarah Kull of IRS Criminal Investigation (IRS-CI) Detroit made the announcement.

    HHS-OIG, FBI, and IRS-CI conducted the investigation. Assistant Chief Jacob Foster of the National Rapid Response Strike Force and Trial Attorney Tom Tynan of the Criminal Division’s Fraud Section prosecuted the case.

    The Fraud Section leads the Health Care Fraud Strike Force. Since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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  • Chicago Woman Sentenced to 56 months for Home Health Care Fraud

    Justice 054

     

    Last of Four Individuals Sentenced in this Conspiracy

    An Illinois woman was sentenced yesterday in the Northern District of Illinois to 56 months in prison and ordered to pay $6.3 million in restitution for her participation in a conspiracy to commit health care and wire fraud.

    According to court documents, and the evidence presented at trial, Angelita Newton, 43, of Chicago, worked at Care Specialists, a home health care company owned by Ferdinand Echavia and later his wife, Ma Luisa Echavia. While operating between 2011 and 2017, Care Specialists fraudulently billed Medicare at least $6.3 million. At trial, the government demonstrated that around 90% of the patients were not homebound and did not qualify for the types of care that Care Specialists billed Medicare for. Further, many patients received cash bribes to receive home health “visits,” some of which were performed in the visiting nurse’s car. Newton facilitated the conspiracy by falsifying patient visit records which were used to support claims billed to Medicare and was convicted by a federal jury on Feb. 14, 2020.

    In addition to issuing Newton’s sentence today, Judge Virginia Kendall previously sentenced three others involved in the conspiracy. On Oct. 21, 2021, Ferdinand Echavia was sentenced to 84 months’ confinement and three years’ supervised release. On Nov. 5, 2021, Ma Luisa Echavia was sentenced to 60 months’ confinement and three years’ supervised release. Another participant in the conspiracy, Reginald Onate, who pleaded guilty and cooperated with the government throughout the investigation, was sentenced to a term of three years’ probation.

    Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, Acting Assistant Director Jay Greenberg of the FBI’s Criminal Investigative Division, and Special Agent in Charge Mario Pinto of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) made the announcement.

    The FBI Chicago Field Office and HHS-OIG investigated the case.

    Trial Attorney Leslie S. Garthwaite of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Patrick Mott (formerly of the Fraud Section) prosecuted the case.

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  • Co-conspirator charged with stealing $470,000 from VA, Michigan Treasury

    Justice 014

     

    LANSING - Another suspect in a scheme to defraud the U.S. Department of Veterans Affairs and Michigan Department of Treasury out of nearly half a million dollars has been formally charged, Michigan Attorney General Dana Nessel announced today.

    The Attorney General's enforcement operation was conducted in close collaboration with the U.S. Department of Veterans Affairs Office of the Inspector General.

    Sophia J. Quill, 60, was arraigned in front of Judge Mark A. McConnell of the Wayne County 18th District Court over Zoom Wednesday.  

    The charges include:

    • one count of Conducting a Criminal Enterprise, a felony punishable by up to 20 years' imprisonment, $100,000 fine and forfeiture of proceeds and items used during the crime;
    • four counts of False Pretenses $50,000-$100,000, a felony punishable by 15 years' imprisonment, $25,000 fine or three times the value of the money or property involved, whichever is greater;
    • two counts of False Pretenses $20,000-$50,000, a felony punishable by 15 years' imprisonment, $15,000 fine or three times the value of the money or property involved, whichever is greater; and
    • two counts of False Pretenses $1,000-$20,000 , a felony punishable by 5 years' imprisonment, $10,000 fine or three times the value of the money or property involved, whichever is greater.

    She is charged as a Fourth Habitual Offender, meaning Quill is facing a maximum term of life imprisonment if convicted of any of the charges.

    Quill and her co-conspirator Melissa Flores, who was arraigned last year, allegedly created aliases and obtained or created fraudulent documents to make it appear that they were heirs to various individuals who died.  

    Between 2013 and 2019, it is alleged that Quill and Flores defrauded the U.S. Department of Veterans Affairs (VA) out of more than $430,000 and the Michigan Department of Treasury out of more than $40,000. Quill's son Steven Decker, who was also arraigned last year, allegedly received proceeds from the scheme and used some of the money to conceal property used to conduct the fraud.

    "I said it after the first arraignments and I'll say it again-taking advantage of agencies that offer public benefits for our servicemembers and their families is a slap in the face to the brave men and women who protect this country," Nessel said. "Let the months spent building and prosecuting this case serve as a warning to anyone trying to defraud our state or federal agencies. It will not be tolerated."

    Quill was not arraigned in Michigan last year with her co-defendants because she is out of state and COVID-19 made extradition from Florida difficult. However, the Wayne County District Court was recently able to coordinate Quill's remote arraignment.

    Judge McConnell set bond at $10,000 cash/surety and ordered that Quill have no contact with co-defendant Flores.

    A Probable Cause Conference is scheduled for April 29 and a Preliminary Examination is scheduled for May 6, both over Zoom.

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  • Colorado Physician Charged for Misappropriating Thousands from Three Different COVID Relief Programs

    Justice 005

     

    An indictment was unsealed Wednesday in Denver charging a Colorado man with stealing nearly $300,000 in government funds from three different COVID relief programs and with making false statements in connection with bankruptcy proceedings.

    According to court documents, Francis F. Joseph, 56, of Highlands Ranch, allegedly transferred approximately $118,000 in COVID relief funding from a medical clinic’s account into his personal bank account, after which he spent the money on, among other things, travel and home improvements. The stolen funds came from two programs that were designed to aid medical providers during the COVID-19 pandemic — the Accelerated and Advance Payment Program and the Provider Relief Fund.

    The Accelerated and Advance Payment Program provides necessary funds in national emergencies in order to accelerate cash flow to impacted Medicare providers. The Provider Relief Fund, through which $50 billion was allocated to providers for the coronavirus response, was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted March 29, 2020 and designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic.

    Today’s indictment constitutes the nation’s second set of criminal charges related to the misuse of Provider Relief Fund moneys and the first time that charges have been brought in connection with fraud on the Accelerated and Advance Payment Program.

    The indictment further alleges that following his termination from the clinic, Joseph applied for a $179,999 loan under the Paycheck Protection Program (PPP) on behalf of the medical practice, which he then directed into his personal bank account. Finally, the indictment alleges that Joseph filed for bankruptcy on behalf of (but unbeknownst to) the clinic following his termination and submitted documents containing materially false statements regarding his misappropriation of funds from the clinic in connection with that proceeding.

    In April 2020, Congress authorized over $300 billion in additional PPP funding through the CARES Act. The PPP allows qualifying small business and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

    Joseph is charged with theft in connection with health care, theft of government property, wire fraud, and making a false statement in connection with a bankruptcy proceeding. Joseph is scheduled to make his initial court appearance on May 25 before U.S. Magistrate Judge S. Kato Crews of the U.S. District Court for the District of Colorado. If convicted, he faces maximum penalties of 10 years in prison for each theft count, 20 years for wire fraud, and five years for the bankruptcy proceeding false statement. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

    Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Special Agent in Charge Curt Muller of the U.S. Department of Health and Human Services’ Office of Inspector General’s (HHS-OIG) Kansas City Region; and Special Agent in Charge Weston King of the U.S. Small Business Administration’s Office of Inspector General’s (SBA-OIG) Western Region made the announcement.

    Trial Attorney Emily Gurskis of the Justice Department’s Fraud Section is prosecuting the case.

    This case was brought in coordination with the Health Care Fraud Unit’s COVID-19 Interagency Working Group, which organizes efforts to address illegal activity involving health care programs during the pandemic. The Department of Justice also thanks the U.S. Attorney’s Office for the District of Colorado and the Colorado State Medicaid Fraud Control Unit for assistance they provided.

    Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

    The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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  • Counselor Sentenced to Federal Prison for Wide-Ranging Medicaid Fraud Scheme

    Justice 004

     

    Leonard C Boyle, United States Attorney for the District of Connecticut, announced that CORTNEY DUNLAP, 37, of Burlington, was sentenced today by U.S. District Judge Kari A. Dooley in Bridgeport to 57 months of imprisonment, followed by three years of supervised release, for operating a wide-ranging scheme that defrauded the Connecticut Medicaid Program of more than $1.3 million.

    According to court documents and statements in court, from 2014 to 2020, Dunlap was a Licensed Professional Counselor with offices located on Brainard Road in Hartford. Dunlap also owned two entities, Inspirational Care and KEYS Program Inc., through which he managed group homes in Hartford, Bristol, Cromwell and Waterbury, including residences for women and children who were victims of domestic abuse.

    From August 2018 through October 2020, Dunlap engaged in a scheme to defraud the Connecticut Medicaid Program by submitting claims for psychotherapy services that were purportedly provided to Medicaid clients. The vast majority of the claims were for occasions and dates of service when no psychotherapy services of any kind had been provided to the Medicaid clients identified in the claims. On a limited number of occasions, some of the services were rendered by unlicensed individuals who were not qualified or licensed to provide psychotherapy.

    The Connecticut Medicaid program suspended Dunlap as a Medicaid provider on approximately April 28, 2020, and, on May 7, 2020, federal law enforcement agents executed a court-authorized search of Dunlap’s Hartford offices. Dunlap subsequently billed Medicaid for psychotherapy services through Inspirational Care for services that which were not provided, using the provider number of a licensed clinical social worker who did not provide the services and was not aware that her provider number was being used to bill for the nonexistent services.

    Dunlap required tenants of the group homes operated or managed by Inspirational Care and KEYS program to provide copies of the Medicaid member cards for the tenants and their children as a condition of the tenants residing at the group homes. Dunlap then used these Medicaid member numbers to bill Medicaid for psychotherapy services that were not provided to the tenants or their children. Dunlap used the Medicaid member numbers of approximately 65 tenants or their children to bill Medicaid for fraudulent services, and Medicaid paid Dunlap approximately $543,117 for psychotherapy services that were not provided to these individuals.

    In February 2019, the New Haven Public Schools hired Dunlap as a guidance counselor at the New Haven Adult and Continuing Education Center. In February 2020, Dunlap accessed a database containing personal identifying information of students and former students enrolled at New Haven Adult and Continuing Education, many of whom Dunlap did not have any professional relationship with and had never met. Dunlap used the information he acquired to determine whether the students were insured by Medicaid and, if so, identified the students’ Medicaid member identification numbers. He then billed Medicaid for fraudulent psychotherapy services that were never provided to the students. Dunlap used the personal identifying information and Medicaid member numbers of approximately 135 New Haven Adult and Continuing Education students to bill Medicaid for fraudulent services, and was paid a total of approximately $593,383 by Medicaid for these claims.

    Dunlap also fraudulently billed Medicaid for psychotherapy services purportedly provided to employees of Inspirational Care when no such services were provided, and submitted fraudulent claims to Medicaid for psychotherapy services purportedly provided to members of his family when no such services were provided.

    Judge Dooley ordered to Dunlap to pay restitution to Medicaid in the amount of $1,313,322.

    U.S. Attorney Boyle noted that Connecticut Department of Social Services, working in close cooperation with law enforcement, suspended Medicaid payments to Dunlap and recovered $337,777.63 that Dunlap was slated to receive from Medicaid. The U.S. Attorney’s Office’s Civil Division also seized and forfeited $412,415.20 from Dunlap’s bank accounts. Dunlap has made an additional restitution payment of $20,000, leaving a restitution obligation of $543,129.17.

    Dunlap was arrested on a criminal complaint on October 14, 2020. On June 4, 2021, he pleaded guilty to one count of health care fraud.

    Dunlap, who is released on bond, is required to report to prison on April 25.

    This investigation has been conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation, with the assistance of the Office of the Inspector General for the U.S. Department of Housing and Urban Development, the Office of the Inspector General for the U.S. Department of Education, the Medicaid Fraud Control Unit of the Connecticut Chief State’s Attorney’s Office, the Connecticut Attorney General’s Office and the Connecticut Department of Social Services.

    This case is being prosecuted by Assistant U.S. Attorney David J. Sheldon with the assistance of Auditor Susan N. Spiegel.

    Source

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  • Creve Coeur pharmacy and owner agree to pay $1,507,808.50 to resolve lawsuit alleging dispensing of controlled substances with no legitimate medical purpose

    Justice 062

     

    ST. LOUIS – The United States has reached a civil settlement with Olive Street Pharmacy, LLC (Olive Street) and pharmacy technician Irina Shlafshteyn (Shlafshteyn) resolving a civil complaint bringing claims under the False Claims Act (FCA) and Controlled Substances Act (CSA) for damages, statutory penalties, and injunctive relief related to the unlawful dispensing of controlled substances, including controlled substances that were submitted to Medicaid or Medicare for reimbursement. As part of the settlement, Olive Street and Shlafshteyn agreed to pay $1,507,808.50, an amount that was based in part on their ability to pay.

    According to the civil complaint filed by the United States, Olive Street, a retail pharmacy located in Creve Coeur, Missouri, and Shlafshteyn, its 25 percent owner and managing employee, repeatedly dispensed prescriptions for controlled substances while disregarding warning signs of diversion, or “red flags,” indicating the prescriptions were not legitimate. The United States alleged that the types of red flags that Olive Street and Shlafshteyn ignored included clear instances of tampering with written prescriptions; dangerous combinations of drugs commonly sought after for recreational purposes; and amounts of opioids that exceeded CDC guidance by as much as 17.5 times the recommended maximum daily dosage.

    In the complaint, the United States further accused Olive Street of routinely dispensing prescriptions for Subsys, an oral fentanyl spray, which is subject to heightened FDA restrictions and indicated only for opioid-tolerant patients experiencing breakthrough pain due to cancer. The United States contended that Olive Street and Shlafshteyn knowingly dispensed high dosages of Subsys to patients who did not qualify for the drug, and that the vast majority of the Subsys Olive Street dispensed was prescribed by Philip Dean, M.D. Dean, a Warrenton, Missouri neurologist, pleaded guilty to illegally distributing prescription opioids in 2018, including to women with whom he had lived and with whom he had had personal relationships.

    The United States alleged that even though Shlafshteyn knew Dean was having intimate relationships with at least one of the women for whom he was prescribing controlled substances, Shlafshteyn and others at her direction continued to dispense Dean’s controlled substance prescriptions to that patient and to other patients of Dean. Further, according to the civil complaint, as the managing employee of Olive Street, Shlafshteyn had the control and authority to effect compliance with the FCA and CSA.

    According to the settlement agreement, effective September 30, 2021, Shlafshteyn surrendered her Missouri pharmacy technician license and Olive Street terminated its enrollment in the Transmucosal Immediate Release Fentanyl Risk Evaluation and Mitigation Strategy (TIRF REMS) Program, the FDA-mandated program that had allowed Olive Street to dispense immediate-release fentanyl drugs like Subsys. The parties further agreed to enter into a consent decree of permanent injunction prohibiting Shlafshteyn from participating in the dispensing of controlled substances or being employed by any establishment that does so, prohibiting Olive Street from seeking enrollment in the TIRF REMS Program, and detailing many additional specific parameters limiting the circumstances under which Olive Street is permitted to continue dispensing controlled substances.

    “Medical professionals have the legal obligation to ensure the dispensing of prescriptions are for legitimate medical purposes,” said Inez Davis, the Drug Enforcement Administration’s Diversion Program Manager for the states of Missouri and Kansas, and southern Illinois. “In this case, the pharmacy abandoned its corresponding responsibility and ignored the clear signs that powerful medications, like oral fentanyl spray, were being prescribed far beyond the recommended guidance. This settlement sends a message that DEA will not accept actions that put people’s lives at risk.”

    Under the settlement agreement, Shlafshteyn is excluded from participating in the federal healthcare programs for a period of 10 years, and Olive Street is bound by the terms of a corporate integrity agreement governing its ability to continue participating in the federal programs.

    “Health care providers who unlawfully dispense controlled drugs risk the health of their patients and pose a threat to society,” said Curt L. Muller, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General. “We will continue to work with our law enforcement partners to protect the integrity of federal health programs and hold accountable individuals who endanger beneficiaries.”

    “The Missouri Attorney General’s Medicaid Fraud Control Unit aids in conducting complex investigations and prosecutions to ensure that those who game the Medicaid system for personal gain are held accountable,” added Missouri Attorney General Eric Schmitt. “We’re proud of our work in this case, and our work across the state to hold bad actors accountable and save taxpayer money.”

    The Office of Inspector General of the Department of Health and Human Services, Drug Enforcement Administration, Federal Bureau of Investigation and the Missouri Attorney General’s Medicaid Fraud Control Unit investigated the case. Assistant United States Attorney Amy Sestric handled the case.

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  • Cumberland County Man Charged with Health Care Fraud, Money Laundering, And Theft of Public Money

    Justice 013

     

    HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Rodney L. Yentzer, age 52, of Cumberland County, Pennsylvania was charged in a criminal information with one count of conspiracy to commit health care fraud, one count of conspiracy to commit money laundering, and one count of theft of public money for defrauding Medicare and the U.S. Department of Health and Human Services between 2016 and 2020.

    According to United States Attorney John C. Gurganus, the information alleges that Yentzer agreed with others to defraud Medicare by submitting bill for medically unnecessary urine drug tests for chronic opioid patients at medical clinics he controlled, including a group of clinics known as Pain Medicine of York or “PMY” (also known as All Better Wellness).

    It is alleged that PMY billed Medicare for more than $10 million in urine drug tests from mid-2017 through the end of 2019. As a result, Medicare paid out over $4 million for these urine drug tests. Pennsylvania’s Medicaid program was also billed for urine drug tests during this same time period. The urine drug tests ordered by PMY were sent to an in-house laboratory at PMY whenever possible. As a result, when medically unnecessary tests were billed to Medicare, the proceeds from them went to PMY itself.

    The information also alleges that Yentzer received over $191,000 in U.S. Department of Health and Human Services stimulus money that was intended for health care providers who had health care related expenses and lost revenues attributable to COVID-19. Yentzer obtained these funds in April 2020, even though he had resigned from PMY the prior month and PMY had been closed since late 2019.   Yentzer allegedly used these funds on various things unrelated to COVID-19 relief, including personal expenses.

    Search warrants were executed at PMY’s various locations in November 2019, and PMY ceased operations soon thereafter.

    The case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, Federal Bureau of Investigation, Drug Enforcement Administration, and the Pennsylvania Office of Attorney General. Assistant U.S. Attorney Ravi Romel Sharma and Special Assistant U.S. Attorney Robert Smultkis are prosecuting the case.

    The maximum penalty under federal law for conspiracy to commit health care fraud is 10 years’ imprisonment. The maximum penalty law for conspiracy to commit money laundering is 20 years’ imprisonment. The maximum penalty law for theft of public money is 10 years’ imprisonment. These charges may also carry a fine and a term of supervised release following imprisonment. A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

    Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

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  • Davis Man Pays $635,000 in Civil Settlement to Resolve Allegations of False Statements to Obtain Grant Frauds

    Justice 037

     

    SACRAMENTO, Calif. — Owen Hughes, the sole proprietor of Eon Research Corporation in Davis, agreed to pay the United States $635,000 to resolve allegations that he knowingly submitted false statements to the National Institute of Environmental Health Sciences to secure Small Business Innovation Research grant funds, Acting U.S. Attorney Phillip A. Talbert announced.

    According to court documents, in 2007, Hughes applied for and received a Small Business Innovation Research grant to conduct environmental research, certifying that he had implemented financial safeguards to ensure the proper use of grant funds.

    The settlement resolves allegations that despite his certifications, Hughes had no financial policies in place. As a result, Hughes could not substantiate how he had actually used the federal funds he received. The settlement also resolves claims that Hughes commingled grant funds in his personal accounts and then used the commingled funds for his aviation hobby, by paying aircraft hangar rental fees and buying aircraft parts.

    “This settlement sends a clear message that recipients of federally funded grants must strictly adhere to the regulations applicable to those grants and fully account for their use of federal funds,” Acting U.S. Attorney Talbert said. “Recipients who fail to do so risk significant consequences.”

    “Establishing required financial policies is a key component to proper accounting of SBIR grants. Therefore, it is imperative that individuals and entities implement sound policies to avoid mismanagement of these limited funds,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Working with our auditors and law enforcement partners, we will continue preserving the integrity of all our grant programs.”

    “It is vital that agencies work together to hold grantees accountable for the use of taxpayer funds,” said Lori Pilcher, Regional Inspector General for Audit Services at the U.S. Department of Health and Human Services. “In this case, using forensic tools, our auditors identified suspicious grant disbursements and partnered closely with investigators and the United States Attorney’s Office throughout the investigation.”

    The National Institute of Environmental Health Sciences is a component of the National Institutes of Health, which is itself a component of U.S. Department of Health and Human Services.

    This case was the result of an investigation by the HHS Office of the Inspector General. Assistant U.S. Attorneys Colleen Kennedy, Rachel Muoio, and Steven Tennyson handled the matter for the United States. The claims settled by this agreement are allegations only, and there has been no determination of liability.

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  • Dayton psychiatric hospital and owner agree to pay $425,000 to resolve claims for unnecessary diagnostic testing

    Justice 019

     

    DAYTON, Ohio – Access Hospital Dayton, LLC and its owner, Dr. John Johnson, have agreed to pay the United States $374,780 to resolve False Claims Act allegations that they knowingly caused the submission of false claims to Medicare and Medicaid for diagnostic testing. Access Dayton and Johnson have also agreed to pay the State of Ohio approximately $50,219 to resolve State of Ohio Medicaid claims.

    The government alleged that, between January 2014 and December 2019, Access Dayton and Johnson knowingly caused the submission of false claims to Medicare and Ohio Medicaid for diagnostic laboratory testing (prolactin and ammonia) that was (1) performed during patients’ inpatient stays at Access Dayton, (2) not used in the management of the patients’ condition, and (3) not medically necessary.

    Prolactin testing measures the level of prolactin in a person’s blood, which providers use to diagnose pituitary tumors or to determine causes for conditions unrelated to psychosis or substance abuse. Providers use ammonia testing to diagnose liver dysfunctions or hyperammonemia.

    Medicare pays for diagnostic testing ordered by the physician who uses the results in the management of the beneficiary’s specific medical problem. Medicare and Ohio Medicaid generally prohibit separate payment for diagnostic testing performed during an inpatient admission.

    “It is crucial that every public dollar available go to treat the drug-addicted and mentally ill,” Ohio Attorney General Dave Yost said. “I am proud of the work by my Health Care Fraud Section and our federal partners to claw back the money to help us continue this fight.”

    False Claims Act tips and complaints about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

    The resolutions obtained in this matter were the result of a coordinated effort between the Department of Justice Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of Ohio, the Department of Health and Human Services Office of Inspector General and Ohio Attorney General Dave Yost’s Medicaid Fraud Control Unit. Trial Attorney Christopher Wilson of the Department of Justice’s Civil Division and Andrew Malek, Deputy Civil Chief of the U.S. Attorney’s Office, are representing the United States in this matter.

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  • Defendant Who Stole Money from Veterans and Social Security Beneficiaries Headed to Federal Prison

    Justice 066

     

    Miami, Florida – A 29-year-old Georgia man who redirected the benefits of veterans and social security beneficiaries to accounts that his co-conspirators set up and controlled has been sentenced to 78 months in prison by a South Florida federal district judge. In addition, the man must pay more than $900,000 in restitution to his victims.

    Defendant Ronaldo Green was a member of a conspiracy that obtained the personal information (including names, dates of birth and social security numbers) of disabled veterans and social security beneficiaries. The co-conspirators used this information to fraudulently open bank accounts and prepaid debit cards in the victims’ names. They also forged documents in the victims’ names that directed the U.S. Department of Veterans Affairs and the Social Security Administration to deposit benefit payments into those fraudulent accounts, instead of the victims’ legitimate bank accounts. Green and his co-conspirators withdrew the diverted money from ATMs and banks in South Florida and Georgia. They used it on personal expenses. Much of the money was ultimately funneled to architects of the scheme, located in Jamaica.

    From 2012 to 2017, members of the conspiracy attempted to redirect over $1.8 million in benefits from more than 100 disabled veterans and social security beneficiaries. Although several of the attempts failed, the defendants’ actually stole more than $1 million. The victims have been reimbursed for their losses.

    Green’s co-defendants, Omar Bailey and Jamare Mason, were sentenced during prior hearings. Bailey received 24 months’ imprisonment. Mason received 78 months’ imprisonment and was ordered to pay over $1 million in restitution. U.S. District Judge James Cohn, who sits in Ft. Lauderdale, imposed the sentences.

    Juan Antonio Gonzalez, U.S. Attorney for the Southern District of Florida; David Spilker, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General’s (VA-OIG) Southeast Field Office; and Rodregas Owens, Special Agent in Charge, Social Security Administration, Office of the Inspector General (SSA-OIG), made the announcement.

    U.S. Attorney Juan Antonio Gonzalez commended the investigative efforts of the Transnational Elder Fraud Strike Force, including partners from VA-OIG, SSA-OIG, United States Postal Inspection Service, and Homeland Security Investigations.

    The case was prosecuted by Assistant U.S. Attorneys Lois Foster-Steers and Sajjad Matin.

    Combatting elder abuse and financial fraud targeted at seniors is a key priority of the Department of Justice. The mission of the Department’s Elder Justice Initiative is to support and coordinate the Department’s enforcement and programmatic efforts to combat elder abuse, neglect and financial fraud and scams that target our nation’s seniors. To learn more visit https://www.justice.gov/elderjustice. The public is encouraged to report suspected elder victimization and fraud by visiting https://www.justice.gov/elderjustice/roadmap or calling the victim connect hotline at 1-855-484-2846.

    Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov, under case number 19-cr-60313.

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  • Defendant Who Stole Veteran and Social Security Benefits Sentenced to Federal Prison

    Justice 062

     

    Miami, Florida – A 27-year-old Georgia man who redirected the benefits of Veterans and Social Security Administration beneficiaries to accounts that his co-conspirators set up and controlled has been sentenced to 78 months in federal prison, to be followed by five years of supervised release. The defendant was also ordered to pay more than $1.3 million in restitution to his victims.

    Defendant Jamare Mason was a member of a conspiracy that obtained the personal information (including names, dates of birth and Social Security numbers) of disabled Veterans and Social Security beneficiaries. The conspirators used this information to fraudulently open bank accounts and prepaid debit cards in the victims’ names. They also forged documents in the victims’ names that directed the U.S. Department of Veterans Affairs and the Social Security Administration to deposit benefit payments into those fraudulent accounts, instead of the victims’ legitimate bank accounts.

    Mason, together with other co-conspirators, withdrew these funds from ATMs and banks throughout South Florida and Georgia for their own personal use. Much of the funds were ultimately funneled to the architects of the scheme in Jamaica.

    Over the course of five years, from 2012 to 2017, members of the conspiracy attempted to redirect over $1.8 million in benefits from more than a hundred disabled Veterans and Social Security beneficiaries. Although several of these attempts were blocked, the defendants’ scheme resulted in the actual loss of over $1 million, money that was diverted from disabled Veterans and Social Security beneficiaries. In each instance, the federal government reimbursed these victims for the full amounts of their stolen benefits.

    In November 2021, Mason pled guilty to conspiring to commit bank and wire fraud. U.S. District Judge Raag Singhal, who sits in Ft. Lauderdale, imposed Mason’s sentence.

    U.S. Attorney for the Southern District of Florida Juan Antonio Gonzalez; Special Agent in Charge David Spilker of the Department of Veterans Affairs, Office of Inspector General’s (VA-OIG) Southeast Field; Special Agent in Charge Rodregas W. Owens, Social Security Administration Office of the Inspector General (SSA-OIG); and Inspector in Charge Tommy D. Coke, U.S. Postal Inspection Service (USPIS), Atlanta Division made the announcement.

    U.S. Attorney Juan Antonio Gonzalez commended the investigative efforts of the Transnational Elder Fraud Strike Force, including our partners at the Department of Veterans Affairs’ Office of the Inspector General, United States Postal Inspection Service, Homeland Security Investigations, and the Social Security Administration’s Office of the Inspector General.

    The case was prosecuted by Assistant U.S. Attorneys Lois Foster-Steers and Sajjad Matin. Assistant U.S. Attorney Annika Miranda is handling asset forfeiture.

    Combatting elder abuse and financial fraud targeted at seniors is a key priority of the Department of Justice. The mission of the Department’s Elder Justice Initiative is to support and coordinate the Department’s enforcement and programmatic efforts to combat elder abuse, neglect and financial fraud and scams that target our nation’s seniors. To learn more visit https://www.justice.gov/elderjustice/roadmap. The public is encouraged to report their victimization and suspected fraud schemes. To find the right reporting agency visit https://www.justice.gov/elderjustice/roadmap or call the victim connect hotline at 1-855-484-2846.

    Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov, under case number 19-cr-60313.

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  • Deltona Man Sentenced For Theft Of Government Funds

    Justice 006

     

    Orlando, Florida – U.S. District Judge Paul G. Byron has sentenced Bobby Morlen (54, Deltona) to two years in federal prison for theft of government funds. As part of his sentence, the court also entered a money judgment of $131,457.16, the amount of proceeds from the offense, and ordered Morlen to pay restitution. A federal jury had found Morlen guilty on January 22, 2020.

    According to evidence presented at trial, Morlen’s mother was receiving benefits from the Social Security Administration (SSA) and the Department of Veterans Affairs (VA). Morlen’s mother died on August 18, 2014. Her death was not reported to the SSA or the VA, and the agencies continued to make benefit payments into her bank account. Morlen was a joint accountholder on the account into which his mother’s benefits were being deposited. He used the funds deposited after her death for his own personal expenses. In total, Morlen stole approximately $131,457.

    This case was investigated by the Social Security Administration Office of the Inspector General and the Department of Veterans Affairs Office of Inspector General. It was prosecuted by Special Assistant United States Attorney Suzanne Huyler.

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  • Diabetic Shoe Company Agrees to Pay $5.5 Million to Resolve False Claims Act Allegations Regarding “Custom” Shoe Inserts

    Justice 006

     

    Miami, Florida – Foot Care Store, Inc. d/b/a Dia-Foot (Dia-Foot), a diabetic shoe company based in Wellington, Florida, and its President and CEO Robert Gaynor, have agreed to pay $5,538,338 to settle allegations that the company sold custom diabetic shoe inserts that were not actually custom-fabricated in accordance with Medicare standards. The agreement is part of a civil settlement that resolves claims brought under the False Claims Act.

    The United States alleged that between 2013 and 2018, Dia-Foot sold diabetic shoe inserts to customers nationwide, representing that many of those inserts were custom-made for an individual’s foot, when the inserts were actually made using generic foot models. The inserts were dispensed to diabetic patients who had a prescription from a health care provider and who believed they were getting a custom product. According to the government, despite fabricating the inserts using generic models, Dia-Foot billed Medicare and Medicaid for the custom version, or sold the inserts to other providers who then billed government health care programs for custom inserts. This allowed Dia-Foot to produce and sell more inserts and increase profits by cutting corners. The government also alleged that Dia-Foot advertised to customers that it was proud to be Medicare-compliant and had received Medicare approval for its custom diabetic shoe inserts, even though Dia-Foot received the Medicare approvals based on false information.

    Individuals with diabetes can in some cases suffer from foot problems, including nerve damage, ulcers, and poor circulation. In severe cases, untreated problems can even lead to amputation. Foot orthotics such as custom shoe inserts are prescribed to help diabetic patients prevent such problems and are covered by Medicare and Medicaid.

    In connection with the settlement, Dia-Foot and Robert Gaynor entered into a three-year Integrity Agreement (IA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). The IA requires, among other things, that Dia-Foot implement updated policies and procedures as part of its compliance program, and hire an Independent Review Organization to review quarterly Dia-Foot’s claims to Medicare and Medicaid.

    The allegations were brought under the qui tam or whistleblower provisions of the False Claims Act by a former Dia-Foot employee. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The whistleblower who brought the allegations in this case will receive a share of the settlement amount. The case is captioned U.S. ex rel. Newman v. Foot Care Store, Inc. d/b/a Dia-Foot, No. 9:18-CV-80702 (S.D. Fla.).

    The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the Southern District of Florida, with assistance from the HHS-OIG. Juan Antonio Gonzalez, United States Attorney for the Southern District of Florida, and Omar Pérez Aybar, Special Agent in Charge, HHS-OIG, announced the settlement.

    The investigation and resolution of this matter illustrate the government’s emphasis on combatting health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477) or at http://tips.hhs.gov/.

    The matter was handled by Assistant U.S. Attorney Clarissa Pinheiro Schild of the Southern District of Florida. The integrity agreement was negotiated by OIG Senior Counsel Tonya Keusseyan.

    The claims resolved by the settlement are allegations only, and there has been no determination of liability.

    Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.

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  • Doctor Admits Role in Genetic Testing Kickback and Bribery Schemes

    Justice 023

     

    NEWARK, N.J. – A Pennsylvania doctor today admitted participating in two conspiracies to receive bribes and kickbacks in exchange for ordering genetic tests, Acting U.S. Attorney Rachael A. Honig announced.

    Lee Besen, 65, of Waverly, Pennsylvania, pleaded guilty by videoconference before U.S. District Judge Anne E. Thompson to an information charging him with two counts of conspiring to violate the Anti-Kickback Statute.

    Besen is the fourth defendant to plead guilty in bribery and kickback schemes involving doctors and medical employees in the Scranton, Pennsylvania, area.

    According to documents filed in this case and statements made in court:

    Besen was a primary care physician with an office in the Scranton area. In 2018, he began accepting monthly cash kickbacks and bribes in exchange for collecting DNA samples from Medicare patients and sending them for genetic tests to clinical laboratories in New Jersey and Pennsylvania. The cash kickbacks ranged from $500 to over $8,000. Besen typically accepted the cash inside his office, at times behind locked doors.

    When Besen did not receive his kickback and bribe payments, the volume of genetic tests he ordered dipped. When he accepted those payments, that volume typically increased because, as Besen said in a recorded conversation, “Greenbacks speak.” Besen was also recorded discussing the kickback and bribe payments as “vigs” – slang for fees collected by bookies.

    Besen frequently sought ways to make more money. At one point, he proposed adding to the scheme by collecting “CGx” cancer screening tests from Medicare patients, sending the tests to a new lab, and then splitting lucrative sales commissions that the lab paid out – ranging up to $2,500 per test. Although Besen had not previously ordered CGx tests for any of his patients, once he realized there was money to be made, he said in a recording that his office was “totally open now for CGx.” He was also recorded saying that he hoped the money he made from CGx tests would help him “retire early.”

    Even as the ongoing COVID-19 pandemic substantially reduced in-patient visits, Besen worked with his staff to generate more genetic tests from Medicare patients. Before one illicit payoff that Besen accepted in the parking lot of a fast-food restaurant, he was recorded making veiled threats and expressing concern about being caught on camera accepting kickbacks and bribes. Despite such concerns, he followed through with the meeting because, as he was recorded saying, he wanted to collect “greenbacks” for his “pool house.”

    Besen enlisted his employee, Kimberly Schmidt, who, in exchange for cash kickbacks and bribes, helped prepare paperwork for the genetic tests. Schmidt has previously pleaded guilty for her role in the scheme and is awaiting sentencing.

    As a result of the scheme, Medicare paid $350,374 for genetic tests generated from Besen’s medical practice.

    Separately, Besen and Terri Haines, of Kennett Square, Pennsylvania, entered into a different kickback and bribery scheme involving “health fairs.” Haines was not a health care provider, but made a living soliciting and collecting CGx genetic screening tests from Medicare patients at health fairs, and then sending those tests to a lab in exchange for commissions. She was not authorized to order those CGx tests without a doctor’s sign-off. Haines paid Besen a kickback and bribe to use his name and medical credentials to order CGx tests for the Medicare patients she met at fairs, even though Besen never actually attended any of the health fairs and never met the patients for whom the genetic tests were ordered. Medicare paid $713,882 for CGx genetic tests that resulted from this scheme.

    Each conspiracy charge is punishable by a maximum of five years in prison and a fine of $250,000, or twice the gross gain or loss derived from the offense, whichever is greater. Sentencing is scheduled for July 6, 2021.

    Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and special agents of the U.S. Department of Health and Human Services, Office of Inspector General, Philadelphia Regional Office, under the direction of Special Agent in Charge Maureen R. Dixon, with the investigation leading to the charges. She also thanked the FBI Scranton Field Office, FBI Philadelphia Division, and the Pennsylvania Attorney General’s Office for their assistance.

    The government is represented by Assistant U.S. Attorney Joshua L. Haber of the Health Care Fraud Unit and Acting Principal Assistant U.S. Attorney Rahul Agarwal.

    The charges and allegations against Haines are merely accusations, and she is presumed innocent unless and until proven guilty.

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  • Doctor and sales rep charged in $12M fraud scheme targeting Tricare and extensive coverup

    Justice 014

     

    LITTLE ROCK, Ark. (News release)— A doctor and a medical sales representative have been charged in a scheme to pay and receive kickbacks to generate expensive prescriptions for compounded drugs. TRICARE, the military’s health insurer, paid over $12 million for the prescriptions, which the indictment alleges were rubber stamped without examining patients or regard to medical necessity. The 43-count indictment alleges the scheme also encompassed widespread efforts to obstruct the ensuing investigation.

    Cody Hiland, U.S. Attorney for the Eastern District of Arkansas, Diane Upchurch, Special Agent in Charge of the FBI Little Rock Field Office, and Latisha Cleveland, Acting Special Agent in Charge of the Dallas Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General, announced the indictment, which was handed down yesterday by a federal grand jury and included charges for conspiracy, wire fraud, mail fraud, Anti-Kickback violations, aggravated identity theft, money laundering, lying to the FBI, falsifying records, and obstruction of justice.

    The indictment alleges that recruiters sought TRICARE beneficiaries to receive the drugs, promising to secure their prescriptions (without any doctor consult) and, at times, offering them money to sign up. Upon receipt of TRICARE beneficiary information from recruiters, the ringleader of the scheme sent pre-filled prescriptions—with drugs to be dispensed, refills authorized, and patient names already listed—to medical professionals who signed without consulting patients or any regard to medical necessity. Prescriptions went to a Mississippi pharmacy, which shipped drugs nationwide and billed TRICARE for reimbursement.

    According to the indictment, local doctor Joe David May, also known as Jay May, of Alexander, rubber stamped pre-filled prescriptions for over 100 beneficiaries for which TRICARE paid $4.5 million. May received pre-filled prescriptions from Derek Clifton, also of Alexander. The indictment alleges the ringleader paid Clifton to get May to sign the prescriptions despite knowing Clifton shared his payout with May. Clifton also had May sign pre-filled prescriptions for beneficiaries solicited by Clifton himself and his own recruiters. Clifton received over $740,000 tied to May’s prescriptions, which he used to buy a car, fund his retirement account, and purchase a home.

    The indictment alleges Clifton, who previously coached high school basketball, began by recruiting three former players who joined the military. Each agreed to receive drugs after being offered money, and one later received $1,200 cash hidden inside a Stetson cowboy hat. Together they received nearly $500,000 in drugs prescribed by May.

    According to the indictment, May used a cell phone app to electronically sign batch after batch of pre-filled prescriptions, including signing 8 pre-filled prescriptions within just 3 minutes of receipt, 10 within 5 minutes, and 13 within 13 minutes. In the final days before TRICARE reimbursements were expected to plummet, May rubber stamped more than 50 pre-filled prescriptions for which TRICARE paid $1.2 million. Many of those beneficiaries were recruited during a meeting at a North Little Rock National Guard facility where attendees were each offered $1,000 for receiving drugs.

    The indictment alleges the only TRICARE beneficiary May actually treated before prescribing drugs was a 91-year-old widow suffering from dementia whom May noted neither “report[ed] any pain” nor appeared to be in pain. Nevertheless, he prescribed her $40,000 in pain cream off the books, failing to log the drugs in her official hospital chart.

    According to the indictment May received cash kickbacks for signing, which participants openly discussed. When the ringleader joked about being hounded for payouts by texting Clifton “Hashtag for the day… [Ringleader], is my check ready? # Lol” Clifton replied “Haha! Meeeee toooo Jay already called asking this morning too…even the rich man[.]” Later, Clifton lamented falling TRICARE reimbursement rates by texting the ringleader “$210 minus half for tax$105 [sic] then dr’s cut then patients cut….. Yikes[.]” According to the indictment May deposited over $15,000 in cash in 2015 (compared to under $500 in 2014), including $10,000 during the same three-month period at the height of the scheme during which time Clifton withdrew over $15,000 in cash.

    According the indictment, following a CBS News exposé and complaints of doctors signing prescriptions “on the down low” without seeing patients, recruiters were instructed to relay prescriber names to beneficiaries so beneficiaries could behave as if they “knew and saw their doctor” if they came into contact with the pharmacy.

    The indictment alleges the ruse continued once federal agents began to investigate, with May and another prescriber both falsely claiming to have consulted patients before signing prescriptions and both producing phony medical records to make it appear patients had been consulted. Records produced by May related to beneficiaries never examined and cited made-up injuries and surgeries patients never experienced. Similarly, Clifton altered records produced to the Grand Jury to conceal the names of TRICARE beneficiaries who received drugs and withheld hundreds of prescriptions, emails, and other records from the Grand Jury that the FBI would later discover when searching his email account.

    “Our healthcare system relies upon the integrity of those who practice in the field. It is our mission to root out those who would prey upon such vulnerability and prosecute them to the fullest extent of the law,” said U.S. Attorney Cody Hiland. “The assembly line alleged in this case of fraudulent prescriptions fueled by kickbacks was especially concerning because it attacked TRICARE, our military’s health insurer. Equally troubling are the allegations of a widespread campaign to throw investigators off the trail by lying to the authorities, falsifying medical records, tampering with evidence, and attempting to hide material from the Grand Jury. While such tactics may prolong an investigation, today’s indictment shows that they ultimately succeed only in bringing ever more serious charges upon the accused.”

    “Unscrupulous medical professionals and fraudsters allegedly stole millions of dollars from the TRICARE program which serves our Veterans, military members and their families,” said FBI Special Agent in Charge Diane Upchurch. “In an effort to further pervert the course of justice, the defendants allegedly lied, obstructed justice, and falsified records in order to conceal their crimes. The deliberate targeting of a healthcare program which solely aids our military troops and their families is appalling, and the additional alleged attempts to cover up their criminal actions show the true nature of those indicted today. Alongside our partners at HHS-OIG, we will continue to aggressively investigate fraud within the healthcare industry and we urge anyone with information about suspected healthcare fraud to contact their local FBI Field Office.”

    “Fraudulently submitting claims to any federally funded health care benefit program equates to robbing all American taxpayers” said HHS-OIG Acting Special Agent in Charge Latisha Cleveland. “Working closely with our law enforcement partners, our agents are determined to protect our nation’s health care systems. We are committed to ensuring that fraudsters pay for their crimes, especially those that target our military service members and Veterans.”

    A vigilant public is indispensable to rooting out fraud, waste, and abuse within the healthcare industry. Please email This email address is being protected from spambots. You need JavaScript enabled to view it. if you or someone you know may have information about the compounded drug scheme targeting TRICARE. Please call 1-800-HHS-TIPS (1-800-447-8477) or the FBI with any other tips on suspected fraud, waste, or abuse within the healthcare industry.

    This case is being investigated by the FBI and HHS-OIG, and prosecuted by Assistant United States Attorneys Alexander D. Morgan and Stephanie G. Mazzanti.

    An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.

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  • Doctor Charged with Illegally Distributing Opioids, Defrauding Health Care Benefit Programs

    Justice 008

     

    PITTSBURGH - A Pittsburgh-area physician has been indicted by a federal grand jury in Pittsburgh on charges of violating federal narcotics laws and health care fraud, Acting United States Attorney Stephen R. Kaufman announced today.

    The 242-count Indictment, returned on May 5 and unsealed yesterday, named John Keun Sang Lee, age 78, of Venetia, Pennsylvania, as the sole defendant.

    According to the Indictment, the defendant was a medical doctor and owner of the medical practice Jefferson Pain and Rehabilitation Center, with a principal office located at 4735 Clairton Blvd, Pittsburgh, Pa 15236. The indictment alleges that on multiple dates between May 2016 and October 2020, Lee knowingly distributed Schedule II controlled substances to five patients outside the usual course of professional practice and not for a legitimate medical purpose. The Indictment further alleges that from May 2016 to October 2020, Lee executed a scheme and artifice to defraud health care benefit programs Medicare and Medicaid by knowingly and willfully submitting claims for steroid injections that were neither reasonable nor medically necessary.

    The law provides for a maximum total sentence of not more than 20 years in prison, a fine of $1,000,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

    Assistant United States Attorney Karen Gal-Or is prosecuting this case on behalf of the government.

    The Federal Bureau of Investigation, the Department of Health & Human Services – Office of Inspector General, the Drug Enforcement Administration, and the Pennsylvania Office of Attorney General conducted the investigation leading to the Indictment in this case.

    An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

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  • Doctor Licensed in the District of Columbia and Virginia Charged with Unlawful Distribution of Controlled Substances

    Justice 020

     

    Case Filed Following Recent Overdose Death, Part of National Enforcement Effort

    WASHINGTON – A criminal complaint was unsealed this week in the District of Columbia charging a doctor with unlawful distribution of a controlled substance outside the scope of his professional practice. As detailed in court documents, the case relates to defendant Dr. Robert M. Cao prescribing various narcotic pain medications in the months and days leading up to a man’s May 31, 2021 overdose death.

    The announcement was made by Acting U.S. Attorney Channing D. Phillips and Special Agent in Charge of the FBI Washington Field Office Criminal Division Wayne A. Jacobs.

    Cao, 38, of Falls Church, Va., was arrested on Sept. 14 and made his initial appearance the following day before Magistrate Judge Zia M. Faruqui in the U.S. District Court for the District of Columbia. His next hearing is scheduled for Oct. 28, 2021. The charge carries a statutory maximum of 20 years in prison and potential financial penalties.

    Cao’s arrest is part of a nationwide initiative targeting health care fraud. The Department of Justice announced today that criminal charges have been filed against 138 defendants, including 42 doctors, nurses, and other licensed medical professionals, in 31 federal districts across the United States for their alleged participation in various healthcare fraud schemes that resulted in approximately $1.4 billion in alleged losses.

    Nationwide, the charges target approximately $1.1 billion in fraud committed using telemedicine (the use of telecommunications technology to provide health care services remotely), $29 million in COVID-19 health care fraud, $133 million connected to substance abuse treatment facilities, or “sober homes,” and $160 million connected to other health care fraud and illegal opioid distribution schemes across the country.

    “This nationwide enforcement action demonstrates that the Criminal Division is at the forefront of the fight against health care fraud and opioid abuse by prosecuting those who have exploited health care benefit programs and their patients for personal gain,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The charges announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a continued pandemic.”

    “Health care fraud and opioid abuse have imposed enormous economic consequences and caused thousands of tragic deaths nationwide,” said Acting U.S. Attorney Phillips. “As today’s announcement shows, we are committed to using the full extent of the law to protect the public from those who illegally sell and prescribe opioids and other dangerous drugs as well as those who carry out schemes to defraud the public health system of taxpayer dollars.”

    “Physicians are entrusted to care for our citizens and prescribe necessary medications in legitimate doctor-patient relationships,” said Special Agent in Charge Jacobs of the FBI Washington Field Office's Criminal Division. “The FBI and our partners will continue to investigate and stop those medical professionals who provide illegal prescriptions and distribute controlled substance medications that fuel the opioid epidemic in our country. Not only are these actions criminal, but as we have seen all too often – they have deadly consequences.”

    According to court documents, Cao is a physician who is licensed to practice medicine in the District of Columbia and Virginia. Between in or around at least Jan. 9, 2021, and continuing through in or around May 30, 2021, the documents allege, Cao knowingly and intentionally wrote a man identified in court documents as “V.C.” at least five prescriptions for oxycodone and hydrocodone, Schedule II controlled substances with a high potential for abuse.

    On May 31, 2021, first responders were dispatched to a Fairfax, Va. residence in response to a 911 call for assistance regarding “V.C.,” after his girlfriend found him cold and non-responsive. He was pronounced deceased under suspicious circumstances.

    A subsequent autopsy report documented the cause of death as acute combined oxycodone and ethanol poisoning. On the nightstand next to where “V.C.” was found were prescription bottles, including one containing Percocet (a brand name of the narcotic analgesic oxycodone/acetaminophen) pills filled on May 23, 2021. Cao was the prescribing doctor listed on the bottle.

    Court filings also detail text message exchanges between Cao and “V.C.”, including discussions about Cao prescribing narcotic pain medications to “V.C.”; “V.C.” agreeing to give Cao a kickback on some of those pills; and meetings between the two, including a meeting in a parking lot on the night before the man’s death.

    The charges in criminal complaints are merely allegations and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. If convicted of any offense, a defendant’s sentence will be determined by the court based on the advisory U.S. Sentencing Guidelines and other statutory factors.

    The case is being prosecuted by Assistant U.S. Attorney Anne P. McNamara of the U.S. Attorney’s Office for the District of Columbia. The investigation into this matter was conducted by the FBI’s Washington Field Office in partnership with the Fairfax County, Va. Police Department.

    Nationally, the cases announced today involving the illegal prescription and/or distribution of opioids involve a total of 19 defendants, including several charges against medical professionals and others who prescribed over 12 million doses of opioids and other prescription narcotics, while submitting over $14 million in false billings.

    Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,600 defendants who have collectively billed the Medicare program for approximately $23 billion. In addition to the criminal actions announced today, CMS, working in conjunction with HHS-OIG, announced 28 administrative actions to decrease the presence of fraudulent providers.

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  • Doctor Pleads Guilty to Accepting Illegal Kickback Payment in Return for Writing Prescriptions for Compounded Drugs

    Justice 014

     

    A doctor licensed in the states of Oklahoma and Texas pleaded guilty Wednesday for writing and referring compounded drug prescriptions in return for illegal kickback payments, announced U.S. Attorney Clint Johnson.

    Jerry May Keepers, 68, of Kingwood, Texas, pleaded guilty to one count of soliciting and receiving heath care kickback. Keepers violated the federal anti-kickback statute when he accepted the illegal payment.

    If the plea agreement is accepted by U.S. District Judge Claire V. Eagan, Keepers will serve 36 months of supervised probation and pay no more than $1,518,180.46 in restitution. Judge Eagan will sentence Keepers on May 10, 2022.

    In the plea agreement, Keepers admitted that OK Compounding solicited him to write prescriptions for his patients that would be filled by the pharmacy. OK Compounding was a pharmacy controlled by Christopher Parks and Dr. Gary Lee, who are also defendants in the case.

    Specifically, on January 22, 2014, Keepers knowingly received $25,000 from representatives of OK Compounding. The purpose of the payment was to induce Keepers to refer prescriptions for expensive compounded drugs to the pharmacy. The compounded medications were filled, and claims were filed by the pharmacy. Those medications were in turn paid for by federal healthcare programs, including TRICARE, Medicare, CHAMPVA, and the Federal Employees Compensation Act Program.

    According to the superseding indictment filed in the case, kickback payments were disguised through various sham business arrangements, including contracts where several physicians purported to serve as “medical directors” or “consulting physicians” for the pharmacy. Keepers and OK Compounding represented that Keepers had been paid for his services as a national spokesperson, medical director or national marketing director.

    It is illegal to pay or receive “kickbacks” in conjunction with federal health care insurance. Prohibitions against kickbacks are crucial to ensure that financial motives do not undermine the medical judgment of physicians and other health care providers.

    Keepers ran a pain clinic practice in the cities of Friendswood, Beaumont and Humble, Texas, and established a clinic in Tulsa in November 2012.

    The Department of Labor- Office of Inspector General (OIG), IRS - Criminal Investigation, U.S. Postal Service- OIG, Department of Veterans Affairs- OIG, FBI, the Department of Health and Human Services-OIG, and Defense Criminal Investigative Service conducted the investigation. Assistant U.S. Attorneys Melody Noble Nelson and Richard M. Cella are prosecuting the cases.

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  • DOJ Adds Employee Defendants in Illegal Opioid Distribution and Health Care Fraud Lawsuit Against Northeast Philadelphia Pharmacy

    Justice 052

     

    Fox Chase-area Pharmacy was the Top Retail Purchaser of Oxycodone in Pennsylvania

    PHILADELPHIA – United States Attorney Jennifer Arbittier Williams announced that the United States filed an amended civil complaint against pharmacist Todd Goodman and pharmacy employees Eric Pestrack and Lee Kamp for their alleged involvement in years-long practices of illegally dispensing opioids and other controlled substances, and systematic health care fraud, at Philadelphia-based pharmacy Spivack, Inc., which previously operated under the name Verree Pharmacy. These individuals were added as defendants in the previously filed lawsuit against Verree and its former owner, pharmacist Mitchell Spivack, for the same alleged schemes. The amended complaint continues to seek civil penalties and civil damages, which could total in the millions of dollars, as well as injunctive relief.

    The lawsuit, in which Goodman, Pestrack, and Kamp were added, was the culmination of a multi-year federal-state investigation. The amended complaint alleges that Verree Pharmacy, Spivack, Goodman, Pestrack, and Kamp had a responsibility to dispense opioids and other controlled substances only when appropriate. Instead, the United States alleges that Verree and these individuals dispensed the drugs, even when faced with numerous red flags suggestive of diversion—such as opioids in extreme doses, dangerous combinations of opioids and other “cocktail” drugs preferred by those struggling with addiction, excessive cash payments for the drugs, blatantly forged prescriptions, and other signs that the pills were being diverted for illegal purposes.

    The amended complaint alleges that Verree—which was the top retail pharmacy purchasing oxycodone in Pennsylvania—has been a nationwide and regional outlier in its deviant purchasing, dispensing, and billing of controlled substances. To avoid scrutiny from the drug distributors that sold them the pills, Verree through Spivack allegedly made false statements to maintain the façade of legitimacy and keep the pharmacy stocked with pills critical to its profits. Behind that façade, the amended complaint alleges that Spivack drew millions of dollars from the pharmacy while the public suffered the consequences, including one patient who overdosed and died next to Verree Pharmacy bottles dispensed by Spivack.

    The United States’ amended complaint also alleges that Verree, Spivack, Goodman, Pestrack, and Kamp were engaging in an expansive health care fraud scheme involving fraudulent billings for drugs not actually dispensed. The alleged cornerstone of the scheme was a code used by the pharmacy employees in their internal computer system: “BBDF” or “Bill But Don’t Fill.” Verree, Spivack, Goodman, Pestrack, and Kamp allegedly used BBDF as a means to cover their losses on other drugs and further the pharmacy’s illicit profits by falsely claiming to insurers, including Medicare, that they had dispensed a drug to a patient, when in fact they had not. According to the amended complaint, this sophisticated fraud—which one of the employees admitted to investigators—resulted in significant losses to Medicare and other federal programs.

    The lawsuit seeks to impose civil penalties and damages on Verree, Spivack, Goodman, Pestrack, and Kamp under the Controlled Substances and False Claims Acts. If Verree, Spivack, Goodman, Pestrack, and Kamp are found liable, they could face civil penalties up to $68,426 for each unlawful prescription dispensed, civil penalties up to $23,607 for each false claim they submitted to federal health care programs, and treble damages for the alleged health care fraud against federal programs. The court may also award injunctive relief to prevent the defendants from committing additional controlled substance violations.

    If the public has any information regarding Verree Pharmacy or any other health care fraud allegation, individuals should contact the HHS-OIG hotline at 800-HHS-TIPS.

    The case is being investigated by the Philadelphia Field Division of the Drug Enforcement Administration, the Pennsylvania Department of State’s Bureau of Enforcement and Investigation, HHS-OIG, and the Pennsylvania Office of the Attorney General, with additional assistance from the Office of Personnel Management Office of Inspector General, the Defense Health Agency, and the Defense Criminal Investigative Service. The civil investigation and litigation are being handled by Assistant United States Attorney Anthony D. Scicchitano and auditors Dawn Wiggins and George Niedzwicki.

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  • DOJ and Federal Way, Washington doctor settle False Claims Act allegations over drug testing

    Justice 059

     

    Doctor submitted bills to state and federal medical programs for tests that were not conducted

    Seattle – The U.S. Department of Justice and a Federal Way, Washington general-practice doctor have settled allegations that the doctor billed government health programs for urine drug tests that were never performed or performed too late to be useful, announced U.S. Attorney Nick Brown. Dr. Vuthy Leng is the sole owner and operator of Family Medicine Clinic of Federal Way LLC. Dr. Leng will pay state and federal health programs $228,000 to resolve allegations that Dr. Leng billed government health programs for useless urine drug tests.

    According to the settlement agreement, the Federal Way clinic had a certified lab, capable of performing urine drug tests so that patients could be screened for appropriate prescribing of medications including substance use disorder treatment. Between January 1, 2019 and July 30, 2019, Dr. Leng submitted bills to Medicare and Medicaid for urine drug tests. In fact, for long periods during this timeframe, the medical equipment for testing urine was broken, the samples were simply frozen for testing at a later date. Some were never tested at all.

    While not admitting the allegations in the settlement, Leng will pay $76,000 in restitution to the government medical programs. Under the False Claims Act, the government can seek treble damages resulting in an additional $152,000 to be paid by Dr. Leng over the next 12 months. The amount will be split between the state and federal programs based on the share each paid of the false bills.

    Under the terms of the settlement each party will pay their own legal fees.

    The matter was investigated by the Health and Human Services Office of Inspector General (HHS-OIG) and the Washington State Health Care Authority and Washington Attorney General Medicaid Fraud Division.

    Assistant United States Attorney Nickolas Bohl negotiated the settlement for the U.S. Department of Justice.

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  • Dominican National Sentenced for Social Security Misuse and Making False Statement

    Justice 015

     

    BOSTON – A Dominican national was sentenced today in federal court in Boston for false representation of a Social Security number and making a false statement relating to health care matters.

    Ronald Lara Pena, 35, a Dominican national previously residing in Lawrence, was sentenced by U.S. Senior District Court Judge Rya W. Zobel to 13 months in prison and three years of supervised release. Lara Pena will be subject to deportation proceedings upon completion of his sentence. On July 21, 2021, Lara Pena pleaded guilty to one count of false representation of a Social Security number and one count of making a false statement relating to health care matters.

    Lara Pena used the identity of a Puerto Rican citizen to obtain Massachusetts driver’s licenses and identification cards and used the victim’s identity to apply for and fraudulently receive over $12,600 in federally funded MassHealth benefits between September 2015 and September 2020.

    Acting United States Attorney Nathaniel R. Mendell; Jack Jermaine, Acting Special Agent in Charge of the Social Security Administration, Office of Inspector General, Boston Field Office; Matthew B. Millhollin, Special Agent in Charge of Homeland Security Investigations in Boston; Phillip M. Coyne, Special Agent in Charge of U.S. Department of Health & Human Services, Office of the Inspector General, Office of Investigations, Boston Regional Office; and Suzanne M. Bump, State Auditor of the Commonwealth of Massachusetts made the announcement today. Special Assistant U.S. Attorney Karen Burzycki of Mendell’s Major Crimes Unit prosecuted the case.

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  • Dominican National Sentenced for Trafficking Fentanyl, Health Care Fraud, ID Theft, Misuse of a Social Security Number

    Justice 006

     

    PROVIDENCE – A Dominican national who operated a drug stash house and arranged for the sale of fentanyl on multiple occasions, and who used the stolen identity and Social Security number of another person to gain Rhode Island Medicaid benefits and Rhode Island driver’s licenses and permits, was sentenced today to seven years in federal prison, announced Acting United States Attorney Richard B. Myrus.

    Jeurin Celado, 31, was sentenced by U.S. District Court Judge William E. Smith to 96 months of incarceration to be followed by four years of federal supervised release and ordered to pay restitution in the amount of $4,726.50 to the Rhode Island Medicaid Program. Celado pleaded guilty on April 2, 2021, to false representation of a Social Security number, aggravated identity theft, health care fraud, and conspiracy to distribute fentanyl.

    At the time of his guilty plea, Celado admitted to the court that from 2010 until August 2019, he used the name, date of birth, and Social Security number of a person he does not know to obtain permits and driver’s licenses from the Rhode Island Department of Motor Vehicles (DMV).

    In addition, Celado admitted that beginning in August 2014 and continuing through July 2018, he used the same stolen identity and Social Security number to obtain Rhode Island Medicaid benefits, health insurance that as a non-United States citizen he was ineligible to receive. Celado obtained Medicaid benefits valued at approximately $4,726.50.

    Additionally, according to information presented to the court, in August and September 2019, an undercover drug investigation by the Woonsocket Police Department included arranging for four undercover purchases of fentanyl from a person known as “Tony.” On each occasion, “Tony” directed the buyer to a location where that person was met by a “runner” who delivered the drugs in exchange for cash. The investigation determined that “Tony” was, in fact, Jeurin Celado, and that he was using an apartment in Manville as a stash house and a location to cut and prepare drugs for delivery. On October 7, 2019, during a court-authorized search of the apartment, law enforcement discovered between 40 and 400 grams of fentanyl and other items consistent with a drug distribution operation.

    The case was prosecuted by Assistant U.S. Attorney Dulce Donovan.

    The various investigations into Celado’s criminal activities were conducted by the Woonsocket Police Department, Homeland Security Investigations, and the U.S. Department of Health and Human Services, Office of Inspector General.

    Acting United States Attorney Myrus acknowledges and thanks the United States Marshals Service for its assistance in locating and assisting in the arrest of the defendant.

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  • Dubuque Care Facility’s Owner Agrees to Repay Federal Medicaid Funds to Resolve Allegations Relating to COVID-19 Screening Procedures

    Justice 005

     

    Care Initiatives, a Texas corporation with a home office in West Des Moines, Iowa, has agreed to repay the United States $214,200 to resolve claims the United States was entitled to restitution for the federal share of Medicaid funds the facility received for an approximately 10 week period while residents at Dubuque Specialty Care, a Care Initiatives facility, were suffering from or testing positive for COVID-19. The United States alleged that repayment of these funds was warranted due to Dubuque Specialty Care’s practices surrounding COVID-19 infections, including the facility’s procedures and criteria for screening symptomatic employees.

    Care Initiatives cooperated during the investigation and did not admit to any liability as part of the settlement agreement.

    “Our office expects that recipients of federal healthcare funds take appropriate steps to maintain beneficiary safety, to protect our district’s most vulnerable residents, and to ensure their practices comport with recognized standards, especially during this unprecedented time,” said Acting United States Attorney Sean R. Berry.

    “Being a healthcare provider in the Medicare and Medicaid programs is a privilege, not a right. It is incumbent upon these providers to protect the safety of beneficiaries under their care, especially during this pandemic,” said Special Agent in Charge Curt L. Muller of Department of Health and Human Services Office of Inspector General. “Our investigators, working closely with our law enforcement partners, will continue to thoroughly investigate allegations of substandard safety practices.”

    Individuals with direct knowledge of facilities in the Northern District of Iowa failing to comply with recognized standards and procedures during the pandemic are encouraged to report any such failures to the appropriate authorities, including the United States Attorney’s Office. The case was handled by Assistant United States Attorney Jake Schunk and investigated by the Department of Health and Human Services Office of Inspector General.

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  • Electronic Health Records Technology Vendor to Pay $18.25 Million to Resolve Kickback Allegations

    Justice 007

     

    A national electronic health records (EHR) technology vendor based in Watertown, Massachusetts, athenahealth Inc. (Athena), has agreed to pay $18.25 million to resolve allegations that it violated the False Claims Act by paying unlawful kickbacks to generate sales of its EHR product, Athena Clinicals, the Justice Department announced today.

    In a complaint filed in conjunction with today’s settlement, the United States alleged that Athena violated the False Claims Act and the Anti-Kickback Statute through three marketing programs. First, Athena invited prospective and existing customers to “Concierge Events,” providing free tickets to and amenities at sporting, entertainment, and recreational events, including trips to the Masters Tournament and the Kentucky Derby with complimentary travel and luxury accommodations, meals, and alcohol. Second, Athena paid kickbacks to its existing customers under a “Lead Generation” program designed to identify and refer new prospective clients to Athena. Under this program, Athena paid up to $3,000 to existing customers for each new client that signed up for Athena services, regardless of how much time, if any, the existing customer spent speaking to or meeting with the new client. Finally, Athena entered into deals with competing vendors that were discontinuing their EHR technology offerings to refer their clients to Athena. Under such deals, Athena paid remuneration to the competitor based on the value and volume of practices that were successfully converted into Athena clients.

    “This resolution demonstrates the department’s continued commitment to hold EHR companies accountable for the payment of unlawful kickbacks in any form,” said Acting Assistant Attorney General Brian Boynton for the Department of Justice’s Civil Division. “EHR technology plays an important role in the provision of medical care, and it is critical that the selection of an EHR platform be made without the influence of improper financial inducements.”

    “Across the country, physicians rely on electronic health records software to provide vital patient data. Kickbacks corrupt the market for health care services and risk jeopardizing patient safety,” said U.S. Attorney Andrew E. Lelling for the District of Massachusetts. “We will aggressively pursue organizations that fail to play by the rules; EHR companies are no exception.”

    “If the benefits of Electronic Health Records are to be fully realized, patients must be confident providers have selected the most effective system – not the one paying the largest kickbacks. Time and again, we’ve seen fraudulent activity undermine the integrity of medical decisions, subvert the health marketplace, and waste taxpayer dollars,” said Phillip M. Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to hold accountable those who provide illegal incentives in order to influence the decision-making of health care providers.”

    “It is illegal for companies to extend invitations to all-expense-paid sporting, entertainment, and recreational events, and other perk-filled offers to its prospective customers to win business and boost their bottom line through illegal kickback schemes,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Today’s agreement by Athena to pay $18.25 million should send a strong message to anyone thinking about engaging in this type of illegal activity. The FBI will continue to work with our law enforcement partners to do everything in our power to safeguard our government health care programs and the taxpayers picking up the bill.”

    The settlement resolves allegations in a lawsuit filed by Geordie Sanborn and a separate lawsuit filed by Cheryl Lovell and William McKusick; both matters are pending in federal court in Boston, Massachusetts. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act allows the government to intervene and take over the action, as it did in these two cases. The whistleblower share to be awarded in connection with the settlement has not been determined.

    The government’s pursuit of these matters illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800HHSTIPS (800-447-8477).

    This matter is being handled by the Civil Division’s Commercial Litigation Branch (Fraud Section) and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Department of Veterans Affairs, Office of Inspector General; and the U.S. Postal Service, Office of Inspector General. The two lawsuits are captioned United States ex rel. Sanborn. v. athenahealth, Inc., No. 17-cv-12125 (D. Mass.) and United States ex rel. Lovell and McKusick v. athenahealth, Inc., No. 17-cv-12543 (D. Mass.). The claims resolved by the settlement are allegations only and there has been no determination of liability.

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  • Elk Grove Woman Pleads Guilty to Medicare Kickback Scheme

    Justice 006

     

    SACRAMENTO, Calif. — Mariela Panganiban, 48, of Elk Grove, pleaded guilty today to conspiring with the owners of home health care agencies to pay and receive illegal kickbacks in exchange for Medicare beneficiary referrals, Acting U.S. Attorney Phillip A. Talbert announced.

    According to court documents, Panganiban worked as the Director of Social Services at a skilled nursing facility in Roseville. In her role, Panganiban assisted Medicare beneficiaries in selecting home health care agencies following their discharge from the facility. Panganiban used her position to steer Medicare beneficiaries to home health agencies in Folsom and El Dorado Hills. In exchange for the referrals, the agencies’ owners paid Panganiban illegal cash kickbacks.

    In her plea agreement, Panganiban admitted that the agencies’ owners paid her kickbacks in exchange for the referral of approximately 100 beneficiaries. Medicare paid the agencies over approximately $735,000 for services they purportedly provided to the beneficiaries. Because the agencies obtained the referrals by paying kickbacks, they should not have received any reimbursement from Medicare.

    This case is a product of an investigation by the Federal Bureau of Investigation and the Department of Health and Human Services’ Office of Inspector General. Assistant U.S. Attorney Matthew Thuesen is prosecuting the case.

    U.S. District Judge Troy L. Nunley is scheduled to sentence Panganiban on May 20. She faces a maximum statutory penalty of five years in prison and a fine of $250,000 or twice the gross loss or gain. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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  • Employee of Autism Services Agency Pleads Guilty to Health Care Fraud and Identity Theft Offenses

    Justice 053

     

    Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced that JESSICA STUART, 38, of Fairfield, waived her right to be indicted and pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to health care fraud and identity theft offenses.

    According to court documents and statements made in court, Stuart was employed by Helping Hands Academy, LLC, in Bridgeport, which provided applied behavior analysis services to children diagnosed with Autism Spectrum Disorder (ASD).   Helping Hands Academy enrolled as a participating provider in the Connecticut Medicaid Program (“Medicaid”) in approximately September 2018.

    Medicaid requires that ASD treatment services be provided under the supervision of a licensed medical practitioner or a Board Certified Behavior Analyst (BCBA), a graduate-level certification in behavior analysis. BCBAs are also required to be credentialed in writing by the state. Stuart does not have a college degree, was not a BCBA or licensed medical practitioner, and did not have any formal training in applied behavior analysis for ASD. Between approximately May 2019 and September 2020, Helping Hands Academy paid Stuart at least $143,0000 and submitted to Medicaid numerous fraudulent claims for applied behavioral analysis services that Stuart performed but was not qualified to provide. Stuart used the name of an individual without the individual’s knowledge or authorization so that Stuart could impersonate a BCBA when she knew she was not a BCBA.

    Medicaid suffered a loss of $369,439.96 as a result of Stuart’s conduct.

    Stuart pleaded guilty to one count of health care fraud, which carries a maximum term of imprisonment of 10 years, and one count of using false identification in connection with health care fraud, which carries a maximum term of imprisonment of 15 years. Judge Meyer scheduled sentencing for August 31, 2021.

    Stuart is released pending sentencing.

    On April 28, 2021, Nicole Balkas, the owner of Helping Hands Academy, pleaded guilty to one count of health care fraud. She awaits sentencing.

    This investigation is being conducted by the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and the Federal Bureau of Investigation.

    Acting U.S. Attorney Boyle acknowledged the valuable cooperation of the Connecticut Department of Social Services in the investigation.

    This case is being prosecuted by Assistant U.S. Attorney David T. Huang.

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  • Enfield Man Charged with Defrauding the Department of Veterans Affairs to Receive Benefits

    Justice 022

     

    John H. Durham, United States Attorney for the District of Connecticut; Christopher Algieri, Special Agent in Charge of the Department of Veteran Affairs, Office of the Inspector General, Northeast Field Office; and James M. Noble, Special Agent in Charge, Coast Guard Investigative Service, Northeast Region, announced that DERRICK BREWER, 35, of Enfield, was arrested today on a criminal complaint charging him with offenses related to his submission of altered documents to the Department of Veterans Affairs (“VA”).

    As alleged in the criminal complaint, in March 2018, Brewer submitted paperwork to the VA offices in Hartford as part of an application for service-connected disability benefits. Specifically, Brewer submitted a form known as a “DD-214,” which indicated that his discharge from his former service in the U.S. Coast Guard was characterized as “Honorable.” The DD-214 had been altered prior to its submission, as official Coast Guard records show that Brewer’s discharge was characterized as “Other Than Honorable Conditions” following Brewer’s convictions under the Uniform Code of Military Justice. There is no record of the discharge characterization ever having been upgraded. As a result of this submission, Brewer collected approximately $69,584.16 in VA benefits up until September 30, 2020.

    The complaint charges Brewer with theft of government funds, which carries a maximum term of imprisonment of 10 years, and making false statements, which carries a maximum term of imprisonment of five years.

    Brewer appeared today via videoconference before U.S. Magistrate Judge Robert A. Richardson and was released on a $10,000 bond.

    U.S. Attorney Durham stressed that a complaint is only a charge and is not evidence of guilt. Charges are only allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

    This matter is being investigated by the Department of Veterans Affairs, Office of the Inspector General, Northeast Field Office, and the Coast Guard Investigative Service. The case is being prosecuted by Assistant U.S. Attorney Margaret Maigret Donovan.

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  • Evergreen Physician Sentenced to Federal Prison for Taking Bribes

    Justice 065

     

    Physician took cash for prescribing fentanyl spray

    DENVER – The U.S. Attorney’s Office for the District of Colorado announces that Dr. Jeffrey Kesten, age 61, formerly of Evergreen, Colorado, was sentenced to 24 months in federal prison, to be followed by three years of supervised release, for conspiring to violate the Anti-Kickback Statute, in connection with a scheme to take bribes and kickbacks from a pharmaceutical company in exchange for prescribing a powerful fentanyl spray to his chronic pain patients.

    According to the plea agreement, beginning in late 2012 and continuing through November 2015, the defendant conspired with pharmaceutical company employees to take approximately $344,000 in bribes and kickbacks from Insys Therapeutics, Inc., the manufacturer of Subsys, a powerful sublingual fentanyl spray approved by the FDA in 2012 to treat breakthrough pain in cancer patients. The bribes were disguised as payments or honoraria for purportedly delivering educational speaker programs to the defendant’s medical peers. In fact, the defendant often delivered no programs at all—at one point taking payments of over $40,000 from Insys for 17 “programs” he allegedly delivered to his own staff at his medical clinic. As part of the plea agreement, the defendant admitted that he entered into a quid pro quo relationship with Insys, and that the payments affected his prescribing decisions. He abused his position of trust vis-à-vis his patients and the Federal healthcare programs in which he was enrolled, becoming one of Insys’s top revenue-generating prescribers. Prescriptions for Subsys typically cost thousands of dollars each month, and Medicare and Medicaid paid millions of dollars to cover Subsys prescriptions written by Dr. Kesten.

    “You have to be able to trust your doctor’s medical judgment,” said U.S. Attorney Cole Finegan. “We’ll hold physicians and medical professionals accountable for taking bribes and kickbacks, especially when they are prescribing powerful drugs to vulnerable patients.”

    “As we’ve seen over the past several years fentanyl abuse has become an existential threat across the nation,” said DEA Denver Acting Special Agent in Charge David Olesky. “There is no greater threat to our community than a doctor who violates a patient’s trust with no regard to patient safety and well-being beyond what profits it can bring him. We applaud this sentencing and will continue to work with our counterparts in the U.S. Department of Health and Human Services Office of the Inspector General and the U.S. Attorney’s Office to ensure other doctors who manipulate the system will be held accountable.”

    “Accepting kickbacks and bribes in exchange for prescribing medication not only compromises the integrity of Federal health care programs; it can also gravely endanger beneficiaries,” said Curt L. Muller, Special Agent in Charge with the U.S. Department of Health and Human Services Office of the Inspector General. “HHS-OIG will continue to work relentlessly alongside our law enforcement partners to ensure the health and safety of beneficiaries and the efficient use of taxpayer dollars."

    Fentanyl is at least 50 times more powerful than morphine, and to ensure patient safety, the FDA requires Subsys prescribers, patients, and pharmacies to enroll in and comply with the Transmucosal Immediate Release Fentanyl Risk Evaluation and Mitigation Strategy (TIRF REMS) program. The defendant disregarded the rules imposed by this program, failing to notify his patients of the risks posed by the Schedule II controlled substance prescription.

    United States District Court Judge Daniel D. Domenico sentenced Kesten on February 24, 2022.

    The Department of Health and Human Services Office of the Inspector General, and the Drug Enforcement Administration conducted the investigation.

    Source

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  • Ex-Indian Health Services doctor sentenced to prison, fined for drug kickback scheme while at Blackfeet Indian Reservation

    Justice 023

     

    GREAT FALLS — A former Indian Health Services doctor who worked on the Blackfeet Indian Reservation and admitted using his job to prescribe a diabetes drug from a pharmacy in exchange for kickbacks was sentenced today to three months in prison, two years of supervised release and fined $10,000, Acting U.S. Attorney Leif Johnson said.

    Dr. Arnold Scott Devous, 68, of Billings, pleaded guilty on Sept. 10, 2020 to federal medical officer with conflict of interest.

    Chief U.S. District Judge Brian M. Morris presided. Chief Judge Morris allowed Devous to self-report to prison.

    “Dr. Devous used his position and ability to exploit patients in the Blackfeet community. These kinds of kickback schemes erode the public’s trust in its healthcare providers at a time when we need that trust more than ever. We will continue to prosecute these schemes to the full extent of the law,” Acting U.S. Attorney Johnson said.

    "By engaging in kickback schemes, Dr. Devous committed a serious ethics violation which may result in diminished public trust of federal employees,” said Curt L. Muller, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “With our law enforcement partners, we are committed to rooting out corruption in our federal healthcare programs.”

    In court documents filed in the case, the prosecution said that Devous used his position at IHS as a medical officer and in charge of the diabetes program in Browning to prescribe Farxiga, a Type 2 diabetes medication. Farxiga was not on the IHS formulary and could not be obtained at the facility. From December 2015 until June 2016, Devous solicited multiple pharmacies in Montana to fill expensive prescriptions of Farxiga in exchange for Devous receiving a "cut" of the profits and kickbacks. Government personnel are prohibited from engaging in these types of relationships.

    Ultimately, a pharmacy agreed to Devous' terms and paid him $45,540 in approximately six months. Devous first hid the kickbacks by sending the money to his wife, and then he used a prospective business associate. Neither of these options was allowable under the law. When interviewed, Devous admitted that his wife received the money, which was illegal. Devous also admitted he never informed his superiors of the outside income as required by law.

    Assistant U.S. Attorney Ryan Weldon prosecuted the case, which was investigated by the Office of Inspector General, Office of Investigations, U.S. Department of Health & Human Services.

    Source

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  • Father and Son Who Defrauded Numerous State Affordable Care Act Programs Sentenced to Prison

    Justice 030

     

    Two California residents were sentenced today by U.S. District Judge Alvin W. Thompson in Hartford for defrauding Affordable Care Act programs in at least 12 states of more than $27 million. JEFFREY WHITE, 63, was sentenced to 36 months of imprisonment and three years of supervised release, and NICHOLAS WHITE, 35, was sentenced to 13 months of imprisonment and three years of supervised release. Both defendants reside in Twin Peaks, California.

    Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the sentencings occurred via videoconference.

    U.S. Attorney John H. Durham of the District of Connecticut, Special Agent in Charge Phillip Coyne of the Boston Regional Office of the Office of the Inspector General of the Department of Health and Human Services, Special Agent in Charge David Sundberg of the FBI’s New Haven Division, Acting Special Agent in Charge Ramsey E. Covington of IRS Criminal Investigation in New England, and Inspector in Charge Joseph W. Cronin of the Boston Division of the U.S. Postal Inspection Service made the announcement.

    According to court documents and statements made in court, Jeffrey White and his son, Nicholas White, conspired to defraud health care plans operating under the Affordable Care Act (“ACA,” commonly referred to as “Obamacare”) in Connecticut and other states by fraudulently enrolling individuals in ACA plans in states where the individuals did not live. In order to further the conspiracy, the Whites created phony residential leases using fictitious landlords in various states, including locations in Danbury, Farmington, Hartford and Norwalk, Connecticut. The Whites also used an online application to obtain false cell phone numbers for the individuals with area codes that made it appear that the individuals lived at the fictitious addresses, and provided the false cell phone numbers to the ACA plans. If anyone at the ACA plan called the false local number, the call would ring through to a phone controlled by the Whites.

    In order to enroll the individuals in an ACA plan, the Whites paid the insurance premiums for the individuals, and also paid to have the individuals transported to California where the individuals were placed in expensive residential substance abuse treatment programs. The treatment programs then billed the ACA plans for thousands of dollars of treatment each week, including claims for expensive laboratory tests such as blood or urine toxicology screenings.

    The treatment programs paid the Whites thousands of dollars in kickbacks for each referral, and some programs arranged for the Whites to receive a percentage of the money the treatment programs received from the ACA health insurance plans. In order to maximize their proceeds from the fraud scheme, the Whites enrolled the individuals in ACA plans in states that paid the highest amount for substance abuse treatment, even though the individuals did not live in those states.

    The Whites have admitted that their scheme resulted in more than $27 million in losses to ACA plans across the country, including plans in Connecticut, Arizona, California, Delaware, Indiana, Kentucky, New Jersey, Ohio, Oregon, Pennsylvania, Tennessee, and Texas.

    Although the Whites personally profited approximately $1 million through this scheme, they were ordered to pay restitution in the approximate amount of $27,617,000.

    October 12, 2018, Jeffrey White and Nicolas White each pleaded guilty to one count of conspiracy to commit health care fraud.

    Jeffrey and Nicholas White, who are released on bond, are required to report to prison on August 24 and May 5, respectively.

    U.S. Attorney Durham noted that this case is believed to be the first of its kind involving fraudulent enrollment of individuals in ACA plans on a national scale.

    This investigation has been conducted by the Office of the Inspector General of the U.S. Department of Health Human Services, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation Division, and the U.S. Postal Inspection Service.

    U.S. Attorney Durham thanked the Connecticut Affordable Care Act exchange, known as Access Health CT, and the U.S. Attorney’s Office for the Central District of California for their assistance with the investigation.

    This case was prosecuted by Assistant U.S. Attorney David J. Sheldon with the assistance of Auditor Susan N. Spiegel.

    Source

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  • Fayetteville, North Carolina Physician Agrees to Pay $300,000.00 to Resolve Allegedly Fraudulent Medicare and Medicaid Claims Involving Autonomic Nervous System Tests

    Justice 007

     

    RALEIGH, N.C. – The Acting United States Attorney, G. Norman Acker, III, announced today that Benjamin C. Udoh and Hanora Medical Center, PLLC, an internal medicine practice that Dr. Udoh operates in Fayetteville, North Carolina, have agreed to pay $300,000.00 to settle civil claims under the Federal and North Carolina False Claims Acts concerning allegations that they submitted false claims to the Medicare and Medicaid Programs for Autonomic Nervous System (“ANS”) Testing.

    Specifically, the United States and the State of North Carolina alleged that during a four-and-a-half-year period between January 2016 to May 2020, Dr. Udoh and Hanora Medical Center submitted false or fraudulent claims for ANS Testing using Current Procedural Terminology codes 95921, 95923, 95925, 95927, 93922, and 93923 when the testing services were not medically necessary and/or the medical record did not support medical necessity. As a result, Dr. Udoh and his medical practice allegedly received funds to which they were not entitled.

    In addition to the monetary portion of the settlement, Dr. Udoh and Hanora Medical Center have entered into an Integrity Agreement with the Office of Inspector General for the United States Department of Health and Human Services.

    “Medical providers have a duty to provide services that are medically necessary for a patient’s care, not services that will simply help pad the provider’s wallet. Our office will continue to root out those providers who attempt to take advantage of their patients in an effort to bilk government programs. Those who fail to comply with the law in order to increase their own bottom line will be pursued by the Department of Justice,” said Acting United States Attorney, G. Norman Acker, III.

    The Federal and North Carolina False Claims Acts authorize the Governments to recover triple the money falsely obtained, plus substantial civil penalties for each false claim submitted.

    It should be noted that the civil claims resolved by settlement here are allegations only, and that there has been no judicial determination or admission of liability.

    This matter was investigated by the United States Attorney’s Office for the Eastern District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office (“MID”). Special Deputy Attorney General Michael M. Berger, who also serves as a Special Assistant United States Attorney, represented the United States and the State of North Carolina.

    The MID investigates and prosecutes healthcare providers that defraud the Medicaid Program, patient abuse of Medicaid recipients, patient abuse of any patient in facilities that receive Medicaid funding, and misappropriation of any patients’ private funds in nursing homes that receive Medicaid funding. To report Medicaid fraud or patient abuse in North Carolina, please call the MID at 919-881-2320.

    Source

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  • Federal Indictment Charges Buncombe County Man For Receiving Veteran Benefits Based On Fraudulent Service-Connected Disabilities

    Justice 005

     

    Defendant Collected over $978,138 in Disability Benefits

    ASHEVILLE, N.C. – U.S. Attorney Andrew Murray announced today that John Paul Cook, 57, of Alexander, N.C. is facing multiple federal charges for defrauding the U.S. Department of Veterans Affairs (the VA) by receiving veteran benefits based on fraudulent service-connected disabilities.

    Kim Lampkins, Special Agent in Charge of the Mid-Atlantic Field Office, Washington, D.C., of the U.S. Department of Veterans Affairs, Office of Inspector General (VA-OIG), joins U.S. Attorney Murray in making today’s announcement.

    According to allegations contained in the federal indictment, Cook enlisted in the United States Army (the Army) in November 1985. The indictment alleges that six months later Cook sustained an accidental injury while on duty. Following the incident, Cook complained that as a result of the accident and injuries he sustained, a preexisting eye condition had worsened. In 1987, following a medical evaluation, Cook was discharged, placed on the retired list, and began receiving VA disability-based compensation at a rate of 60%. Over the next 30 years, Cook’s disability-based compensation increased, following Cook’s repeated false claims of increased visual impairment and unemployability due to “severe visual deficit.” The indictment alleges that, in 2005, based on Cook’s claims of severe visual impairment, Cook was declared legally blind and began receiving disability-based compensation at a maximum rate. Cook also began to receive additional benefits, including Special Monthly Compensation (an extra monetary allowance paid to a qualifying veteran due to the severity of his disability), Specially Adapted Housing (a grant that goes toward paying for adaptations in a new home), and Special Housing Adaptation (a grant that goes toward remodeling an existing home).

    According to allegations in the indictment, Cook’s monthly VA disability payments in 1987 were $1,411 per month. With the increases in his disability rating, as well as cost-of-living adjustments and his Special Monthly Compensation, these payments steadily increased over the years. By 2016, the monthly payment had risen to $3,990. In total, from 1987 through 2017, Cook received approximately $978,138 in VA disability payments due to his claimed blindness, to which he was not lawfully entitled.

    The indictment alleges that, contrary to Cook’s filed claims with the VA for additional disability claims and his complaints of increased visual impairment, Cook repeatedly passed vision screening tests to renew or obtain a driver’s license in North and South Carolina. The indictment further alleges that, during the relevant time period, Cook purchased and registered over 30 different motor vehicles which Cook routinely drove, including on long-distance trips, to perform errands, and to drive to medical appointments. As alleged in the indictment, from 2010 to 2016, during a time period that Cook was receiving maximum VA disability benefits for his visual impairment, Cook was actively involved with the Boy Scouts of America (BSA), including serving as a Den Leader and a Cubmaster. Among the courses the defendant completed with the BSA were courses qualifying him to be a range officer for BB guns and for archery. He was also certified for land navigation, which involves reading maps and using a compass.

    The indictment alleges that, in addition to the fraudulently obtained disability benefits for visual impairment, Cook also defrauded the VA’s Beneficiary Travel Program, after filing multiple false claims for mileage reimbursement in connection with his medical appointments. The VA terminated Cook’s blindness-related disability payments in October 2017.

    The federal criminal indictment charges Cook with one count of stealing from the VA, which carries a maximum penalty of 10 years in prison and a $250,000 fine; three counts of making false statements in connection with obtaining VA disability payments, which carry a maximum penalty of five years in prison and a $250,000 fine, per count; and three counts of a making false claims for travel benefits from the VA, which carry a maximum penalty of five years in prison and a $250,000 fine, per count.

    The indictment also contains a Notice of Forfeiture seeking a money judgement in the amount of $978,138, which is the amount constituting the proceeds of Cook’s alleged fraudulent conduct.

    The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

    In making today’s announcement U.S. Attorney Murray thanked the VA-OIG for their investigation of the case.

    Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville is in charge of the prosecution.

    Source

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  • Federal Jury Convicts Pharmacy Owner for Role in $174 Million Telemedicine Pharmacy Fraud Scheme

    Justice 058

     

    On Dec. 2, a federal jury in Greeneville, Tennessee, convicted Peter Bolos, 44, of Tampa, Florida, of 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of a misbranded drug into interstate commerce, following a month-long trial.

    According to court documents and evidence presented at trial, Bolos and his co-conspirators, Andrew Assad, Michael Palso, Maikel Bolos, Larry Smith, Scott Roix, HealthRight LLC, Mihir Taneja, Arun Kapoor, and Sterling Knight Pharmaceuticals, as well as various other companies owned by them, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions. The PBMs processed and approved claims for prescription drugs on behalf of insurance companies. Bolos and his co-conspirators defrauded the PBMs into authorizing claims worth more than $174 million that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

    Court documents and evidence at trial established that Bolos, Assad and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida. Under their direction, Synergy agreed with Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The prescriptions were typically for drugs such as pain creams, scar creams and vitamins. To obtain the prescriptions, evidence showed Roix used HealthRight’s telemarketing platform as a telemedicine service, calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information. HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations. Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act. Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

    Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos paid Roix more than $30 million to buy at least 60,000 invalid prescriptions generated by HealthRight. Evidence showed Bolos selected specific medications for the prescriptions that he could submit for highly profitable reimbursements. In addition, Bolos used illegal means to hide his activity from the PBMs so that he could remain undetected. Evidence showed that Bolos was responsible for at least $89 million out of the total $174 million in fraudulently paid billings.

    “The defendants deceived consumers in order to facilitate the distribution of drugs without proper medical oversight, and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao of the Justice Department’s Civil Division. “The Department will continue to investigate and prosecute individuals who use telemedicine to advance fraudulent schemes that violate the Food, Drug, and Cosmetic Act.”

    “The United States Attorney’s Office for the Eastern District of Tennessee applauds the unwavering efforts of the multiple agencies involved in this collaborative investigation to bring this extensive healthcare fraud and misbranding scheme to justice,” said Acting U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. “The scope and nature of this fraud and misbranding scheme shock the conscience. Patients were given medications that they neither requested nor wanted, and the trial proof demonstrated that the prescriptions were specifically chosen by Bolos to maximize the fraudulent scheme’s profits, rather than for the patients’ healthcare needs. The guilty verdict against Bolos and the guilty pleas obtained from his co-defendants should send a strong message that the Department of Justice will aggressively prosecute fraud against health insurance providers.”

    “Healthcare fraud is an egregious crime problem that impacts every American,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office. “The guilty verdict was a result of a multi-agency investigation into a complex health care fraud scheme that required substantial investigative resources. Along with its law enforcement partners, the FBI remains committed to investigate these crimes and prosecute all those that are intent in defrauding the American public."

    “Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations Miami Field Office. “We will continue to pursue and bring to justice those who put profits ahead of public health.”

    “Bolos and his co-conspirators used their pharmacies to fraudulently bill insurance companies hundreds of millions of dollars, and that type of health care fraud impacts everyone,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa. “HSI will continue to work with our law enforcement partners at the federal, state and local level to investigate all fraud and bring those responsible to justice.”

    “Bolos and his co-conspirators sought to increase their profits by executing a comprehensive health care fraud scheme involving innocent patients,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “This conviction should serve as a warning to individuals who wish to deceive the government and steal from taxpayers. Alongside our law enforcement partners, we will continue to pursue medical professionals who engage in fraudulent activity.”

    “The verdict in this case sends a clear message that these types of schemes will not be tolerated,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service Office of Inspector General in the Northeast Area Field Office. “The Special Agents of the U.S. Postal Service Office of Inspector General will continue to work closely with the U.S. Attorney’s Office and our law enforcement partners to bring to justice those who commit these kinds of offenses.”

    Roix, Assad, Palso, Smith, Maikel Bolos and various associated business entities previously pleaded guilty to their roles in the conspiracy. Taneja, Kapoor, and Sterling Knight pleaded guilty to felony misbranding in a conspiracy with Bolos. U.S. District Judge J. Ronnie Greer set sentencing for Bolos for May 19, 2022, in the United States District Court for the Eastern District of Tennessee at Greeneville. Sentencings for the other defendants will be set for dates in 2022.

    The trial and plea agreements resulted from a multi-year investigation conducted by the U.S. Department of Health & Human Services Office of Inspector General (Nashville); Food and Drug Administration Office of Criminal Investigations (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); Federal Bureau of Investigation (Knoxville and Johnson City, Tennessee); Office of Personnel Management Office of Inspector General (Atlanta); and the Department of Homeland Security, Homeland Security Investigations (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

    Assistant U.S. Attorneys TJ Harker and Mac Heavener for the Eastern District of Tennessee and Trial Attorney David Gunn of the Department of Justice Civil Division’s Consumer Protection Branch in Washington, and a former Assistant U.S. Attorney in Knoxville, prosecuted and tried the case. They were assisted by Barbra Pemberton, Bryan Brandenburg and April Denard from the U.S. Attorney’s office.

    Source

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  • Feds: 'Blind' Veteran bilked VA out of $1M, served as BB gun and archery instructor

    Asheville VAMC

     

    ASHEVILLE - A Buncombe County man who claimed to be blind because of his military service — but who also repeatedly got his driver's license renewed and served as a BB gun and archery instructor for a Boy Scouts troop — bilked the VA system out of nearly $1 million dollars in disability payments, federal prosecutors say.

    John Paul Cook, 57, of Alexander in northern Buncombe County, pleaded guilty July 19 in federal court to defrauding the U.S. Department of Veterans Affairs, according to a press release. From 1987-2017, Cook received $978,138 in Veterans Affairs disability payments "due to his claimed blindness, to which he was not lawfully entitled," the release states.

    The U.S. Attorney's Office cited court records that show Cook’s monthly VA disability payments in 1987 were $1,411 per month, but with incremental increases in his disability rating, "as well as cost-of-living adjustments and his Special Monthly Compensation, these payments steadily increased over the years. By 2016, the monthly payment had risen to $3,990."

    Cook enlisted in the U.S. Army in 1985, and court documents showed that six months later he sustained an accidental injury while on duty.

    "Following the incident, Cook complained that as a result of the accident and injuries he sustained, a preexisting eye condition had worsened," the press release states. "In 1987, following a medical evaluation, Cook was discharged, placed on the retired list, and began receiving VA disability-based compensation at a rate of 60%."

    But over the next 30 years, Cook’s disability-based compensation increased, "following Cook’s repeated false claims of increased visual impairment and unemployability due to 'severe visual deficit,'" the press release states.

    Ultimately, in 2005, the VA declared Cook legally blind, and he began receiving maximum disability compensation, which Cook admitted in court this week. He also began receiving additional benefits.

    But contrary to Cook’s claims about worsening visioning, Cook "repeatedly passed vision screening tests to renew or obtain a driver’s license in North and South Carolina," the press release states.

    "Furthermore, during the relevant time period, court documents show that Cook purchased and registered over 30 different motor vehicles which Cook routinely drove, including on long-distance trips and to perform errands," the release stated.

    Court records show that from 2010-16 — when Cook was receiving the maximum VA benefits — he was actively involved with the Boy Scouts of America, serving as a den leader and cubmaster.

    "Among the courses the defendant completed with the BSA were courses qualifying him to be a range officer for BB guns and for archery," the press release states. "He was also certified for land navigation, which involves reading maps and using a compass."

    Stealing from the VA carries a maximum penalty of 10 years in prison and a $250,000 fine, according to the press release. A sentencing date has not been set.

    For the 2020 fiscal year, the VA's Office of the Inspector General found the VA had reported $100.5 million in confirmed fraud.

    Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville led the prosecution in the Cook case.

    Acting U.S. Attorney Stetzer thanked the VA-OIG for their investigation of the case.

    Source

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  • Final four sentenced in $189M Health Care Fraud Scam

    Justice 008

     

    HOUSTON – Four executives of Continuum Healthcare and its various health centers have been ordered to federal prison for a massive scam perpetrated in the Houston area, announced Acting U.S. Attorney Jennifer B. Lowery.

    Bobby Rouse, 81, and Steven Houseworth, 47, both of Houston; Jeffery Parsons, 62, Crockett; and David Edson, 72, Palm Harbor, Florida, had all pleaded guilty to their respective roles in the scam.

    On April 22, U.S. District Judge Gray Miller sentenced Rouse to 120 months in prison. Edson received a 48-month-term of imprisonment, while Parsons and Houseworth each received 30 months in prison.

    Rouse, Houseworth, Edson and Parsons were part of the executive team for Continuum Healthcare LLC, which owned Westbury Community Hospital in Houston as well as community mental health centers in the Houston area known by their locations as Hornwood, Baytown and Missouri City.

    Each location operated a partial hospitalization program (PHP). The PHP was supposed to be a treatment program for individuals with mental illness, intended to closely resemble a highly structured, short-term hospital inpatient program. However, while it was a distinct and organized intensive treatment program, it offered less than 24-hour daily care.

    In 2010, Continuum opened Westbury Community Hospital with Hornwood and Baytown becoming outpatient centers and continuing to operate their existing PHPs under the Westbury name. Westbury also opened a PHP.

    The four men were responsible for the day-to-day operation of Continuum/Westbury and were involved in the implementation of the various kickback programs. Numerous people were referred for treatment in exchange for payment. However, the vast majority did not qualify for PHP services, because they were not experiencing an acute psychotic episode or were actually suffering from mental retardation, dementia or Alzheimer’s.

    In total, Continuum billed Medicare approximately $189 million in total for fraudulent PHP services and Medicaid paid approximately $66 million on those clams.

    The convictions of all 14 charged in the case were announced in 2019.

    The FBI, Department of Health and Human Services - Office of the Inspector General, Texas Attorney General's Medicaid Fraud Control Unit and IRS - Criminal Investigation participated in the joint investigation. Assistant U.S. Attorneys Tina Ansari and Special Assistant U.S. Attorney Justin Blan are prosecuting the case.

    Source

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  • Five People Charged, Two Others Admit Guilt, in $93 Million Health Care Fraud Scheme

    Justice 010

     

    NEWARK, N.J. – Five individuals have been charged and two others have pleaded guilty in New Jersey for their roles in massive durable medical equipment and genetic cancer screening kickback fraud schemes, Acting U.S. Attorney Rachael A. Honig announced today.

    Thomas Farese, 78, of Delray Beach, Florida; Pat Truglia, 53, of Parkland, Florida; Domenic J. Gatto Jr., 46, of Palm Beach Gardens, Florida; and Nicholas Defonte, 72, and Christopher Cirri, 63, both of Toms River, New Jersey, are each charged by complaint with conspiracy to commit health care fraud.

    Two additional individuals pleaded guilty today by videoconference before U.S. District Judge Kevin McNulty: Brian Herbstman, 46, of Jackson, New Jersey, pleaded guilty to an information charging him with conspiracy to commit health care fraud and to violate the Anti-Kickback Statute; and Sean Hogan, 48, Old Bridge, New Jersey, pleaded guilty to an information charging him with conspiracy to engage in money laundering. Sentencing for both is scheduled for Aug. 31, 2021.

    According to documents filed in these cases and statements made in court:

    Each of the defendants played a role in defrauding health care benefit programs by offering, paying, soliciting, and receiving kickbacks and bribes in exchange for completed doctors’ orders for durable medical equipment (DME), namely orthotic braces:

    Farese, Truglia, Gatto, and their conspirators had financial interests in multiple DME companies, which paid kickbacks to suppliers of DME orders, including Cirri, Defonte, and Truglia. In exchange for DME orders, the DME companies fraudulently billed Medicare, TRICARE, CHAMPVA, and other health care benefit programs. The defendants concealed their ownership of the DME companies by using straw owners, who were falsely reported to Medicare as the owners of the companies.

    Truglia, Cirri, Defonte, and their conspirators owned and operated multiple call centers through which they obtained DME orders for beneficiaries of Medicare and other federal health care programs. The call centers paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these beneficiaries. The telemedicine companies then paid physicians to write medically unnecessary DME orders. The orders were provided to DME supply companies owned by Farese, Truglia, Gatto, and others in exchange for bribes. The DME supply companies provided the braces to beneficiaries and fraudulently billed the health care programs.

    Herbstman and his conspirators had financial interests in multiple DME companies. The DME companies paid kickbacks to suppliers in exchange for DME orders, which the DME companies fraudulently billed to Medicare, TRICARE, CHAMPVA, and other health care benefit programs.

    Hogan and his conspirators agreed to launder the proceeds of the health care fraud conspiracy. From March 2018 to October 2019, Hogan and others withdrew approximately $1.16 million in ill-gotten gains.

    Herbstman and his conspirators had business relationships with call centers through which they obtained patient referrals for genetic cancer screening tests. Herbstman provided these patient referrals to others in exchange for kickbacks and bribes from companies that performed the tests and fraudulently billed them to health care programs.

    The defendants caused losses to Medicare, TRICARE, and CHAMPVA of approximately $93 million.

    The charge of conspiracy to commit health care fraud is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gross profit or loss caused by the offense, whichever is greater. The charges of conspiracy to violate the federal Anti-Kickback Statute and conspiracy to commit health care fraud, to which Herbstman pleaded guilty, are punishable by a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross profit or loss caused by the offense, whichever is greater. The charge of conspiracy to transact in criminal proceeds, to which Hogan pleaded guilty, is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000 or twice the gross profit or loss caused by the offense, whichever is greater.

    Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; the Department of Health and Human Services-Office of Inspector General, under the direction of Scott J. Lampert; the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Patrick J. Hegarty; and the U.S. Department of Veterans Affairs Office of Inspector General, under the direction of Special Agent in Charge Christopher F. Algieri, with the investigations leading to the charges and guilty pleas.

    The government is represented by Assistant U.S. Attorneys Sean M. Sherman and Ryan L. O’Neill of the Opioid Abuse Prevention & Enforcement and Health Care Fraud Units in Newark, Senior Trial Counsel Barbara Ward of the Asset Recovery and Money Laundering Unit in Newark, and Trial Attorney Darren C. Halverson of the Criminal Division’s Fraud Section.

    The charges and allegations contained in the complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

    Source

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  • Florida Attorney Admits Role in $7.5 Million Bank Extortion Scheme

    Justice 007

     

    NEWARK, N.J. – A Florida attorney today admitted his role in a scheme to extort $7.5 million from a California bank, Attorney for the United States Rachael A. Honig announced.

    Richard L. Williams, 73, of Miami, Florida, pleaded guilty by videoconference before U.S. District Judge Susan D. Wigenton to an information charging him with conspiracy to transmit an interstate communication with the intent to extort.

    According to documents filed in this case and statements made in court:

    Beginning in May 2020, Williams and his client (Client-1) conspired to extort $7.5 million from a commercial bank headquartered in California (Bank-1). Williams threatened Bank-1 that if it did not pay Client-1 $7.5 million, Client-1 would publicly disclose that Client-1 had accessed and obtained certain confidential data from the bank that did not belong to Client-1 and that Client-1 was not authorized to retain.

    On June 18, 2020, Williams sent an email to an attorney for Bank-1 that attached a proposed agreement that Bank-1 had not requested. The agreement – titled “Settlement, Assistance, and Confidentiality Agreement” – provided for Bank-1 to pay Client-1 approximately $7.5 million as a “settlement, assistance and confidentiality fee” within 48 hours of signing the agreement. The payment was purportedly in exchange for Client-1 serving for one week as an “advisor” to Bank-1, a service that Bank-1 had not requested, and agreeing not to publicize confidential Bank-1 data that Client-1 had accessed and obtained. The agreement was designed to conceal that Williams and Client-1 were extorting Bank-1.

    From July through August 2020, Williams also engaged in a series of telephone conversations with an undercover law enforcement agent (UC-1) who Williams believed was a representative of Bank-1 located in New Jersey, with authority to transfer funds to Williams. During a telephone call with UC-1 on July 24, 2020, Williams warned UC-1 that if Bank-1 did not pay Client-1 it should “fear” that Client-1 might reveal to various third parties that Client-1 had accessed and obtained the confidential data from Bank-1 or issue a press release disclosing that information. Williams also implied that if Bank-1 refused to accede to his demands and pay Client-1, there may be violent consequences from third parties unrelated to Williams. Williams warned UC-1 that “FBI agents were murdered a couple of blocks from where [he was] sitting,” and that if Williams were in Bank-1’s position, “what would scare the [expletive] out of [him] would be” the reaction of those third parties to the public revelation of Client-1’s access and retention of the data.

    The charge to which Williams pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross grain or loss from the offense, whichever is greater. Williams’s sentencing is scheduled for April 6, 2021.

    Attorney for the United States Honig credited the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott Lampert; Defense Criminal Investigative Service, under the direction of Special Agent in Charge Patrick J. Hegarty; the U.S. Department of Veterans Affairs Office of Inspector General, under the direction of Special Agent in Charge Christopher F. Algieri; and special agents of the U.S. Attorney’s Office for the District of New Jersey with the investigation leading to today’s guilty plea.

    The government is represented by Assistant U.S. Attorney Sean M. Sherman and Bernard J. Cooney, Acting Chief of the Opioid Abuse Prevention & Enforcement, of the U.S. Attorney’s Office in Newark.

    Source

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  • Florida Man Admits Role in $1 Million Kickback Scheme Related to Genetic Testing

    Justice 013

     

    NEWARK, N.J. – A Florida man today admitted his role in a conspiracy to receive kickbacks and bribes from laboratories in exchange for referrals of patient DNA samples and genetic tests, Acting U.S. Attorney Rachael A. Honig announced.

    Norman Smiley, 80, of Boca Raton, Florida, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an information charging him with conspiracy to violate the Anti-Kickback Statute.

    According to documents filed in this case and statements made in court:

    Smiley owned and operated Sun Health Advocates LLC, a company that was in the business of acquiring patient DNA samples and physicians’ orders for purposes of submitting those samples and orders to clinical laboratories for genetic testing, including Metric Lab Services LLC and Spectrum Diagnostic Labs LLC. Smiley, on behalf of Sun Health, entered into illicit agreements with the Metric and Spectrum laboratories under which the laboratories paid Sun Health kickbacks in exchange for delivering DNA samples and orders for genetic tests. Sun Health concealed these arrangements by issuing sham invoices to the laboratories that purportedly reflected services provided at an hourly rate even though the parties had already agreed upon the kickback amount, which was based on the revenue the laboratories received from Medicare. Metric and Spectrum paid Sun Health approximately $1.16 million in kickbacks as part of the scheme.

    The charge to which Smiley pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross grain or loss from the offense, whichever is greatest. Sentencing is scheduled for March 16, 2022.

    Acting U.S. Attorney Honig credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and special agents of the U.S. Attorney’s Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas J. Mahoney, with the investigation leading to today’s guilty plea.

    The government is represented by Bernard J. Cooney, Chief of the Government Fraud Unit.

    Source

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  • Florida Man Admits Role in $35 Million Pharmacy Compounded Medication Scheme

    Justice 018

     

    NEWARK, N.J. – A Palm City, Florida, man today admitted participating in a compounded medication kickback scheme that he and others ran out of a pharmacy in Clifton, New Jersey, U.S. Attorney Philip R. Sellinger announced.

    Anderson Triggs, 42, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to an information charging him with one count of conspiracy to violate the Anti-Kickback Statute.

    According to documents filed in this case and statements made in court:

    From 2014 through 2016, Triggs and his conspirators used Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, New Jersey, to run a kickback scheme involving compounded drugs like scar creams, pain creams, migraine mediation, and vitamins. Compounded drugs are prescribed by a physician when an FDA-approved drug did not meet the health needs of a particular patient, such as when a dye or preservative triggers an allergic reaction, or when a patient can’t swallow an FDA-approved pill.

    Triggs started as a consultant to Main Avenue Pharmacy and later became a board member of its corporate parent. The scheme revolved around identifying compounded drugs that would yield exorbitant reimbursements from health insurers, including both federal and commercial payers.

    The physicians who signed prescriptions for compounded medications that were filled at Main Avenue frequently had never even spoken to the patients or examined them. Once the prescriptions were signed by a doctor, they would be returned to the marketing company, which would transmit the prescription to Main Avenue Pharmacy, which would fill them and submit claims to health care benefit programs for reimbursement

    On compounded medications alone, Main Avenue received over $34 million in reimbursements from health care benefit programs, approximately $8 million of which was paid by federal payers. Triggs earned over $900,000 through the course of the scheme.

    The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for June 21, 2022.

    U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; the Department of Defense Office of Inspector General, Defense Criminal Investigative Service under the direction of Special Agent in Charge Patrick J. Hegarty; and special agents of the Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to the charges.

    The government is represented by Senior Trial Counsel Jason S. Gould of the Health Care Fraud Unit of the U.S. Attorney’s Office in Newark.

    Source

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  • Florida Man Sentenced in Multi-Million-Dollar Medicare Fraud Scheme

    Justice 010

     

    BOSTON – A Florida man was sentenced yesterday for his role in a multi-million-dollar Medicare fraud scheme involving durable medical equipment.

    Nathan LaParl, 34, of Boca Raton, Fla., was sentenced by U.S. District Court Senior Judge George A. O’Toole, Jr. to three years of probation, the first year to be served subject to a curfew and forfeiture in the amount of $220,671. On Jan. 21, 2021, LaParl pleaded guilty to one count of receiving kickbacks in connection with a federal health care program and one count of violating the HIPAA statute.

    LaParl and co-defendant Talia Alexandre sold Medicare patients’ personal and medical data to Juan Camilo Perez Buitrago. LaParl and Alexandre worked with foreign call centers to contact Medicare patients to ask if they were interested in durable medical equipment (DME) such as arm, back, knee and shoulder braces “at little to no cost.” The call centers collected demographic and insurance information from Medicare patients, which LaParl and Alexandre sold to Perez Buitrago. Together, LaParl and Alexandre received more than $1.6 million from Perez Buitrago for the patient data. Perez Buitrago used that patient data to submit more than $109 million in false and fraudulent claims, submitting claims for DME that was not prescribed, not necessary, and, in many instances, never requested or received.

    To perpetuate the scheme, LaParl checked Medicare patients’ insurance eligibility by improperly accessing a patient eligibility tool provided by co-defendant Stefanie Hirsch. Hirsch owned EI Medical, Inc., a Medicare-enrolled wheelchair and scooter repair company that qualified for access to a health care clearinghouse that contains Medicare patients’ personal, medical and insurance information. Hirsch improperly gave LaParl access to that clearinghouse and charged him about $0.25 per patient eligibility check. Using Hirsch’s credentials, LaParl accessed the personal and medical data of more than 350,000 patients.

    Hirsch pleaded guilty to violating the HIPAA statute and was sentenced on Sept. 21, 2021, to three years of probation. Hirsch was also ordered to pay a fine of $2,500. Alexandre pleaded guilty to one count of receiving kickbacks in connection with a federal health care program and was sentenced on Dec. 8, 2021, to three years of probation with the first year spent in home detention. Alexandre was also ordered to pay a fine of $5,000 and restitution in the amount of $1.47 million

    United States Attorney Rachael S. Rollins; Johnnie Sharp Jr., Special Agent in Charge of the Federal Bureau of Investigation, Birmingham Field Division; Phillip M. Coyne, Special Agent in Charge of the Department of Health and Human Services, Office of the Inspector General, Boston Division; and Ketty Larco Ward, Inspector in Charge of the U.S. Postal Inspection Service made the announcement. Assistant U.S. Attorney Elysa Q. Wan of Rollins’ Health Care Fraud Unit prosecuted the case.

    Source

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  • Florida Woman Sentenced in Multi-Million Dollar Medicare Fraud Scheme

    Justice 060

     

    BOSTON – A Florida woman was sentenced today in connection with a multi-million-dollar Medicare fraud scheme.

    Talia Alexandre, 30, of Palm Springs, Fla., was sentenced by U.S. Senior District Court Judge George A. O’Toole Jr. to three years of supervised release with the first year spent in home detention. Alexandre was also ordered to pay a fine of $5,000 and restitution in the amount of $1.47 million. On Feb. 24, 2021, Alexandre pleaded guilty to one count of receiving kickbacks in connection with a federal health care program.

    Alexandre and co-conspirator Nathan LaParl sold Medicare patients’ personal and medical data to Juan Camilo Perez Buitrago. Alexandre and LaParl worked with foreign call centers to contact Medicare patients to ask if they were interested in durable medical equipment (DME) such as arm, back, knee and shoulder braces “at little to no cost.” The call centers collected demographic and insurance information from Medicare patients, which Alexandre and LaParl sold to Perez Buitrago. Alexandre received more than $1.4 million from Perez Buitrago for the patient data. Perez Buitrago used that patient data to submit more than $109 million in false and fraudulent claims, submitting claims for DME that was not prescribed, not necessary, and, in many instances, never requested or received.

    Acting United States Attorney Nathaniel R. Mendell; Johnnie Sharp Jr., Special Agent in Charge of the Federal Bureau of Investigation, Birmingham Field Division; Phillip M. Coyne, Special Agent in Charge of the Department of Health and Human Services, Office of the Inspector General, Boston Division; and Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service made the announcement. Assistant U.S. Attorney Elysa Q. Wan of Mendell’s Health Care Fraud Unit prosecuted the case.

    Source

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  • Florida-Based Medicare Reimbursement Consultant Resolves Litigation for Allegedly Causing False Diabetic Supply Claims to Medicare

    Justice 003

     

    Medicare reimbursement consultant Ted Albin and his wholly-owned consulting and billing firm Grapevine Billing and Consulting Services Inc. (Grapevine), both based in Stuart, Florida, have agreed to pay $50,000 to resolve allegations that they violated the False Claims Act. This settlement resolves allegations that Albin and Grapevine caused the submission of false claims to Medicare because of kickbacks to Medicare beneficiaries and because patients were ineligible to receive glucometers. This settlement is based on the United States’ analysis of financial disclosures made by Grapevine.

    “Consultants must abide by federal requirements when providing Medicare billing advice,” said Acting Assistant Attorney General Brian M. Boynton for the Justice Department’s Civil Division. “We will continue to protect the integrity of federal health insurance programs by pursuing individuals or entities responsible for the submission of false or fraudulent claims, including those who cause such claims to be submitted.”

    In its complaint, the United States alleged that, from 2008 until 2017, Albin and Grapevine provided consulting services to now-defunct diabetic testing supplier Arriva Medical LLC (Arriva), its parent Alere Inc. (Alere), and starting in January 2018, Abbott Laboratories (Abbott), after Abbott acquired Arriva and Alere in October 2017. From at least 2009 until 2011, Albin, through Grapevine, allegedly served effectively as the Head of Reimbursement at Arriva, overseeing Arriva’s reimbursement department, developing Arriva’s policies for the collection of beneficiary copayment obligations and submitting claims to Medicare on Arriva’s behalf for diabetic testing supplies.

    The United States alleged that, as consultants to Arriva, from April 2010 until the end of 2016, Albin and Grapevine knowingly caused the submission of claims to Medicare that were tainted by the payment of kickbacks to Medicare beneficiaries in the form of (i) free or “no cost” glucometers, or (ii) the routine waiver of beneficiary copayment obligations. Additionally, the United States alleged that Albin and Grapevine knowingly caused the submission of claims to Medicare for glucometers on behalf of beneficiaries who were not eligible to seek reimbursement because they had received a meter paid for by Medicare within the previous five years.

    The United States produced sworn testimony from Albin in the litigation in which he admitted that, as a reimbursement consultant for Arriva, Albin personally (1) would “write off customer co-payments” because “I could tell someone on my team ‘Yes, write this off,’” (2) engaged in such write-offs “probably every week,” (3) engaged in “mass write-offs of denials by Medicare” for ineligible meters, (4) created Arriva’s “routine policy not to send a bill for customers who owed less than $5,” and (5) “came up with the policy” of “courtesy adjustments” in the form of copayment waivers in response to customer complaints about their Medicare coinsurance obligations.

    “The resolution of this matter brings about the conclusion of a lengthy and protracted investigation and litigation in which the United States sought and received substantial penalties and damages as a result of allegations of False Claims Act violations,” said U.S. Attorney Mark H. Wildasin for the Middle District of Tennessee. “I commend the legal team and investigators for working diligently to preserve the integrity of our federal healthcare programs.”

    “Those who provide advice to health care providers about Medicare billing must do so with integrity,” said Special Agent in Charge Tamala E. Miles of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to investigate those who cause fraudulent claims to be submitted to federal health care programs.”

    The litigation resolved by this settlement originally included claims against Arriva and Alere that were brought under the qui tam or whistleblower provisions of the False Claims Act by Gregory Goodman, a former employee in Arriva’s Antioch, Tennessee call center. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The act also permits the United States to intervene and take over the litigation of a qui tam action, as the United States did here. In August 2021, Arriva and Alere agreed to pay $160 million to resolve the claims against them. The United States also previously settled for $1 million claims against Arriva’s founders, David Wallace and Timothy Stocksdale, for their alleged part in the scheme. The litigation, which is concluded by the settlement announced today, is currently captioned United States v. Albin, et al., Case No. 3:13-cv-00760 (M.D. Tenn.).

    The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Middle District of Tennessee and HHS-OIG, with the assistance of the Tennessee Bureau of Investigation.

    The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

    The matter was handled by Trial Attorney Jake M. Shields of the Civil Division and Assistant U.S. Attorney Ellen Bowden McIntyre of the Middle District of Tennessee.

    Source

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  • Florida’s NCH Healthcare System Agrees to Pay $5.5 Million to Settle Common Law Allegations for Impermissible Medicaid Donations

    Justice 004

     

    NCH Healthcare System (NCH), which operates two hospitals in Collier County, Florida, has agreed to pay the United States $5.5 million to resolve allegations that it made donations to local units of government to improperly fund the state’s share of Medicaid payments to NCH.

    The Florida Medicaid program provides medical assistance to low-income individuals and individuals with disabilities, and is jointly funded by the federal and state governments. Under federal law, Florida’s share of Medicaid payments must consist of state or local government funds, and not “non-bona fide donations” from private health care providers, such as hospitals. A non-bona fide donation is a payment — in cash or in kind — from a private provider to a governmental entity that is then returned to the private provider as the state share of Medicaid. The private provider’s donation triggers a corresponding federal expenditure for the federal share of Medicaid, which is also paid to the private provider. This unlawful conduct causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider. The prohibition of this practice ensures that states are in fact paying a share of Medicaid payments and thus have an incentive to curb Medicaid costs and prevent unnecessary services.

    The United States alleged that, between October 2014 and September 2015, NCH made improper, non-bona fide donations by: (1) providing free nursing and athletic training services to the Collier County School Board; and (2) assuming and paying certain of Collier County’s financial obligations. Both types of donations were designed to increase Medicaid payments received by NCH, without any actual expenditure of state or local funds. In particular, NCH’s donations freed up funds for the county and school board to make payments to the State as the state share of Medicaid payments to NCH. This state share was “matched” by the federal government before being returned to NCH as Medicaid payments. The Medicaid payments NCH received were thus funded by the federal government and NCH’s own donations, in violation of the prohibition on non-bona fide donations.

    “States and local units of government must use their own money when seeking federal Medicaid matching funds to help ensure that Medicaid payments are determined by beneficiaries’ medical needs rather than donations by hospitals or other health care providers,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “When private parties violate the rules by making improper donations to fund the state share of Medicaid, they endanger the integrity of the Medicaid program.”

    “Millions of Floridians depend on the Medicaid Program for medical care and related services,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “This settlement underscores our commitment to protecting the integrity of the Medicaid program by ensuring that government funds are legally obtained and used for their intended purposes.”

    The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Middle District of Florida, with assistance from the U.S. Department of Health and Human Services Office of Inspector General.

    The matter was handled by Fraud Section Attorneys Alison B. Rousseau and Jonathan T. Thrope and Assistant U.S. Attorney Carolyn B. Tapie.

    Source

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  • Former Biloxi VA Employee Sentenced to Prison for Stealing VA Property

    Justice 019

     

    Gulfport, Miss. – A Saucier man was sentenced to serve 12 months in federal prison for stealing government property, announced U.S. Attorney Darren J. LaMarca and Special Agent in Charge Jeffrey A. Breen of the Veterans Affairs (VA) Office of Inspector General, South Central Field Office.

    Chad Jacob, 55, was also ordered to pay a $40,000 fine and $23,584 in restitution to the VA.

    According to court documents, Jacob stole personal protective equipment (“PPE”), electronics, and medical equipment while working as the Assistant Chief of Supply Chain Management for the Gulf Coast Veterans Health Care System. Starting in 2019 and continuing to December 2020, Jacob stole items belonging to the VA and resold them to local pawn stores and on his personal eBay account. In total, Jacob made more than $50,000 selling the stolen N-95 masks and over $9,000 selling stolen iPads and iPhones.

    The case was investigated by the VA Office of Inspector General.

    Assistant U.S. Attorney Kathlyn R. Van Buskirk prosecuted the case.

    Source

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  • Former Biloxi VA Employee Sentenced to Prison for Stealing VA Property

    Justice 061

     

    Gulfport, Miss. – A Saucier man was sentenced to serve 12 months in federal prison for stealing government property, announced U.S. Attorney Darren J. LaMarca and Special Agent in Charge Jeffrey A. Breen of the Veterans Affairs (VA) Office of Inspector General, South Central Field Office.

    Chad Jacob, 55, was also ordered to pay a $40,000 fine and $23,584 in restitution to the VA.

    According to court documents, Jacob stole personal protective equipment (“PPE”), electronics, and medical equipment while working as the Assistant Chief of Supply Chain Management for the Gulf Coast Veterans Health Care System. Starting in 2019 and continuing to December 2020, Jacob stole items belonging to the VA and resold them to local pawn stores and on his personal eBay account. In total, Jacob made more than $50,000 selling the stolen N-95 masks and over $9,000 selling stolen iPads and iPhones.

    The case was investigated by the VA Office of Inspector General.

    Assistant U.S. Attorney Kathlyn R. Van Buskirk prosecuted the case.

    Source

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  • Former Cemetery Owner Sentenced For Defrauding Customers

    Justice 018

     

    HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that Arminda Martin, age 49, formerly of York County, Pennsylvania, was sentenced on July 28, 2020, to 12 months’ and one day imprisonment to be followed by two years of supervised release, by Chief District Court Judge John E. Jones, III, for conspiring to commit mail fraud. The sentence represents a downward adjustment of approximately 32 months to account for prison time that Martin has served for a related fraud scheme in Ohio.

    According to United States Attorney David J. Freed, Martin, along with her husband, Theodore Martin, owned and operated Suburban Memorial Gardens Cemetery in Dover, Pennsylvania. The Martins previously pleaded guilty to conspiring to defraud hundreds of their customers out of approximately $500,000. The Martins admitted that instead of applying customer payments to cemetery services and products, they embezzled the money for their own personal gain, including for gambling.

    Theodore Martin was sentenced earlier this year to 13 months’ imprisonment.        

    The case was investigated by the United States Department of Veterans Affairs Office of Inspector General, the Federal Bureau of Investigation, and the Northern York County Regional Police Department. Assistant U.S. Attorneys Carlo D. Marchioli and Joseph J. Terz prosecuted the case.

    Source

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  • Former Cleveland VA Medical Center supervisor charged with theft of government property and fraud

    Justice 003

     

    U.S. Attorney Justin Herdman announced today that a grand jury sitting in Cleveland has returned a 28-count indictment charging William H. Precht, age 53, of Kent, Ohio, with theft of government property, conspiracy to commit wire fraud and honest services fraud, wire fraud, and false statements relating to health care matters.

    According to the indictment, from October 5, 2010, through January 4, 2019, the defendant is accused of using his position with the Cleveland Veteran Affairs (VA) Medical Center to engage in a scheme to enrich himself and co-conspirators.

    The indictment alleges that from on or about October 5, 2010, through on or about February 16, 2018, the defendant fraudulently used his VA-issued purchase card and facilitated the use of other VA employees’ purchase cards to make purchases from a company controlled by the defendant for approximately $1,066,348.

    In addition, from on or about May 27, 2015, through on or about January 4, 2019, the defendant is accused of conspiring with a medical supplies company located in South Euclid, Ohio, to devise a scheme in which the defendant would receive kickbacks and other items of value, in exchange for steering VA business and other monetary awards to the medical supplies vendor.

    Allegedly, it was part of the conspiracy that the defendant would solicit and accept items of value from the medical supplies vendor such as money, sporting event tickets and future business interest. The defendant would then provide favorable actions for the benefit of his co-conspirators and the medical supplies vendor when the opportunities arose. He is accused of concealing this activity from the Cleveland VA by providing false and misleading information to VA employees about reasons for ordering medical supplies. The defendant also allegedly falsified some patient records to make it appear patients had implants in their electronic health record that did not correlate to any actual surgical or medical procedure, to justify the purchase of implants.

    An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

    If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation.

    In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

    The investigation preceding the indictment was conducted by the Department of Veterans Affairs – Office of the Inspector General, Cleveland and the Cleveland Division of the FBI. This case is being prosecuted by Assistant U.S. Attorney Brian McDonough.

    Source

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  • Former Delaware Doctor Sentenced to 20 Years in Prison for Unlawfully Distributing Opioid Pills

    Justice 053

     

    A former Delaware doctor was sentenced today to 20 years in prison for unlawful drug distribution and maintaining a drug-involved premises.

    Patrick Titus, 58, of Milford, was convicted by a federal jury in July 2021 of 13 counts of unlawfully distributing and dispensing controlled substances and one count of maintaining a drug-involved premises.

    “This sentence is a reminder that the Department of Justice will hold accountable those doctors who are illegitimately prescribing opioids and fueling the country’s opioid crisis,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “Doctors who commit these unlawful acts exploit their roles as stewards of their patients’ care for their own profit.”

    According to court documents and evidence presented at trial, Titus unlawfully distributed or dispensed a variety of powerful opioids – including fentanyl, morphine, methadone, OxyContin and oxycodone – outside the usual scope of professional practice and not for legitimate medical purposes. Titus operated an internal medicine practice where he frequently prescribed these dangerous controlled substances in high dosages, sometimes in combination with each other or in other dangerous combinations, mostly in exchange for cash. Evidence at trial showed he distributed over 1 million opioid pills. Although these Schedule II drugs are approved for pain management treatment, Titus provided no meaningful medical care and instead prescribed these controlled substances to patients he knew were suffering from substance use disorder and/or who demonstrated clear signs that the prescribed drugs were being abused, diverted or sold on the street.

    “DEA-registered medical practitioners have an important role in our communities to treat patients compassionately and responsibly,” said DEA Administrator Anne Milgram. “Today’s sentencing makes clear that medical professionals who recklessly prescribe opioids and endanger the safety and health of patients will be held accountable. I applaud the outstanding investigative work conducted by DEA’s Wilmington Resident Office Tactical Diversion Squad and the Department of Justice’s prosecution of the case.”

    “As we continue the fight against the opioid crisis, this case serves as an important reminder that health care professionals have a duty to prescribe medication responsibly to ensure the well-being of individuals under their care. Failing to do so can endanger patients and undermines critical, ongoing public health measures,” said Special Agent in Charge Maureen Dixon of the U.S. Department of Health and Human Services, Office of the Inspector General (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to hold bad actors accountable.”

    The DEA and HHS-OIG investigated the case.

    Assistant Deputy Chiefs Aleza Remis and Justin Woodard and Trial Attorney Claire Sobczak of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Edmond Falgowski of the District of Delaware assisted with the case.

    The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this Program, comprised of 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who collectively have billed the Medicare program for more than $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found athttps://www.justice.gov/criminal-fraud/health-care-fraud-unit.

    Source

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  • Former Employee of Veterans Affairs Medical Center Admits Stealing HIV Medication

    Justice 038

     

    NEWARK, N.J. – A former pharmacy procurement technician today admitted stealing prescription HIV medications from the pharmacy of the Veterans Affairs Medical Center (VAMC) in East Orange, New Jersey, Acting U.S. Attorney Rachael A. Honig announced.

    Lisa M. Hoffman, 49, of Orange, New Jersey, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to Count 2 of an indictment charging her with theft of government property.

    According to documents filed in this case and statements made in court:

    From October 2015 through November 2019, Hoffman was a procurement officer at the VAMC, who used her authority to order medication for the outpatient pharmacy, including ordering large quantities of HIV medication. Hoffman admitted that she stole HIV prescription medications from the VAMC pharmacy and sold it to her conspirator, Wagner Checonolasco, 34, of Lyndhurst, New Jersey, in exchange for cash. Checonolasco previously admitted to conspiring with Hoffman to steal HIV medication belonging to the U.S. Department of Veterans Affairs. Hoffman and Checonolasco stole approximately $10 million worth of HIV medications belonging to the VAMC during the scheme.

    The theft of government property charge is punishable by a maximum penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for March 9, 2022.

    Checonolasco previously pleaded guilty to one count of conspiracy to steal government property and is scheduled to be sentenced on Dec. 15, 2021.

    Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, and the U.S. Department of Veterans Affairs Office of Inspector General, Northeast Field Office, under the direction of Special Agent in Charge Christopher F. Algieri, with the investigation leading to today’s guilty plea.

    The government is represented by Assistant U.S. Attorney Nicole F. Mastropieri of the Health Care Fraud Unit in Newark.

    Source

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  • Former Family Practitioner Sentenced to Prison for Illegally Dispensing Drugs and Health Care Fraud

    Justice 054

     

    PITTSBURGH, PA - A former physician who operated private family practices in Perryopolis, Pennsylvania, and Mount Pleasant, Pennsylvania, has been sentenced in federal court to 18 months’ incarceration, followed by three years supervised release, and ordered to pay a $5,000 fine on his conviction of violating federal narcotics and health care laws, United States Attorney Cindy K. Chung announced today.

    United States District Judge J. Nicholas Ranjan imposed the sentence on Emilio Ramon Navarro, 60, of Coal Center, Pennsylvania.

    According to the information presented to the court, Navarro, a licensed physician in the Commonwealth of Pennsylvania, operated private family practices in Mount Pleasant and Perryopolis. In 2018, Navarro issued Victim 1 nine prescriptions for a total of 300 dosage units of Oxycodone and 240 dosage units of Oxymorphone, both Schedule II controlled substances, outside the usual course of professional practice and for no legitimate medical purpose. Rather, Navarro forced Victim 1 to engage in sexual acts with him prior to issuing her these prescriptions to which he caused her to be addicted. Navarro thereby caused the submission of fraudulent claims to Medicaid for reimbursement for the unlawfully prescribed prescriptions thereby defrauding Medicaid.

    Prior to imposing the sentence, Judge Ranjan stated, “There are victims involved and they have suffered lasting impacts.”

    “Today’s sentence holds Dr. Navarro accountable for his illegal activities,” said U.S. Attorney Chung. “I will continue our office’s tenacious pursuit of unscrupulous doctors who exploit the addictions of patients for personal gratification and then cause our healthcare system to be defrauded.”

    “Dr. Navarro had a clear disregard for medical integrity,” said FBI Pittsburgh Special Agent in Charge Mike Nordwall. “He preyed on victims struggling with addiction and traded drugs for sex. The FBI will continue to work with our partners to hold accountable those who abuse their positions of trust.”

    “When Dr. Navarro prescribed opioid prescriptions in exchange for sexual favors, he abandoned his duty as a physician and recklessly discarded the health and safety of his patients,” said Special Agent in Charge Maureen R. Dixon of the U.S. Department of Health and Human Services. “Together with our law enforcement partners, our agency will continue to uproot such egregious fraud schemes that threaten public health and wastes taxpayer dollars.”

    “Navarro held a position of trust in his community and his patients depended on him to provide medical care,” said AG Shapiro. “He will now face consequences for showing no regard for the health and safety of his patients, illegally prescribing drugs that have fueled the opioid crisis here in Pennsylvania, and defrauding our Commonwealth's Medicaid Program. The Office of Attorney General's arrests of prescribers who divert prescription drugs are up 135% since 2016. We will continue to work with our partners to seek out those who put lives at risk and hold them accountable.”

    Assistant United States Attorneys Robert S. Cessar and Mark V. Gurzo are prosecuting this case on behalf of the government.

    The investigation leading to the prosecution of Emilio Navarro was conducted by the Western Pennsylvania Opioid Fraud and Abuse Detection Unit (OFADU). The Western Pennsylvania

    OFADU, led by federal prosecutors in the U.S. Attorney’s Office, combines the expertise and resources of federal and state law enforcement to address the role played by unethical medical professionals in the opioid epidemic. The agencies which comprise the Western Pennsylvania OFADU include: Federal Bureau of Investigation, U.S. Health and Human Services – Office of Inspector General, Drug Enforcement Administration, Internal Revenue Service-Criminal Investigations, Pennsylvania Office of Attorney General - Medicaid Fraud Control Unit, Pennsylvania Office of Attorney General – Bureau of Narcotic Investigations, United States Postal Inspection Service, U.S. Attorney’s Office – Criminal Division, Civil Division and Asset Forfeiture Unit, Department of Veterans Affairs-Office of Inspector General, Food and Drug Administration-Office of Criminal Investigations, U.S. Office of Personnel Management – Office of Inspector General and the Pennsylvania Bureau of Licensing.

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  • Former Pain Management Doctor Sentenced for Illegally Dispensing Opioids, Health Care Fraud

    Justice 024

     

    PITTSBURGH, PA - A former physician has been sentenced in federal court to one day of imprisonment, to be followed by three years of supervised release, including 15 months home confinement and 300 hours community service, on his conviction of drug diversion, health care fraud and money laundering, associated with his suburban Pittsburgh holistic medical practice, Acting United States Attorney Stephen R. Kaufman announced today.

    Senior United States District Judge Nora Barry Fischer imposed the sentence on Andrzej Kazimierz Zielke, 66, of Allison Park, Pennsylvania 15101.

    According to information presented to the court, Zielke owned and operated Medical Frontiers, LLC, a purported pain management practice, located in Gibsonia, Pennsylvania. On or about October 3, 2017, May 25, 2017, October 3, 2017, and December 17, 2014, Zielke knowingly dispensed and distributed Schedule II drugs, including Oxycodone, Methadone, Hydrocodone and Oxymorphone, to four patients outside the course of professional practice and not for a legitimate medical purpose. Zielke committed health care fraud by causing fraudulent claims to be submitted to Medicaid for payments to cover the costs of the unlawfully prescribed drugs. Finally, Zielke violated federal money laundering statutes when he caused approximately $150,000 in proceeds obtained through his illegal drug distribution to be wired from a bank account to Kitco Metals, Inc., in Canada to purchase silver and collector coins.

    In addition to the criminal penalties, Zielke agreed to forfeit $75,359 in U.S. currency and an unvalued amount of gold coins and bullion.

    Assistant United States Attorney Robert S. Cessar, and Special Assistant United States Attorney Summer F. Carroll prosecuted this case on behalf of the government.

    The investigation leading to the filing of charges in this case was conducted by the Western Pennsylvania Opioid Fraud and Abuse Detection Unit (OFADU). The Western Pennsylvania OFADU, led by federal prosecutors in the U.S. Attorney’s Office, combines the expertise and resources of federal and state law enforcement to address the role played by unethical medical professionals in the opioid epidemic.

    The agencies which comprise the Western Pennsylvania OFADU include: Federal Bureau of Investigation, U.S. Health and Human Services – Office of Inspector General, Drug Enforcement Administration, Internal Revenue Service-Criminal Investigations, Pennsylvania Office of Attorney General - Medicaid Fraud Control Unit, Pennsylvania Office of Attorney General – Bureau of Narcotic Investigations, United States Postal Inspection Service, U.S. Attorney’s Office – Criminal Division, Civil Division and Asset Forfeiture Unit, Department of Veterans Affairs-Office of Inspector General, Food and Drug Administration-Office of Criminal Investigations, U.S. Office of Personnel Management – Office of Inspector General and the Pennsylvania Bureau of Licensing.

    Source

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  • Former Pharmaceutical Sales Representative Sentenced to More Than Four Years in Prison for Insurance Fraud and Aggravated Identity Theft

    Justice 031

     

    BOSTON – An Illinois man was sentenced yesterday for defrauding insurance companies in relation to a high-priced drug made by Cambridge-based pharmaceutical company Aegerion Pharmaceuticals Inc., and for using the identities of physicians to carry out the fraud.

    Mark Moffett, 49, of Springfield, Ill., was sentenced by U.S. Senior District Court Judge William G. Young to 54 months in prison and three years of supervised release. In December 2019, Moffett was convicted by a federal jury of nine counts of wire fraud and six counts of aggravated identity theft.

    “Mr. Moffett exploited his personal relationships with medical staff, stole doctors’ identities, falsified medical documents and deceived insurance companies – all in pursuit of sales bonuses,” said Acting United States Attorney Nathaniel R. Mendell. “His prison sentence is a reminder that those who engage in healthcare fraud schemes, no matter how sophisticated, will pay for their crimes.”

    “Today’s sentence holds Mark Moffett accountable for gaming the healthcare system to line his own pockets. He deceived doctors and patients to boost sales of this powerful drug, and defrauded Medicare in the process. Fraud of this magnitude will not be tolerated because it drives up healthcare costs for all of us,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division.

    “Today’s sentence shows that fraudsters like Mark Moffett who try to enrich themselves at the expense of federal health care programs and the well-being of beneficiaries will be held accountable for their greed-fueled schemes. Such scams threaten patient health, waste taxpayer funds, and drive-up healthcare costs for all of us,” said Phillip M. Coyne, Special Agent in Charge for the U.S. Department of Health & Human Services, Office of Inspector General. “Working closely with our law enforcement partners, we will continue to aggressively root out health care fraud and bring criminals to justice.”

    “Working with our law enforcement partners, the Employee Benefits Security Administration continues to investigate and vigorously pursue cases in which participants and private sector health benefit plans are victimized by unscrupulous and illegal pharmaceutical sales practices,” said Carol S. Hamilton, Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office.

    In 2014 and 2015, Moffett, a pharmaceutical sales representative for Aegerion, marketed the company’s cholesterol drug Juxtapid. Juxtapid was approved by the FDA only to treat high cholesterol in patients with a rare genetic disease called homozygous familial hypercholesterolemia (HoFH). The FDA approved the drug only to treat HoFH patients because the drug carried serious risks of side effects, including liver damage. The drug’s label included a black box warning.

    Moffett nonetheless convinced doctors to prescribe Juxtapid, which costs over $300,000 per year, for patients without HoFH. In order to defraud Medicare and private sector employee health plans into paying for a drug they only covered for FDA-approved uses, Moffett obtained fraudulent prescriptions and falsified numerous documents, including statements of medical necessity and other insurance documents. This included false patient test results, false clinical histories and false diagnoses. Moffett used the identities of several cardiologists to carry out the fraud. He was paid bonuses by Aegerion of up to $11,000 for each prescription of Juxtapid.

    Acting United States Attorney Mendell, FBI Boston SAC Bonavolonta, HSI-OIG SAC Coyne and DOL-EBSA Regional Director Hamilton made the announcement. Assistant U.S. Attorneys Kriss Basil, of Mendell’s Securities and Financial Fraud Unit, and Rachel Y. Hemani, of Mendell’s Health Care Fraud Unit, prosecuted the case.

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  • Former Tennessee Clinic Owner Sentenced for Opioid Distribution

    Justice 003

     

    A former nurse practitioner and clinic owner was sentenced in the Eastern District of Tennessee today to 14 years in prison for illegally distributing prescription opioid pills to his patients.

    Mark Daniel Allen, 64, of Venice, Florida, was found guilty of six counts of unlawfully distributing controlled substances not for a legitimate medical purpose outside the scope of professional practice and one count of maintaining a drug-involved premises after a three-day trial on Sept. 1, 2021.

    According to evidence presented at trial, Allen unlawfully prescribed roughly 15,000 opioid pills to three women with whom he had sexual relationships, and to a male patient who later passed away.

    Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee; Special Agent in Charge Joseph Carrico of the FBI’s Knoxville Field Office; Special Agent in Charge Tamala Miles of the Department of Health and Human Services, Office of Inspector General (HHS-OIG); and Director David Rausch of the Tennessee Bureau of Investigation (TBI) made the announcement.

    The FBI, HHS-OIG, TBI, Manchester Police Department and Coffee County Sheriff's Office investigated the case.

    Trial Attorney Emily Petro of the Criminal Division’s Fraud Section and Assistant U.S. Attorney James Brooks of the Eastern District of Tennessee prosecuted the case.

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  • Former VA Employee Pleads Guilty to Embezzling $70,000 Using Mobile Payment Application

    Justice 005

     

    BOSTON – A former Department of Veteran Affairs (VA) employee was sentenced today for embezzling nearly $70,000 in VA funds.

    Michael Donaher, 41, of Lakeville, was sentenced by U.S. District Court Judge Indira Talwani to time served (approximately one day), three years of supervised release with the first six months to be served in a sober house, and ordered to pay $69,720 in restitution. The government recommended a sentence of one year and one day incarceration. In May 2020, Donaher pleaded guilty to one count of embezzlement and theft of public money, property or records after being arrested and charged in January.

    Donaher worked as an Inventory Management Specialist for the Veterans Affairs Medical Facility in Brockton and was responsible for purchasing various equipment necessary for use in the facility. Donaher conducted fraudulent transactions using his government-issued purchase cards and routed the proceeds to his personal bank account. He attempted to conceal these fraudulent purchases by making it appear as if the purchases were made through a large company that the VA frequently used for legitimate business, when, in fact, they were actually made through a company Donaher created through a mobile payment company. These purchases were not for actual items ever received by the VA. Furthermore, Donaher attempted to hide this fact by annotating the items as having been received within the VA’s accountability system. Donaher fraudulently routed approximately $70,000 of VA funds to his personal account since the scheme began in 2016.

    United States Attorney Andrew E. Lelling and Christopher Algieri, Special Agent in Charge of the Department of Veteran Affairs, Office of the Inspector General, Northeast Field Office made the announcement today. Assistant U.S. Attorney Eugenia M. Carris of Lelling’s Public Corruption & Special Prosecutions Unit prosecuted the case.

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  • Former VA Hospice Nurse Sentenced for Diverting and Tampering with Morphine Meant for Dying Veterans

    Justice 034

     

    BOSTON – A Tewksbury woman was sentenced today for diverting morphine while she was employed as a nurse in the hospice unit at the Veterans Affairs (VA) Medical Center campus in Bedford.

    Kathleen Noftle, 55, was sentenced to 40 months in prison and three years of supervised release. In October 2020, Noftle pleaded guilty to one count of tampering with a consumer product and one count of obtaining a controlled substance by misrepresentation, fraud, deception and subterfuge.

    On Jan. 13, 14 and 15, 2017, Noftle used her position as a nurse to obtain doses of morphine that were meant to be given to the Veterans under her care in the hospice unit. Noftle admitted that she mixed water from the sink with a portion of the liquid morphine doses, and then administered the diluted medication to patients orally. Noftle then ingested a diluted amount of the remaining drug.    

    United States Attorney Andrew E. Lelling and Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office made the announcement today. Assistant U.S. Attorney William B. Brady of Lelling’s Health Care Fraud Unit.

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  • Former VA Pharmacist Found Guilty of Stealing Controlled Drugs from Veterans' Prescriptions

    Justice 003

     

    SHREVEPORT, La. – A licensed pharmacist, who was formerly employed with the Overton Brooks VA Medical Center (VAMC) in Shreveport, was found guilty today by a federal jury for stealing controlled substances from mail-out prescriptions, announced United States Attorney David C. Joseph.

    Following a one-week trial and four hours of deliberations, Melissa W. Richardson, 44, of Shreveport, was found guilty of 15 counts of acquiring a controlled substance by fraud.

    According to evidence presented at trial, on June 9, 2017, Richardson, a licensed pharmacist employed at the VAMC, stole various quantities of Hydrocodone out of individual prescription bottles as she verified mail-out prescriptions meant for Veterans. The prescriptions at issue had been prepared by a pharmacy technician and were awaiting a second count and verification from Richardson. Video surveillance from inside the VAMC controlled substances vault showed Richardson slipping the pills into her pocket as she counted the prescriptions. In multiple instances, she slipped pills into her pocket before the pills were counted. Video footage showed her then verify that the prescription was correct in the VAMC’s computer system, seal the bottle, place it in a sealed envelope, and drop it in a bin for mail-out. When federal agents confronted Richardson, she had 236 loose pills in her pocket.

    The U.S. Department of Veterans Affairs, Office of Inspector General, conducted the investigation. Assistant U.S. Attorney Brian C. Flanagan and Supervisory Assistant U.S. Attorney Allison D. Bushnell are prosecuting the case.

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  • Former Whitesville Pharmacy to Pay Civil Monetary Penalties to Resolve Alleged Violations of the Controlled Substances Act

    Justice 007

     

    CHARLESTON, W.Va. – Mountaineer Drug, Inc. (“MDI”), which operated a pharmacy in Whitesville, Boone County, has agreed to pay civil monetary penalties to resolve allegations that the pharmacy violated the Controlled Substances Act (CSA) by filling illegitimate prescriptions. MDI ceased operations at the Whitesville location in October 2019 during the course of the federal investigation. Pursuant to the terms of the settlement agreement, MDI agreed to pay $250,000 to resolve allegations that from in or about January 2015 to in or about January 2019, the pharmacy filled prescriptions for Schedule II and Schedule III controlled substances from the Whitesville location that were not valid. The United States contends that during this time MDI filled these prescriptions “knowing or having reason to know that they were not written for a legitimate purpose in violation of 21 C.F.R. §§ 1306.04(a) and 1306.06 and 21 U.S.C. § 842(a)(1),” according to the settlement agreement. The CSA prohibits the distribution or dispensing of a controlled substance without a valid prescription. A valid prescription for a controlled substance must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his or her practice. Based on the investigation, the United States maintains that MDI’s pharmacists knew or had reason to know that patients had presented illegitimate prescriptions that should not have been filled.

    “The U.S. Attorney’s Office in the Southern District of West Virginia is committed to putting an end to drug diversion and to working with our partners at DEA and HHS-OIG to hold all DEA registrants accountable,” said Acting United States Attorney Lisa G. Johnston.  

    “As our nation reels from a staggering rise in overdose deaths, the Drug Enforcement Administration remains committed to stopping those unscrupulous medical professionals who put personal greed above patient care,” said Special Agent in Charge Todd Scott, head of DEA’s Louisville Division.

    “Pharmacists play an important role in health care and are expected to review prescriptions carefully,” said Maureen Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “We will continue to work with our partners at the U.S. Attorney’s Office and the DEA to investigate allegations of illegitimate prescriptions.”

    The case was handled by Assistant United States Attorneys Alan G. McGonigal and Gregory P. Neil.

    The settlement is a result of the United States Attorney’s Healthcare Fraud Abuse, Recovery and Response Team (ARREST), an innovative approach linking civil and criminal enforcement efforts together in a comprehensive attack on the opioid epidemic and healthcare fraud.

    A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia.

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  • Fort Dodge Man Sentenced to Federal Prison for Misappropriating Social Security Benefits of Severely Disabled Nursing Home Resident

    Justice 037

     

    Stole Over $15,000 after Applying to Become Victim’s Representative Payee

    A Fort Dodge man who stole over $15,000 in Social Security benefits from a severely disabled woman was sentenced February 23, 2022, to ten months in federal prison. Donald Glenn Conner, also known as Donald Luevanos, age 38, received the prison term after a September 16, 2021 guilty plea to one count of representative payee fraud.

    In a plea agreement, and at his guilty plea and sentencing hearings, Conner admitted that, in March 2018, the Social Security Administration (SSA) approved his application to become the representative payee for a severely disabled relative. A representative payee is a person whom the SSA entrusts to manage Social Security funds for those who cannot do so due to mental, physical, or other limitations. A doctor had diagnosed Conner’s relative with a severe mental impairment, and she also had a number of other physical health issues. In May 2019, Conner admitted his victim to a local nursing home on the false pretense that she was on Medicaid when she was not. Conner then used his victim’s social security funds for his own purposes, including at a casino, a grocery store, and for videogames, subscription services, and other bills. In March 2020, after the nursing home began asking questions about Conner’s use of his victim’s Social Security funds, Conner abruptly removed his victim from the nursing home against a doctor’s medical advice and left the nursing home with an unpaid bill in excess of $50,000. The investigation also revealed that Conner falsely underreported his household income and received an overpayment of Section 8 federal housing benefits.

    Conner was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Conner was sentenced to 10 months’ imprisonment. He was ordered to make $15,499 in restitution. He must also serve a two-year term of supervised release after the prison term. There is no parole in the federal system.

    Conner was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.

    The case was prosecuted by Assistant United States Attorney Timothy L. Vavricek and investigated by the Social Security Administration, Office of Inspector General, and Health and Human Services, Office of Inspector General.

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  • Four Florida Men Charged for Their Roles in a $54 Million Compound Pharmacy Kickback Scheme

    Justice 005

     

    Four Florida men were charged in an indictment unsealed Thursday for their alleged participation in a compound pharmacy kickback scheme.

    Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Maria Chapa Lopez of the Middle District of Florida, Special Agent in Charge Cyndy Bruce of the Defense Criminal Investigative Service’s (DCIS) Southeast Field Office, Special Agent in Charge Michael F. McPherson of the FBI’s Tampa Field Office, Special Agent in Charge Omar Aybar Perez of the U.S. Health and Human Services-Office of Inspector General (HHS-OIG) Miami Regional Office and Special Agent in Charge David Spilker of the Veterans Affairs-Office of Inspector General (VA-OIG) Southeast Field Office, made the announcement.

    James Wesley Moss, 57, of Zephyrhills, Florida, Edward Christopher White, 38, of Panama City Beach, Florida, David Byron Copeland, 52, of Tallahassee, Florida, and Michael Alton Gordon, 56, of Ft. Myers, Florida, were each charged in an indictment filed in the Middle District of Florida with one count of conspiracy to defraud the United States and to pay or receive health care kickbacks.

    In addition, Moss was charged with six counts of offering or paying health care kickbacks and one count of possession with intent to deliver a controlled substance, ketamine;

    White was charged with four counts of soliciting or receiving health care kickbacks; Copeland was charged with two counts of soliciting or receiving health care kickbacks and three counts of offering or paying health care kickbacks; and Gordon was charged with three counts of soliciting or receiving health care kickbacks. The defendants will be arraigned in the Middle District of Florida at a later date.

    The allegations stem from the defendants’ participation in a multi-million dollar conspiracy to defraud TRICARE, a federal health care benefit program. TRICARE is the health care benefit program of the U.S. Department of Defense that provides health care coverage for active duty service members, National Guard and Reserve members, retirees, their families and survivors. The indictment alleges that Moss and others owned and operated Florida Pharmacy Solutions Inc. (FPS) for the purpose of targeting TRICARE beneficiaries and causing the submission to TRICARE of claims for expensive prescription compounded drugs that were not legitimately prescribed because they were induced and procured by the payment of illegal kickbacks and bribes. The indictment alleges that between approximately November 2012 and September 2015, the defendants caused the submission to TRICARE of more than $54 million in claims for prescription compounded drugs and that TRICARE paid approximately $41 million to FPS on those claims.

    The indictment further alleges that Moss paid more than $20 million in health care kickbacks to White, Copeland and Gordon in return for their procuring and referring prescriptions for compounded drugs for TRICARE beneficiaries to be filled by FPS. FPS allegedly submitted claims for payment to TRICARE for providing prescription compounded drugs to TRICARE beneficiaries living in approximately 30 states and several foreign countries.

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

    This case was investigated by the DCIS Tampa Resident Agency, assisted by the FBI, the HHS/OIG and the VA/OIG. Trial Attorney John A. Michelich of the Criminal Division’s Fraud Section, National Health Care Fraud Strike Force, is prosecuting the case.

    The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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  • Four Sentenced for Bribery and Scheme to Defraud VA and SBA

    Justice 064

     

    ANCHORAGE – Four Anchorage individuals involved in a bribery and fraud scheme to obtain Service-Disabled Veteran-Owned Small Business (SDVOSB) government contracts with the U.S. Department of Veterans Affairs (VA) have been sentenced in federal court.

    Donald Garner, 50, owner of Veteran Ability, was a government contractor who provided various services to the U.S. government, including the VA in Anchorage. Richard Vaughan, 74, worked at the Anchorage VA as a contract officer representative responsible for awarding and managing numerous contracts for the VA, including a $700,000 SDVOSB contract to perform snow removal services at the Anchorage VA.

    Between 2015 and 2017, Garner directed his bookkeeper Yalonda Moore, 52, to deliver more than $29,000 in bribe payments to Vaughan. In exchange, Vaughan gave preferential treatment to Garner by selecting Veteran Ability to complete dozens of “purchase card” jobs at the Anchorage VA, totaling more than $100,000. Vaughan also approved numerous invoices submitted by Garner related to the snow removal contract for work that was either unnecessary or never actually performed, causing the government an estimated $347,000 in losses.

    Garner and Vaughan each pleaded guilty to one count of bribery involving a public official and were sentenced to one year and one day in federal prison, followed by three years of supervised release. They must also pay $347,000 in restitution to the VA.

    Additionally, between 2014 and 2016, Dale Johnson, 50, owner of ADALECO General LLC, conspired with Garner to perpetrate a “pass-through” scheme in which Johnson allowed Garner to use ADALECO’s name to bid on and obtain SDVOSB set-aside contracts for which Garner’s company was not eligible, including the VA snow removal contract. Although ADALECO was expected to perform the work, Garner’s company illegally assumed control of the contract and received the majority of the profits. In return, Garner paid Johnson a percentage of the contract as a kickback, totaling $54,302.

    Johnson pleaded guilty to one count of conspiracy to defraud the United States and was sentenced to five years’ probation and ordered to pay $54,302 in restitution.

    The FBI and the VA Office of the Inspector General began investigating Garner, Vaughan, and Johnson in 2016. During that investigation, Moore, who worked as a bookkeeper for both Veteran Ability and ADALECO, intentionally obstructed the government’s investigation by tipping off Garner about the FBI’s investigation plans. Prior to that Moore had been purporting to cooperate with the government’s investigation. Moore recently pleaded guilty to one count of obstruction of justice and was sentenced to three years’ probation.

    “The bribery and fraud scheme by these defendants not only cheated the government, but simultaneously diverted work from eligible, law-abiding service-disabled Veterans,” said John E. Kuhn, Jr. U.S. Attorney for the District of Alaska. “The U.S. Attorney’s Office will prosecute every unlawful attempt to corrupt the government contracting process and will work to ensure that no one profits from such efforts.”

    “At the expense of U.S. taxpayers, these individuals traded their integrity for greed, and undermined the VA’s efforts to lawfully contract with service-disabled Veteran-owned businesses in Alaska,” said Assistant Special Agent in Charge Shawn Peters of the FBI Anchorage Field Office. “Dismantling criminal enterprises involving bribery and corruption will always be a priority for the FBI, and together with our law enforcement partners, we will hold those accountable who take part in such schemes.”

    The Federal Bureau of Investigation, the U.S. Department of Veterans Affairs Office of the Inspector General, the Small Business Administration Office of the Inspector General, and the General Services Administration Office of the Inspector General investigated the case.

    Assistant U.S. Attorney Ryan Tansey prosecuted the case.

    ###

    Note to Editors:

    Garner case: 3:19-cr-00120-SLG-DMS

    Vaughan case: 3:19-cr-00120-SLG-DMS

    Johnson case: 4:19-cr-00018-RRB-SAO

    Moore case: 3:21-cr-00084-JMK-MMS

    The United States Small Business Administration (SBA) is an independent agency of the federal government responsible for aiding, counseling, assisting and protecting the interests of small business concerns. The SBA and VA administer a program to award SDVOSB contracts which can only be awarded to small businesses owned and controlled by qualified Service-Disabled Veterans (SDVs)

    Service-Disabled Veteran-Owned Small Business (SDVOSB) is a small business that is 51% unconditionally owned and controlled by a service-disabled Veteran. Through the SDVOSB, the federal government aims to award at least three percent of all federal contracting dollars to SDVOSBs each year. Competition is limited for certain federal contract opportunities to businesses that participate in the SDVOSB program.

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  • Geisinger Community Health Services Agrees To $18 Million Civil Settlement

    Justice 029

     

    HARRISBURG, PA —The United States Attorney’s Office for the Middle District of Pennsylvania announced that Geisinger Community Health Services (GCHS) has agreed to pay $18,513,621.05 to resolve allegations of civil liability for submitting claims to Medicare for hospice and home health services that violated Medicare rules and regulations. GCHS voluntarily disclosed the violations.

    According to the voluntary disclosures, between January 2012 and December 2017, through several affiliated entities, GCHS submitted claims to Medicare for hospice and home health services that violated Medicare rules and regulations regarding physician certifications of terminal illness, patient elections of hospice care, and physician face-to-face encounters with home health patients. After it discovered the problems, GCHS took corrective action and disclosed the matter to the United States Attorney’s Office.

    “The $18 million payment in this matter reflects the priority healthcare providers should place on making sure they closely follow all Medicare rules and regulations,” said Acting U.S. Attorney Brandler. “Healthcare fraud remains a focus of the Department of Justice and the Affirmative Civil Enforcement Unit of the United States Attorney’s Office. I commend GCHS for taking this seriously, voluntarily disclosing these issues to our office and working to address the problems that led to these violations.”

    This matter was handled by the Department of Health and Human Services (HHS), Office of Counsel to the Inspector General (OCIG), the Justice Department’s Civil Division Commercial Litigation Branch, Fraud Section, and AUSA Tamara Haken of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office for the Middle District of Pennsylvania.

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  • Georgia Genetic Testing Laboratory to Pay up to $200,000 to Resolve Anti-Kickback Statute Claims

    Justice 018

     

    Columbia, South Carolina---- Acting United States Attorney M. Rhett DeHart announced today that his office has resolved claims that Alpha Genomix Laboratories, Inc. paid unlawful kickbacks to Aiken Counseling Group, LLC to induce genetic testing referrals, from April 2015 through December 2016.

    The United States alleges that during this time period, Alpha Genomix disguised its kickbacks by paying the salary of an individual who primarily worked for Aiken Counseling Group. Further, the United States alleged most of the referrals were not legitimately ordered by a physician and were medically unnecessary. Medicare and South Carolina Medicaid paid for these fraudulent claims, which violated the Anti-Kickback Statute and the False Claims Act. Alpha Genomix Laboratories, Inc. will pay a $35,000 settlement upfront and a percentage of gross annual revenues up to a total of $200,000 to resolve the claims.

    The allegations settled arose from a lawsuit filed by a psychiatrist formerly employed by Aiken Counseling Group, under the whistleblower provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share between 15 and 30% of the recovery.

    The owner of the Aiken Counseling Group, Lain Bradford, was sentenced in February 2020 to three years of probation and ordered to pay restitution, after pleading guilty to health care fraud and drug offenses in a related case. Aiken Counseling Group filed for Chapter 7 Bankruptcy in January 2018 and is no longer in business.

    Since the allegations, Alpha Genomix Laboratories was sold to new ownership.

    The Alpha Genomix Laboratories, Inc. matter was investigated by the Office of the Inspector General of the Department of Health and Human Services, the South Carolina Attorney General’s Medicaid Fraud Control Unit, and Assistant United States Attorney Beth Warren.

    “Providers participating in Medicare and Medicaid are expected to uphold the integrity of the programs,” stated Derrick L. Jackson, Special Agent in Charge with the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Companies that seek unmerited payment for unnecessary and illegitimate services abuse the programs and divert funds meant to improve the health and prolong the lives of beneficiaries. HHS-OIG and our partners will actively pursue those who commit health care fraud.”

    The litigation and settlement of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

    The claims resolved by this settlement are allegations only. Alpha Genomix Laboratories, Inc. does not admit wrongdoing or liability.

    The case is captioned United States ex rel. Jane Doe, M.D. v. Aiken Counseling Group, LLC and Alpha Genomix Laboratories, Inc.

    Source

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  • Georgia Man Is Charged with Conspiracy to Defraud The North Carolina Medicaid Program

    Justice 022

     

    National Health Care Fraud Enforcement Action Results in Charges Involving over $1.4 Billion in Alleged Losses

    CHARLOTTE, N.C. – A Georgia man is facing federal charges for an illegal kickback scheme that has defrauded the North Carolina Medicaid program of more than $4 million, announced William T. Stetzer, Acting U.S. Attorney for the Western District of North Carolina. Specifically, a criminal bill of information charges Glenn Pair, 35, formerly of North Carolina now residing in Georgia, with conspiracy to commit Medicaid fraud and money laundering.

    “The Medicaid program provides medical services to qualified North Carolinians in need of assistance. It’s not a piggy bank for cheats and fraudsters,” said Acting U.S. Attorney Stetzer. “The U.S. Attorney’s Office will hold accountable those who engage in get-rich-schemes that exploit government programs and deprive important resources from those in real need.”

    “North Carolina’s Medicaid program is meant to help the most vulnerable people in our community. Anyone who thinks they can manipulate the system should know the FBI will work tirelessly to make sure they pay dearly,” said FBI Special Agent in Charge Robert R. Wells.

    “IRS Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money. Individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable,” said Acting Special Agent in Charge Mona Passmore for the Charlotte Field Office of Internal Revenue Service Criminal Division.

    As alleged in the charging document, Pair was a partner and operator of Everlasting Vitality, LLC (EV) and Do-It-4-The Hood Corporation (D4H). From January 2016 through November 2018, Pair and his co-conspirators paid individuals to recruit at-risk youths, in particular children who were Medicaid eligible, for EV’s or D4H’s after-school and youth mentoring programs. Once enrolled, children were required to submit urine specimens for drug testing. Pair and his co-conspirators allegedly conspired with certain laboratories to perform the drug testing of the enrolled children’s urine specimens submitted and received kickbacks once the laboratories were reimbursed by the North Carolina Medicaid.

    Pair and his conspirators also allegedly conspired to defraud North Carolina Medicaid by providing client information used by certain laboratories to file other fraudulent reimbursement claims. For example, on some occasions, Pair and his co-conspirators obtained personal identifying information (PII) of D4H clients, such as names, addresses, dates of birth, and Medicaid beneficiary numbers, which the laboratories used to submit drug testing claims to the North Carolina Medicaid that were fraudulent because, among other reasons, the drug tests were not medically necessary, or the urine specimens were not of the Medicaid beneficiaries under whose names they were submitted. Once the laboratories were reimbursed by North Carolina Medicaid, they paid companies under the control of Pair and others a percentage of the Medicaid reimbursements.

    As the bill of information alleges, the drug testing laboratories involved in the scheme submitted over $16 million in fraudulent claims to Medicaid and received $4 million in reimbursements, of which they paid more than $1.5 million in illegal kickbacks to Pair and his co-conspirators.

    Pair is the second defendant charged in the scheme. Pair’s co-conspirator, Markuetric Stringfellow, was sentenced in February 2021 to 78 months in prison and was ordered pay $5,278,550 in restitution for his role in the conspiracy.

    In making today’s announcement Acting U.S. Attorney Stetzer thanked the FBI, IRS-Criminal Investigations and the North Carolina Medicaid Investigations Division for their investigation of the case.

    Assistant U.S. Attorney Michael E. Savage, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.

    A bill of information is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

    * * *

    The Department of Justice announced today criminal charges against 138 defendants for their alleged participation in various healthcare fraud schemes that resulted in approximately $1.4 billion in alleged losses. Nationwide, the charges target approximately $1.1 billion in fraud committed using telemedicine, $29 million in COVID-19 health care fraud, $133 million connected to substance abuse treatment facilities, or “sober homes,” and $160 million connected to other health care fraud and illegal opioid distribution schemes across the country.

    “This nationwide enforcement action demonstrates that the Criminal Division is at the forefront of the fight against health care fraud and opioid abuse by prosecuting those who have exploited health care benefit programs and their patients for personal gain,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The charges announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a continued pandemic.”

    Source

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  • Georgia Man Sentenced for Stealing Medical Treatment Using Veteran’s Identity

    Justice 017

     

    GREENEVILLE, Tenn. – On June 23, 2021, Kristopher M. Voyles, 31, of Georgia, was sentenced to 27 months in prison, followed by three years’ supervised release, by the Honorable Clifton L. Corker, in the United States District Court for the Eastern District of Tennessee at Greeneville.

    As part of a negotiated plea agreement, Voyles pled guilty to theft of more than $1,000 of government property. Voyles will be required to make restitution of $20,502 to the Department of Veteran’s Affairs.

    According to court records, Voyles is not a Veteran and has never served in the United States military. On October 9, 2019, Voyles used the name, date of birth, and social security number of a United States Veteran when receiving medical services at a hospital in Knoxville, Tennessee. The next day, while still impersonating the Veteran, Voyles obtained a transfer to the VA Medical Center in Johnson City, Tennessee. Voyles used fraudulently obtained identification documents, and a fraudulently obtained Form DD214. For approximately a week, Voyles accepted medical goods, items, and services from the VA Medical Center. The value of the goods, items, and services Voyles stole was $20,502. When apprehended, Voyles still had the Veteran’s identification documents with him, including the fraudulently obtained Form DD214.

    Subsequent investigation revealed that Voyles had previously been prosecuted by Atlanta, Georgia authorities for using the same Veteran’s identity to obtain prescription drugs from the VA Medical Center in Atlanta.

    The criminal indictment was the result of an investigation by the Department of Veterans Affairs Police and the Department of Veterans Affairs Office of Inspector General ("VAOIG"). The federal investigation was led by Special Agent Charles Pack, VAOIG.

    Assistant U.S. Attorney Mac Heavener represented the United States.

    Source

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  • Georgia Man Sentenced to 135 Months’ Imprisonment for Role in Health Care Fraud Scheme Against Tricare

    Justice 003

     

    Miami, Florida -- A Georgia man was sentenced yesterday to over 11 years in federal prison for defrauding Tricare of approximately $12 million through a South Florida compounding pharmacy fraud scheme. Tricare is the health care benefit program covering military personnel and their dependents.

    According to court documents, 51-year-old Erik Santos and his co-conspirators ran the scheme as follows: Santos paid recruiters to convince Tricare beneficiaries to fill prescriptions for expensive, supposedly tailor-made, compounded medications that the beneficiaries did not need. Santos paid doctors to approve pre-printed prescriptions for large amounts of these medications. The doctors did not see the beneficiaries or otherwise consider their medical needs before approving the prescriptions. Lastly, Santos steered the Tricare beneficiaries to fill their prescriptions with Patient Care America (PCA), a compounding pharmacy located in Broward County, Florida. PCA would bill Tricare for expensive drug formulations that had little to no therapeutic value. Many of the compounded medications were billed to Tricare at $10,000 to $15,000 for a month’s supply, even though the ingredients used in the mixtures were little more than common pain or scar creams. Santos’s fraudulent referrals caused an actual loss to the Tricare program of approximately $12 million. PCA pharmacy paid Santos over $7 million in prescription referral kickbacks.

    In addition to the prison sentence, the Court imposed restitution in the amount of $11.8 million and entered a forfeiture judgement of approximately $7.6 million. On January 27, 2021, Santos pled guilty in federal district court in Ft. Lauderdale to one count of conspiring to commit health care fraud and wire fraud.

    Acting U.S. Attorney Juan Antonio Gonzalez of the Southern District of Florida, Special Agent in Charge Cynthia A. Bruce of the Defense Criminal Investigative Service (DCIS), Southeast Field Office, and Special Agent in Charge George L. Piro of FBI Miami announced the sentence.

    “Criminals steal exorbitant amounts of money from our government health programs through prescription medication fraud schemes. This significant sentence recognizes the seriousness of the crime,” said Acting U.S. Attorney Gonzalez. “Those who use kickbacks and other illegal activity to bilk taxpayer dollars from vital public programs will be held accountable.”

    “Billing healthcare programs for medically unnecessary medications not only undermines the viability of those programs, it exploits all citizens,” said DCIS Special Agent in Charge Bruce. “I am pleased with the significant outcome of this investigation and would like to thank the U.S. Attorney’s Office and the investigative team for their tireless effort and great work to hold accountable those who fraudulently bill the Defense Health Agency.”

    “Illegal kickbacks undermined the integrity of the Tricare health benefit program by putting profits in front of patient welfare,” said FBI Special Agent in Charge Piro. “The investigators who unraveled this scam are to be commended for their diligence and commitment. The FBI and our partners will continue to pursue those individuals who pay kickbacks and fraudulently bill for medical services that are not necessary.”

    DCIS investigated the case with assistance from FBI Miami, and the Food and Drug Administration-Office of Criminal Investigation. The superseding indictment also named CHAMPVA (the Department of Veterans Affairs’ version of Tricare) as a fraud target and the Department of Veterans Affairs-Office of Inspector General assisted with the investigation.

    Assistant U.S. Attorney Jon Juenger prosecuted the case. Assistant U.S. Attorney Daren Grove is handling the asset forfeiture component of the case.

    Source

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  • Georgia nurse practitioner convicted of health care fraud in complex telemedicine fraud scheme

    Justice 008

     

    Fraudulent orders included knee brace for leg amputee

    AUGUSTA, GA: A Rockdale County, Ga., nurse practitioner faces substantial time in federal prison after a jury found her guilty of health care fraud, aggravated identity theft, and other counts in a multimillion-dollar telemedicine fraud scheme.

    Sherley L. Beaufils, 43, of Conyers, Ga., was convicted after a two-day trial on charges of an illegal kickback conspiracy, and five counts each of Health Care Fraud, False Statements Related to Health Care, and Aggravated Identity Theft, said David H. Estes, U.S. Attorney for the Southern District of Georgia. Conviction on the charges subjects Beaufils to a possible statutory sentence of up to 10 years in prison on each count of Health Care Fraud, two years on each count of Aggravated Identity Theft, and five years in prison on all other counts, along with substantial fines and penalties, followed by a period of supervised release upon completion of any prison term. There is no parole in the federal system.

    “Indicted in the Southern District as part of the nationwide Operation Brace Yourself initiative targeting healthcare fraud, Sherley Beaufils profited by signing unnecessary orders for orthotic braces for patients she never examined or spoke to,” said U.S. Attorney Estes. “Her greed was her undoing – and she is now being held accountable for targeting the elderly with her serial fraud.”

    As described in court documents and testimony, Beaufils, as a nurse practitioner, facilitated orders for more than 3,000 orthotic braces that generated more than $3 million in fraudulent or excessive charges to Medicare. Co-conspirators captured the identities of senior citizens, identified through a telemarketing scheme, and bundled that information as “leads.”

    Beaufils then signed her name to fake medical records, in which she falsely claimed she provided examinations of those patients, and then created orders for orthotic braces for patients she never met or spoke with – including a knee brace for an amputee, and a back brace for a recently deceased patient – and other durable medical equipment, in exchange for money. Beaufils’s fraudulent orders were then sold to companies that would generate reimbursement from Medicare.

    Beaufils was found not guilty at trial of one additional charge of conspiracy.

    “Today, this defendant found out what health care providers who defraud Medicare are finding out all over America: fraudsters will be held accountable for their greed-fueled fraud schemes,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General. “Our investigators will continue to work closely with our state and federal law enforcement partners to protect federal health care programs from such scams.”

    “The level of greed shown by Beaufils in this case is shocking, as she lined her pockets at the expense of American taxpayers and government funded healthcare programs,” said Philip Wislar, Acting Special Agent in Charge of FBI Atlanta. “Health care costs are driven up when doctors and staff bill for unnecessary and incomplete services, and the FBI and our partners will use every resource necessary to put a stop to it.”

    The case was investigated by the FBI and the U.S. Department of Health and Human Services Office of Inspector General, and prosecuted for the United States by Assistant U.S. Attorneys Jonathan A. Porter and Patricia G. Rhodes.

    Source

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  • Gloucester County Man Charged with Fraud for Role in Healthcare Conspiracy

    Justice 024

     

    CAMDEN, N.J. – A federal grand jury today returned a five-count indictment charging a Gloucester County, New Jersey, man with defrauding his employer’s health insurance plan out of more than $4 million by submitting fraudulent claims for medically unnecessary compounded medications, Acting U.S. Attorney Rachael A. Honig announced today.

    Christopher Gualtieri, 48, of Franklinville, New Jersey, is charged with conspiracy to commit health care fraud and mail fraud and individual acts of mail fraud. Gualtieri was also charged with making false statements to federal agents during the investigation, as well as preparing and filling fraudulent oxycodone prescriptions. Gualtieri is scheduled to appear today by videoconference before U.S. Magistrate Judge Sharon A. King. The case is assigned to U.S. District Judge Robert B. Kugler in Camden.

    According to the indictment:

    Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Compounded drugs can be properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.

    Gualtieri and others learned that certain compound medication prescriptions – including vitamins, scar creams, pain creams, and sunscreens – were reimbursed by their health insurance plan for up to thousands of dollars for a one-month supply. Gualtieri recruited co-workers who were covered by their employer’s self-funded health insurance plan to agree to receive medically unnecessary compounded medications for themselves and their family members. Gualtieri and others caused the submission of fraudulent prescriptions to compounding pharmacies, which filled the prescriptions and billed the health insurance plan’s pharmacy benefits administrator. The pharmacy benefits administrator paid the compounding pharmacies more than $4 million for compounded medications arranged by Gualtieri and two conspirators for themselves, their dependents, and other family members. Gualtieri received a portion of the amount paid by the pharmacy benefits administrator to the compounding pharmacies. Gualtieri then paid cash and other remuneration to his conspirators for their participation in the scheme. When questioned by special agents of the FBI, Gualtieri falsely denied recruiting others to receive compounded medications and falsely denied paying cash to others for their participation in the scheme.

    During the same time period as the conspiracy involving compounded medications, Gualtieri also prepared and filled fraudulent prescriptions for oxycodone for himself and a family member.

    Gualtieri faces a maximum penalty on the conspiracy and mail fraud counts of 20 years in prison, a maximum penalty on the false statements count of five years in prison, and a maximum penalty on the obtaining drugs by fraud count of four years in prison. He also faces a fine on each count of up to $250,000 or twice the gross gain or gross loss from the offense, whichever is greatest.

    Acting U.S. Attorney Honig credited agents of the FBI, Philadelphia Field Office, Health Care Fraud Task Force, under the direction of Acting Special Agent in Charge Bradley S. Benavides, and task force members from the Pennsylvania Attorney General’s Office, Department of Health and Human Services – Office of Inspector General, and the Philadelphia Police Department, as well as diversion investigators of the Drug Enforcement Administration, New Jersey Division, Camden Resident Office, under the direction of Special Agent in Charge Susan A. Gibson, with the investigation leading to the indictment. Acting U.S. Attorney Honig also thanked U.S. Postal Service – Office of Inspector General, for their assistance in the investigation.

    The government is represented by Assistant U.S. Attorney Jeffrey Bender of the U.S. Attorney’s Office in Camden.

    The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

    Source

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  • GOVERNMENT CONTRACTOR ADMITS SCHEME TO INFLATE COSTS ON FEDERAL PROJECTS AND PAYS $11 MILLION TO RESOLVE CRIMINAL AND CIVIL PROBES

    Justice 018

     

    Schneider Electric Buildings Americas Admits to Fraudulent Scheme to Overcharge Government Agencies on Federal Energy Savings Performance Contracts

    UPDATE

    The SEBA Civil Settlement Agreement has been attached to this Press Release.

    BURLINGTON – Schneider Electric Buildings Americas, Inc. (Schneider Electric), a nationwide provider of electricity solutions for buildings and data centers with its principal place of business in Carrollton, Texas, will pay $11 million to resolve criminal and civil investigations relating to kickbacks and overcharges on eight federally-funded energy savings performance contracts (ESPCs), the Department of Justice announced today. Under the contracts, Schneider Electric was to install a variety of energy saving upgrades such as solar panels, LED lighting, and insulation in federal buildings.

    As part of the criminal resolution with the United States Attorney’s Office for the District of Vermont (USAOVT), Schneider Electric admitted that it fraudulently charged the Government nearly $1.7 million in design costs incurred on three ESPCs funded by the Department of the Navy (DON), General Services Administration (GSA), and Department of Agriculture (USDA) by disguising those costs and spreading them across un-related pricing components. Schneider Electric employees described this process as “burying” or “hiding” the costs. Schneider Electric specifically spread costs across various line items in these federal projects so that the agencies would pay the amounts without knowing they were design costs that Schneider Electric was prohibited from charging the Government. Schneider Electric admitted that its conduct constituted wire fraud in violation of 18 U.S.C. § 1343. Schneider Electric executed a non-prosecution agreement related to this conduct and agreed to pay nearly $1.7 million in criminal forfeiture.

    Schneider Electric further admitted that former convicted Senior Project Manager Bhaskar Patel solicited and received over $2.5 million in kickbacks from various subcontractors who worked on ESPCs issued by the DON, Coast Guard, GSA, USDA, and Department of Veterans Affairs (VA). Schneider Electric admitted that this conduct violated the Anti-Kickback Act, 41 U.S.C. § 8707.

    Schneider Electric is required by its agreement with the USAOVT to cooperate fully in any and all matters relating to relevant conduct for a period of three years, to report to the USAOVT any evidence or allegation of a violation of U.S. fraud, anti-corruption, procurement integrity, or anti-kickback laws, to implement and comply with an updated corporate compliance program, and to report annually to the USAOVT on remediation and implementation of its required compliance enhancements.

    In the separate civil settlement announced today, Schneider Electric agreed to pay $9.3 million to resolve False Claims Act and Anti-Kickback Act liability for Patel’s kickback scheme and for including inflated estimates and improper costs in proposals, and overcharging federal agencies under the eight ESPCs.

    “These cases are complex and challenging, and I commend the dogged work of our Assistant U.S. Attorneys and their law enforcement agency partners to ensure that Schneider Electric’s conduct was brought to light and that it was held to account,” said United States Attorney Christina E. Nolan. “I am proud that our small office not only successfully convicted Bhaskar Patel, but went further and unraveled Schneider Electric’s broader criminal scheme of fraudulently inflating costs to boost its profits and steal from taxpayers. In reaching this resolution, we considered that Schneider Electric terminated two employees involved in the schemes and overhauled its compliance program. We also considered the shortcomings of Schneider Electric’s cooperation and its failure to timely accept responsibility.”

    “ESPC projects can only be successful where contractors are forthright and honest with federal agencies,” said Acting Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division. “We will not tolerate attempts by contractors to mislead the government and line their own pockets at the expense of the very energy savings the government seeks to achieve.”

    Michael Wiest, Special Agent in Charge of the Northeast Field Office of the Naval Criminal Investigative Service concurred, stating: “Fraud is not a victimless crime. It steals money from American taxpayers, damages the integrity of the Department of the Navy procurement process, degrades the readiness of the warfighter by compromising the quality of goods and services used to protect the nation, and squanders more money in the funding of criminal investigations which could have been avoided simply by individuals doing the right thing. NCIS will continue to work with our partner agencies to aggressively pursue those who perpetrate financial crimes.”

    Similarly, USDA Office of Inspector General (OIG) Special Agent in Charge Bethanne M. Dinkins emphasized: “Participation in Government contracts should not involve contractors and their employees seeking financial gain to the detriment of the U.S. Government. Thanks to the hard work and tireless efforts of the investigative team, the interests and integrity of the United States and the procurement process throughout Government have been protected. The USDA Office of Inspector General appreciates the commitment of the Department of Justice and the cooperative efforts of our law enforcement partners. Our resources are well utilized when we work together to investigate those who unlawfully solicit and accept bribes and kickbacks and overcharge the U.S. Government. This resolution demonstrates that we are committed to holding contractors accountable when they choose to abuse the integrity of vital government programs designed to significantly reduce energy and operating costs and make progress toward meeting federal sustainability goals.”

    Joseph Dattoria, GSA-OIG Special Agent in Charge, likewise highlighted the significance of this investigation, stating: “The GSA Office of Inspector General is committed to protecting the integrity of the GSA’s procurement process and programs. This resolution is a testament to that commitment, and should serve as a warning to other contractors who may consider engaging in similar conduct. We appreciate the collaborative efforts of the DOJ and our other law enforcement partners."

    Finally, VA OIG Special Agent in Charge Christopher Algieri, Northeast Field Office, affirmed: “VA OIG is committed to protecting the integrity of energy savings performance contracts awarded by VA and other federal agencies. We appreciate the tireless efforts of the United States Attorney’s Office, the Civil Division, and our other law enforcement partners in rooting out this and other procurement fraud.”

    The criminal investigation and resolution was handled by Assistant United States Attorneys Owen C.J. Foster and Michael P. Drescher of the United States Attorney’s Office for the District of Vermont. The civil investigation was jointly handled by the District of Vermont and Trial Attorneys Kelley Hauser and Alexandra Wilson of the Civil Division’s Commercial Litigation Branch (Fraud Section). The investigation was supported by the Offices of Inspector General for the VA, USDA and GSA, and the Navy Criminal Investigative Services. Schneider Electric was represented by Mark Goodman and David Sarratt of Debevoise & Plimpton LLP, and Michael Connolly, Michael Koenig, and Victoria Lane of Hinkley, Allen & Snyder LLP.

    Except for the conduct admitted in connection with the criminal resolution, the civil claims resolved by the settlement are allegations only, and there has been no determination of liability as to such civil claims.

    Non Prosecution Agreement (Schneider).pdf

    Corporate Compliance Program (Schneider).pdf

    Statement of Facts (Schneider).pdf

    SEBA Civil Settlement Agreement.pdf

    Source

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