Texas

July 29, 2010

Superseding Indictment Charges Romelia Puig and Mission Clinic Staff with Defrauding Medicare and Medicaid (U.S. Attorney for the Southern District of Texas)

McAllen, Texas - A 13-count superseding indictment charging Romelia Sanchez Puig, 41, of Edinburg, Texas, and two staff members of the Mission Clinic in Mission, Texas, with conspiracy to commit health care fraud, health care fraud arising from a scheme to defraud Medicare and Medicaid from the operation of two clinics and mail fraud has been returned by a Corpus Christi grand jury, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on July 29, 2010. 

The two Mission Clinic staff members, Eliza Lozano Lumbreras, 63, and San Juanita Gallegos Lozano, 54, both of Mission, Texas, were arrested this morning and are expected to appear before a U. S. Magistrate Judge in McAllen later today.  Their release on bond is expected to be decided then. Romelia Puig, on bond since the return of the first indictment is expected to surrender herself to federal authorities on Friday, July 30, for arraignment on the new charges against her.

Puig was originally indicted along with her husband, Manuel Anthony Puig, 44, of Edinburg, Texas, on March 9, 2010, charged with health care fraud, mail fraud and conspiracy to commit health care fraud arising from their operation of the La Hacienda Family Clinic in Mission, Texas. The superseding indictment, returned by a federal grand jury on July 27, 2010, adds Lumbreras and Lozano as defendants to each of the original counts alleged in the first indictment along with Romelia Puig and adds charges accusing Lumbreras and Lozano of conspiracy to commit health care fraud and five new counts of health care fraud arising from the operation of the Mission Clinic. The superseding indictment also charges all three defendants with four additional counts of mail fraud arising from the operation of both clinics. The Medicare program is also identified as a victim of the alleged fraud scheme.   

Puig, along with her husband, a physician assistant, operated La Hacienda Family Clinic in Mission, Texas. By state law, as a physician assistant, Manuel Puig was required to have a licensed physician supervising his work and delegating responsibilities to him. The original indictment accused the Puigs of fraudulently using the Medicaid provider number of R.J.P., a medical doctor who owned the Mission Clinic in Mission, Texas to fraudulently bill Medicaid for services performed by Manuel Puig without required delegation of authority nor supervision.  According to the indictment, R. J. P.’s physical and mental condition prevented him from practicing medicine, and R. J. P. had not delegated authority to the Manuel Puig to see patients nor did he supervise Manuel Puig’s activities, yet beginning in or about May 1, 2005, through on or about Jan. 10, 2006, Manuel Puig provided medical care and services for Medicaid beneficiaries without the authority or the supervision of R.J.P.  During the same time period, the Puigs alleged sent 6,000 claims to Medicaid fraudulently using the Texas Medical provider number for R.J.P.  Medicaid paid over $173,000 as a result of these claims.

The superseding indictment alleges that between September 2001 and January 2006, R. J. P. was physically and mentally unable to practice medicine but that his office staff, Lumbreras and Lozano, kept the Mission Clinic open for patient care. Despite R. J. P.’s inability to practice medicine, the superseding indictment alleges Lumbreras and Lozano took him to the Mission Clinic where they placed him in an office while Lumbreras saw and treated patients. Neither Lumbreras or Lozano were licensed to provide any medical services.  Between September 2001 and January 2006, Lumbreras and Lozano allegedly submitted bills to the Medicare and Medicaid programs which fraudulently claimed that R. J. P. had provided patients with over 7,000 medical benefits, items or services when in fact those services had been provided by Lumbreras or not at all. Medicare and Medicaid paid over $195,000 on those claims. 

The indictment further alleges that Lumbreras and or Lozano arranged for Manual Anthony Puig to operate La Hacienda Family Clinic in Alton, Texas, beginning in April 2005 and to send bills to Medicare and Medicaid using the provider number of R.J. P.  Romelia Puig allegedly did the billing for her husband and La Hacienda Clinic and also gave billing advice to Lumbreras and Lozano.   

Lumbreras, according to the indictment, had power of attorney over R. J. P.’s finances and was able to obtain control over the money Medicare and Medicaid paid for the fraudulent bills submitted from the Mission and La Hacienda clinics, which was divided among Lumbreras, Lozano, and the Puigs.  The clinic operated by the Puigs and the clinic operated by Lumbreras and Lozano are no longer in operation.

Conspiracy to commit health care fraud, and each count of health care fraud carries a maximum punishment of 10 years imprisonment upon conviction.  Mail fraud carries a maximum punishment of 20 years imprisonment upon conviction.  Maximum fines of $250,000 fine can also be imposed upon conviction for each count. 

On  July 23, 2010, Manuel Anthony Puig pleaded guilty before Chief United States District Judge Ricardo H. Hinojosa to the conspiracy charge of the original incitement and faces up to 10 years in prison and a $250,000 fine for the conviction. Mr. Puig, who is not charged in the superseding indictment, remains on bond pending an Oct. 26, 2010 sentencing hearing.

The investigation leading to the charges was conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit with the assistance and cooperation of the Mission Police Department. Assistant United States Attorney Casey N. MacDonald and Special Assistant United States Attorney Rex G. Beasley are prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless and until convicted through due process of law.

July 26, 2010

Physician’s Assistant Convicted of Conspiring to Defraud Medicaid (U.S. Attorney for the Southern District of Texas)

McAllen, Texas - Local Physician Assistant Manuel Anthony Puig, 44, has plead guilty to conspiracy to defraud the Texas Medicaid program, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on July 26, 2010. Manuel Puig, doing business as Puig Medical Services, operated La Hacienda Family Clinic, near Alton, Texas.

Indicted by a federal grand jury on March 9, 2010, for health care fraud, mail fraud and conspiracy to commit health care fraud, Puig pleaded guilty before Chief United States District Judge Ricardo H. Hinojosa on Friday, July 23, 2010, to the conspiracy charge and faces up to 10 years in prison and a $250,000 fine for the conviction. 

By state law, as a physician assistant, Manuel Puig is required to have a licensed physician supervising his work and delegating responsibilities to him. At today’s hearing, Manuel Puig admitted that in 2005, he joined an ongoing conspiracy with others to submit claims to the health care benefit program known as the Texas Medicaid program. Puig admitted fraudulently using the Medicaid provider number of R.J.P., a medical doctor who, for some time before 2005 until his death, was physically and mentally unable to practice medicine nor provide any health care benefits, items or services; who did not delegate authority to Manuel Puig to provide any health care benefits, items or services; and who did not supervise Puig’s attempts to provide health care benefits, items or services.  

Puig admitted that he furthered the conspiracy by submitting, or allowing others to submit, a written notice with the Texas State Board of Physician Assistant Examiners that fraudulently claimed that R.J.P. would supervise his attempts to provide health care benefits, items and services at La Hacienda Family Clinic. Thereafter, Puig operated La Hacienda Family Clinic without supervision from R.J.P. or any other licensed physician and then submitted claims, or aided and abetted others in the submission of claims, to Medicaid under the Medicaid provider number of R.J.P. for health care benefits, services or items which were not provided by R.J.P.; were not authorized, ordered or supervised R.J.P.; were not provided by a licensed person; or were not provided at all. 

Puig admitted that for the period of time beginning on or about May 1, 2005, through on or about Jan. 10, 2006, he provided medical care and services for Medicaid beneficiaries without the authority or the supervision of R.J.P., signed an affidavit sent to the Texas Medical Board in January 2006 - falsely claiming he had been assisting R.J.P., that there had been communications between them and that he believed R.J.P was mentally capable of practicing medicine.

Puig admitted that he submitted or caused to be submitted over  6,000 claims to Medicaid fraudulently using the Texas Medical provider number for R.J.P. for which Medicaid paid the approximately $173,830.56 between May 2005 and January 2006.

The clinic operated by Puig is no longer in operation. Puig remains free on bond of $174,000 pending sentencing scheduled for October 26, 2010. 

Puig’s wife, Romelia Sanchez Puig, 41, who allegedly acted as the biller for the clinic she and her husband operated and is also charged for her alleged involvement in the health care fraud scheme, remains on bond pending trial on the charges pending against her. 

The investigation leading to the charges in this case was conducted by the FBI and the Texas Attorney General's Medicaid Fraud Control Unit. Assistant United States Attorney Casey N. MacDonald and Special Assistant United States Attorney Rex G. Beasley are prosecuting the case.

July 21, 2010

Longview Medical Supplier Guilty in Health Care Fraud Scheme (U.S. Attorney for the Eastern District of Texas)

Tyler, Texas - A 49-year-old Henderson, Texas woman has pleaded guilty to federal health care fraud related charges in the Eastern District of Texas announced U.S. Attorney John M. Bales today. Sheena Shelton pleaded guilty to health care fraud and wire fraud on July 22, 2010, before U.S. Magistrate Judge John D. Love.

According to information presented in court, from 2003 to 2009, Shelton controlled and operated KC Medical Supplies, a durable medical equipment supplier in Longview, Texas.  During that time, Shelton devised and carried out a scheme to defraud Medicare and Medicaid by submitting fraudulent claims for equipment and supplies which had not been prescribed or authorized by a physician.  Shelton prepared documents that falsely represented that physicians had prescribed or ordered medical equipment for certain beneficiaries although they had not.  Shelton forged the signatures of local physicians to fraudulent claim forms before submitting them to Medicare and Medicaid for payment.

Shelton faces up to 10 years in federal prison for the health care fraud charge and up to 20 years in federal prison for the wire fraud charge.  A sentencing date has not been set.

This case is being investigated by the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), the Texas Office of the Attorney General – Medicaid Fraud Control Unit (OAG-MFCU), and the FBI and prosecuted by Special Assistant U.S. Attorney Nathaniel C. Kummerfeld.

July 13, 2010

DME Company Operator Sentenced to Prison for Defrauding Medicare (U.S. Attorney for the Southern District of Texas)

Houston, Texas - Sandra Thurman Patino, 46, the operator of two Houston area durable medical equipment (DME) companies, has been sentenced to four years in federal prison without parole for her role in a $3.9 million motorized wheelchair scam and ordered to pay restitution to Medicare, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on July 12, 2010.

On Monday, July 12, 2010, U. S. District Judge Lynn N. Hughes sentenced Patino to 48 months imprisonment to be followed by a three year term of supervised release during which she is expressly prohibited from seeking employment with any company that bills Medicare or Medicaid.  Judge Hughes further ordered Patino to surrender herself to federal authorities this morning to begin serving her sentence.  She has surrendered. 

Patino, Katrice Oliver, and Anthony Thurman, both 29, were involved in operating two Houston durable medical equipment companies, Thurman Family Medical Services and Seniors Comfort & Caring Medical Services. Between 2002 through 2003, they fraudulently billed Medicare for durable medical equipment, primarily for motorized wheelchairs and related accessories, but delivered less expensive scooters.  In all, the two companies billed Medicare approximately $3.9 million and were paid approximately $2.6 million. More than 99 percent of the two companies’ claims involved motorized wheelchairs and related accessories.

Most of the fraudulent claims billed upon by the two companies involved prescriptions sold to Patino by Dr. Lewis Gottlieb. Patino sold wheelchair prescriptions to other durable medical equipment companies, besides the two she helped run. Gottlieb has pleaded guilty to receiving kickbacks for signing prescriptions for patients who did not meet the medical necessity requirements to receive motorized wheelchair, and is currently serving a lengthy prison term.

The United States has recovered approximately $1.1 million from bank accounts related to the fraud, and seized and sold a Cadillac and a $400,000 home, both purchased with proceeds of the fraud. The recovered funds have been returned to Medicare. After credit for the seized amounts, the court has also ordered Patino to pay the remaining amount of approximately $1.46 million in restitution to Medicare.

Two co-defendants, Katrice Oliver, 29, and Anthony Thurman, 29, were previously convicted and sentenced to five years terms of probation for their roles in the scheme.  Anthony Thurman was further ordered to serve every weekend for a period of nine months in federal custody.

This case was the result of the investigative efforts of the FBI, the Texas Attorney General’s Medicaid Fraud Unit in Houston; Health & Human Services-Office of the Inspector General, Office of Investigations; and the U.S. Attorney’s Office. Special Assistant United States Attorney Suzanne Bradley prosecuted the case.

July 2, 2010

Lubbock Massage Therapist Sentenced to 78 Months in Health Care Fraud Case (U.S. Attorney for the Northern District of Texas)

Lubbock, Texas - Kawai Ary-Berry, 38, of Lubbock, Texas, was sentenced on July 2, 1010, by U.S. District Judge Sam R. Cummings to serve 78 months in federal prison, to be followed by three years of supervised release, and ordered to pay $1.6 million in restitution, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  In early April 2010, a federal jury found Kawai Ary-Berry, a licensed massage therapist, guilty on all 10 counts of an indictment charging offenses related to a health care fraud scheme she ran.  She is presently in federal custody.

Specifically, Ary-Berry was convicted on one count of making a false statement involving a health care matter and nine counts of health care fraud.  Although Ary-Berry was a licensed massage therapist, she enrolled in the federal worker’s compensation program to provide therapy to injured workers as a physical therapist.   Over the course of four years, she billed the federal government’s worker’s compensation program using physical therapy and other billing codes, purporting to have provided physical therapy and other services to three patients.

Evidence presented during trial showed that on some dates, Ary-Berry billed in excess of 24 hours for services that were not rendered, and on other dates, billed for services provided during periods when she was out of town.  The evidence also showed that Ary-Berry continued billing for two patients after they had discontinued their treatment with her.  In addition, Ary-Berry provided two of her patients with hot tubs and one of her patients a dry sauna, all of which were billed to the government program as “rentals,” using codes for a physician office visits and educational materials. Witnesses from the federal Office of Worker’s Compensation Programs, as well as the three former patients, provided testimony against Ary-Berry.

Federal authorities began investigating the case in early 2008, when they received a referral from a nurse examiner employed by the federal government who believed the claims coming in from Ary-Berry appeared excessive.  Federal agents began an intensive review of Ary-Berry’s billing records and conducted surveillance on her office.  The agents discovered that the federal government had been billed for services on days when no patients were seen coming or going from Ary-Berry’s business, PTMT The Pain Relief Center, located on 50^th Street  in Lubbock.

On April 29, 2008, federal agents executed search warrants on PTMT The Pain Relief Center and on Ary-Berry’s residence, located in a rural area between Lubbock and New Deal, Texas.  Officers found evidence that Ary-Berry had completed and mailed billing forms before services had been rendered and found evidence that she was billing the dry sauna and hot tubs to the government using codes that disguised the true nature of the goods being provided. 

The case was jointly investigated by the U.S. Postal Service - Office of the Inspector General and the U.S. Department Labor- Office of the Inspector General.  The case was prosecuted by Assistant U.S. Attorney Amy Burch and Assistant U.S. Attorney Steve Sucsy. Assistant U.S. Attorney Walt Junker pursued the asset forfeiture.

July 1, 2010

Jury Finds Mount Pleasant Man Guilty in Disability Fraud Scheme (U.S. Attorney for the Eastern District of Texas)

Texarkana, Texas - A 60-year-old Mount Pleasant, Texas man has been found guilty by a jury in a disability fraud scheme in the Eastern District of Texas announced U.S. Attorney John M. Bales. 

Jim Bob Shipp was convicted on July 1, 2010, of six counts of health care fraud and one count of making a false statement following a three day trial before U.S. District Judge David Folsom. 

According to information presented in court, from Oct. 25, 1974 to Dec. 1, 2009, Shipp devised and executed a scheme to defraud the Veterans' Affairs Disability Compensation Program by overstating the severity and extent of his disability.  As part of the scheme, Shipp represented to doctors that he had extreme loss of vision in both eyes.  As a result of these false claims, the Veterans' Affairs Disability Compensation Program awarded Shipp compensation at the 100% rate when he was only entitled to a lesser evaluation at the 30% rate.  As a result of the scheme, Shipp received payments totaling $804,522.57 from the program. 

Shipp faces up to five years in federal prison.  A sentencing date has not been set.

This case was investigated by the Veterans' Affairs – OIG and ATF and was prosecuted by Assistant U.S. Attorney Denise O. Simpson and Special Assistant U.S. Attorney Nathaniel Kummerfeld..

June 24, 2010

Two More DME Operators Indicted In Health Care Fraud Case (U.S. Attorney for the Southern District of Texas)

Houston – Bassey Essien and Ebong Akpan, of Houston, have been charged by a federal grand jury with conspiracy, multiple counts of health care fraud and aggravated identity theft for their roles in a scheme to defraud Medicaid through the fraudulent billing for adult urinary incontinence supplies, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on June 24, 2010.

A federal grand jury returned a superseding indictment on June 3, 2010, adding Essien, 60, and Akpan 35, as defendants in a previously charged health care fraud scheme allegedly involving the operation of Logic World Medical and Roben Medical, both durable medical equipment (DME) companies located in Houston. According to allegations in the indictment, Essien and Akpan unlawfully received Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers, which they used to file false claims through these DME companies for adult incontinence supplies, including adult diapers, underpads, wipes and pull-up briefs. The first indictment charged Benjamin, 34, and Rose Essien, 29 - Bassey Essien’s son and daughter. 

Bassey Essien and Akpang were taken into custody this morning by investigating agents, have appeared before a U.S. Magistrate and been ordered released upon posting a $50,000 bond. In addition to the bond amount the court has ordered, while on pretrial release, each defendant must surrender their Nigerian passports and are prohibited from being involved in any businesses which bills Medicare or Medicaid for services or supplies. 

Bassey Essien and Akpan are accused of routinely billing Medicaid for adult urinary incontinence supplies they allegedly did not deliver to the Medicaid beneficiaries, or for delivering supplies in amounts significantly less than the amounts billed to Medicaid or for supplies provided to Medicaid beneficiaries who either did not need or whose physicians had not prescribed the supplies. According to the indictment, Bassey Essien and Akpan continued to bill Medicaid for incontinence supplies even after their delivery staff and/or delivery contractors were told by the beneficiaries they did not need or want the supplies. Moreover, each is accused of billing Medicaid the maximum allowed amount of incontinence supplies each month per beneficiary, for extra large size diaper briefs, which have the highest Medicaid reimbursement rate, without consideration to the actual size needed by a beneficiary and even billing Medicaid for delivering a quantity of adult diapers far in excess of the amount they purchased from wholesale suppliers.

The scheme to defraud is alleged to have begun in April 2004, through Logic World, with the last allegedly false claim having been filed in February 2010 through Roben Medical. During this time period, Essien and Akpan allegedly billed and caused the billing of Medicaid for claims totaling approximately $2,341,293.64 and received payments for those claims totaling approximately $1,455,837.91. 

Bassey Essien, Akpan and Rose Essien, all of whom are presumed innocent unless and until convicted through due process of law, are pending trial on the charges. All defendants face a maximum of 10 years imprisonment and a $250,000 fine, if convicted of conspiracy or any of the healthcare fraud counts in which they are accused in addition to a mandatory two-year consecutive term of imprisonment for aggravated identity theft. Benjamin Essien, 34, has pleaded guilty to conspiracy to commit health care fraud, health care fraud and aggravated identity theft and is pending sentencing in August 2010.

This case was the result of the investigative efforts of the Health and Human Services Office of the Inspector General, the Texas Attorney General’s Medicaid Fraud Unit in Houston and the FBI. Special Assistant United States Attorney Justo A. Méndez and Assistant United States Attorney Al Balboni are prosecuting the case.

June 23, 2010

State Representative Tara R. Rios Ybarra and Two Other Area Dentists Charged in Health Care Fraud Kickback Scheme (U.S. Attorney for the Southern District of Texas)

Brownsville, Texas - Texas House of Representative and dentist, Tara R. Rios Ybarra DDS, of South Padre Island, Texas, along with Diana Woo Paparelli DDS, 57, and Colbert J. Glenn DDS, 49, of McAllen, Texas, have been indicted for allegedly illegally refering Medicaid beneficiaries to Gary Morgan Schwarz DDS in exchange for remuneration, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced June 23, 2010.

The 22-count indictment returned under seal on June 15, 2010, was partially unsealed yesterday following the arrest of Gary Morgan Schwarz DDS, MSD, along with two of his office employees and two other area dentists. Rios Ybarra, 38, who has her own private dental practice in Brownsville and also represents District 43 in the Texas House of Representatives, surrendered herself to U.S. Marshals this morning at the U.S. Courthouse in Brownsville. Paparelli and Glenn surrendered themselves to federal authorities in McAllen just before noon today. As a result of the surrender of these three defendants, the indictment has now been ordered unsealed as to all defendants. Rios Ybarra appeared before U.S. Magistrate Judge Felix Recio in Brownsville and ordered released on a $100,000 unsecured bond. Paparelli and Glenn are expected to appeared before a U.S. Magistrate in McAllen at 3:00 p.m. today. 

Rios Ybarra is charged in counts 17 through 19 of a 22-count indictment with allegedly illegally referring Medicaid beneficiaries to Schwarz in exchange for 15% of the total payment made by Medicaid to Schwarz for all referred beneficiaries. Paparelli and Glenn are similarly charged in counts 11 through 13 of the same indictment. All three defendants face a maximum punishment of up to five years in prison and a fine not to exceed $25,000 for each offense upon conviction. The investigation leading to the charges in this case was conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Assistant United States Attorney Carolyn Ferko is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence. The defendant is presumed innocent unless and until convicted through due process of law.

June 18, 2010

Doctor and Durable Medical Equipment Provider Owner Plead Guilty to Conspiracy to Commit Health Care Fraud (U.S. Attorney for the Southern Texas)

Houston - John Edward Perry III, 47, of The Woodlands, Texas, and Kate Ose Olear, 43, a Nigerian national residing in Houston, have been convicted of conspiracy to commit health care fraud, United States Attorney José Angel Moreno announced on June 18, 2010.

Olear, the owner of Sefan Medical Supply (Sefan), a durable medical equipment provider in Houston, and Perry, the medical director of Sefan, were scheduled to begin a jury trial on Monday. Instead, they have decided to plead guilty. Olear pleaded guilty on June 17, 2010, before United States District Judge David Hittner while Perry pleaded guilty this morning before United States District Court Judge Gray H. Miller. Olear was ordered into federal custody immediately after yesterday’s hearing pending sentencing set for Sept. 15, 2010. Perry has been permitted to remain on bond pending his sentencing set for Sept. 17, 2010. Each faces a maximum of 10 years in prison, a fine of up to $250,000 or twice the pecuniary gain or loss - whichever is greater and up to three years supervised release for the health care fraud conspiracy conviction.  Restitution is mandatory in both cases.

According to court documents, the scheme orchestrated by these defendants involved Sefan, through Olear, billing Medicare for medically unnecessary durable medical equipment and supplies which were either not provided to Medicare beneficiaries or a lesser product from what was billed to Medicare was provided. Olear billed Medicare for arthritis kits for more than 683 beneficiaries - some of whom were deceased. Perry in many instances was the physician who authorized the arthritis kits. All the kits included a knee adjustment with air chamber, rigid frame back brace, elbow with joint, ankle gauntlet, flex glove with elastic finger, heat lamp with stand and a wrist brace. Sefan would order these items for both the left and right side. If the beneficiaries received the items, they did not receive the rigid brace items billed to Medicare, instead they would receive neoprene sleeves, which was not covered by Medicare. Additionally, none of the beneficiaries interviewed knew of Sefan, Olear or Perry. Between December 2005 and July 2009, Olear submitted more than $2.8 million worth of claims for the arthritis kits and was paid more than $1.7 million for those claims. 

The investigation into Olear and Perry is part of the Medicare Fraud Strike Force and was the result of a joint investigation by agents of the Department of Health and Human Services, Drug Enforcement Administration Diversion Division, Texas Attorney General Medicaid Fraud Control Unit, United States Railroad Retirement Board and the FBI. Assistant United States Jennifer Lowery and Special Assistant United States Attorney Justin Blan prosecuted the case

June-18-2010

Tyler Businessman Arrested For Health Care Fraud Violations (U.S. Attorney for the Eastern District of Texas)

A Tyler businessman has been arrested on charges of health care fraud violations in the Eastern District of Texas announced U.S. Attorney John M. Bales on June 18, 2010.

Nicodemus Udofia, 50, of Tyler, was arrested on June 15, 2010, in connection with a health care fraud scheme. 

On June 3, 2010, a federal grand jury returned a fourteen count indictment charging Udofia, the owner of a Tyler medical equipment business, with health care fraud, wire fraud, illegal remunerations, and aggravated identity theft.  According to the indictment, from January 2006 to August 2008, Udofia is alleged to have submitted claims to Medicare and Medicaid for medical equipment and supplies which were not prescribed or otherwise authorized by a physician.  It is alleged that Udofia forged the signatures of physicians on prescriptions and represented that physicians had prescribed or ordered medical equipment for certain patients when the physicians had not prescribed or ordered the equipment.  Through his company, Ebony Medical Equipment & Supplies, Inc., Udofia submitted claims for payment to Medicare and Medicaid based on forged paperwork.  As a result of these claims, the defendant unlawfully obtained more than $70,000 from Medicare and Medicaid.  Udofia is also charged with offering to pay cash kickbacks in exchange for patient information that he could use to submit claims to Medicare and Medicaid.  Udofia's indictment was unsealed on June 17, 2010.

If convicted, Udofia faces up to 10 years in federal prison for each count of health care fraud, 20 years in prison for each count of wire fraud, 5 years in prison for each count of illegal remunerations, and up to 2 years in prison for each count of aggravated identity theft. 

The investigation leading to the charges was conducted by agents from the Texas Office of the Attorney General - Medicaid Fraud Control Unit (OAG-MFCU), the FBI, and the U.S. Department of Health and Human Services - Office of the Inspector General (HHS-OIG).  This case is being prosecuted by Special Assistant U.S. Attorney Nathaniel C. Kummerfeld.

grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

June 14, 2010

TexasPain Management Physician and Psychiatrist Arrested Based on Federal Health Care Fraud Indictment (U.S. Attorney for the Western District of Texas)

El Paso, Texas - United States Attorney John E. Murphy; David Cuthbertson, Special Agent in Charge of the Federal Bureau of Investigation, El Paso Division; Joseph M. Arabit, Special Agent in Charge of the Drug Enforcement Administration, El Paso Field Division; William “Bill” Cotter, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation in El Paso; Byron Hogan, Special Agent in Charge of the Department of Defense Criminal Investigative Service, Southwest Field Office; and, Texas Attorney General Greg Abbott announced on June 14, 2010, that Dr. Anthony Francis Valdez, 56, stands charged with carrying out an estimated $41 million fraudulent health care benefit program billing scheme. Valdez is the owner of the Institute of Pain Management with clinics in El Paso and San Antonio.

The 99-count indictment–returned on June 9, 2010, by a federal grand jury in El Paso and unsealed today–charges Dr. Valdez with 21 counts of heath care fraud; 20 counts of false statements relating to health care fraud matters; 21 counts of mail fraud; 16 counts of wire fraud; four counts of unlawful distribution of controlled substances; and, 16 counts of money laundering. The indictment also includes a notice of criminal forfeiture whereby the government is seeking the forfeiture of more than $1.7 million in cash, his residence in El Paso, his residence in San Antonio and five vehicles. The government is also seeking a monetary judgement in the case for over $41.8 million.

It alleges that beginning in January 2001 and continuing through December 2009, Valdez caused fraudulent claims to be submitted to Medicare, Medicaid, TRICARE and the Texas Workers’ Compensation Commission (TWCC). The indictment states that Valdez caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed. Instead of the above-mentioned procedures, the indictment further alleges that Dr. Valdez performed prolotherapy on his patients, a procedure the healthcare benefit programs do not reimburse.

The indictment also alleges that on four occasions, Valdez unlawfully dispensed controlled substances–Fentanyl in February 2006 and August 2008; Oxycontin in September 2007; and, Hydrocodone in September 2008.

Conviction on each count of wire fraud, mail fraud and unlawful distribution of a controlled substance is punishable by up to 20 years in federal prison; health care fraud, up to ten years in federal prison; and, making a false statement, up to five years in federal prison.

This case is being investigated by agents with Federal Bureau of Investigation, Drug Enforcement Administration, Internal Revenue Service-Criminal Investigation, Defense Criminal Investigative Service–Southwest Field Office together with the Texas Attorney General’s Office.

 An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.

June 10, 2010

Lufkin Physician Arrested for Health Care Fraud Violations (U.S. Attorney for the Eastern District of Texas)

Beaumont, Texas –A Lufkin physician and his employee have been arrested on charges of health care fraud violations in the Eastern District of Texas announced U.S. Attorney John M. Bales on June 10, 2010.

Dr. Alexander Orlov, D.O., 45, and Haseeb Rehman, 57, both of Lufkin, were arrested on June 9, 2010, for health care fraud violations.  Orlov and Rehman appeared today before U.S. Magistrate Judge Keith Giblin for initial appearances. 

According to the indictment, from Nov. 2008 to Apr. 2010, Orlov, a physician and the owner of a Lufkin medical practice and urgent care clinic, and Rehman, an employee, are alleged to have submitted claims for physicians' services to Medicare and Medicaid for services provided by Rehman who was not a licensed medical professional.  Orlov controlled and operated Lufkin Urgent Care, P.A.  He employed Rehman to run Lufkin Urgent Care.  Rehman treated patients, prescribed medication, performed minor surgical procedures, and operated within Lufkin Urgent Care as if he were a licensed medical professional.  Rehman also filled out prescriptions and forged Orlov's signature on prescriptions.  Claims were submitted to Medicare and Medicaid for Rehman's services representing that the services were provided by a physician.  As a result of these claims, the defendants and their co-conspirators unlawfully obtained more than $725,000 from Medicare and Medicaid.

On June 3, 2010, a federal grand jury returned a ten count indictment charging Orlov with conspiracy to commit health care fraud, wire fraud, and aggravated identity theft.  Rehman was charged with one count of conspiracy to commit health care fraud.

If convicted, both defendants face up to 10 years in federal prison for conspiracy to commit health care fraud.  Orlov also faces up to 20 years in federal prison for each count of wire fraud and up to 2 years in federal prison for each count of aggravated identity theft. 

The investigation leading to the charges was conducted by agents from the Texas Office of the Attorney General - Medicaid Fraud Control Unit (OAG-MFCU), the FBI, and the U.S. Department of Health and Human Services - Office of the Inspector General (HHS-OIG).  This case is being prosecuted by Special Assistant U.S. Attorney Nathaniel C. Kummerfeld.

A grand jury indictment is not evidence of guilt.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

June 1, 2010

Owner and Operator of Behavioral Counseling Company Convicted of Health Care Fraud (U. S. Attorney for the Southern District of Texas)

HOUSTON – Edward Birts, of Houston, has pleaded guilty to conspiracy to commit health care fraud, health care fraud and aggravated identity theft arising from his role in a health care fraud scheme in which Medicare and Medicaid were fraudulently billed for psychiatric counseling services, U.S. Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on June 1, 2010. 

Birts, 51, owns and operates Courage to Change, a behavioral counseling company located in Houston. Birts represented himself as a doctor in psychology (PhD) when in fact he just purchased a doctoral degree online and then awarded himself several bogus professional certifications in counseling.

Birts unlawfully acquired Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers which he would use to file false claims. Then, through his counseling business, Birts routinely billed Medicaid for group therapy sessions and psychiatric counseling that were not provided to the beneficiaries.  

Birts regularly billed Medicaid and Medicare for psychiatric counseling services provided by himself when in fact he was not legally licensed, or even professionally qualified, as a psychiatrist, psychologist or a counselor. Finally, Birts routinely billed Medicaid and Medicare for psychiatric counseling services provided by “Dr. R. B.” on behalf of Courage to Change Inc. when in fact “Dr. R.B.” did not provide the services and was neither employed nor contracted by Courage to Change Inc.

The scheme to defraud began in January 2003 and continued through September 2006. Birts billed Medicaid and Medicare for claims totaling approximately $1,282,466.87 and received payments for those claims totaling approximately $968,583.58. 

U.S. District Court Judge Vanessa Gilmore scheduled sentencing for Nov. 29, 2010. Birts faces a maximum of 10 years imprisonment and a $250,000 fine for the conspiracy conviction as well as a maximum of 10 years imprisonment and a $250,000 fine for the health care fraud conviction. Federal law also imposes a mandatory two-year terms of imprisonment for the aggravated identity theft conviction which must be served consecutive to any prison term imposed for either of the two other counts of conviction. Birts has been in federal custody since his arrest on March 3, 2010.

The investigation leading to the indictment and ultimately to today’s conviction was conducted by the Department of Health and Human Services - Office of Inspector General and the Texas Attorney General’s Medicaid Fraud Unit in Houston. Special Assistant United States Attorney Justo A. Mendez is prosecuting the case.

May 28, 2010

Houston Podiatrist and His Unlicensed Podiatrist Co-Defendant Sentenced to Prison for Health Care Fraud (U.S. Attorney for the Southern District of Texas)

Houston - Franklin Beltre D.P.M., 40, of Houston, and a co-defendant have been sentenced to prison for committing more than $1 million in Health Care Fraud for submitting false and fraudulent claims to both the Medicare and Medicaid health care programs, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced today on May 28, 2010.

Beltre was sentenced today to 36 months incarceration by United States District Judge Randy Crane to be followed by a three-year-term of supervised release. In addition to the prison term, Beltre was ordered to pay  $691,128.04 in restitution, which represents the amount he was paid for the false and fraudulent claims he had submitted to both Medicare and Medicaid. Indicted in September 2009, Beltre pleaded guilty on Jan. 27, 2010, to health care fraud.

At the time of his guilty plea, Beltre admitted to defrauding two health care benefit programs, specifically Medicaid and Medicare, by means of false and fraudulent claims in connection with the use of unqualified, unlicensed medical personal and for billing for medical services not rendered as described in count six of indictment. From April 29, 2006, through May 6, 2006, while vacationing in Fort Lauderdale, Fla., Beltre submitted claims to both Medicare and Medicaid for podiatric services he never performed and that were actually performed by co-defendant Manuela Alana, an unlicensed, unsupervised podiatrist and resident of Pharr, Texas. Judge Crane also sentenced Alana today. She will be serving a 24-month term of incarceration to be followed by a three-year-term of supervised release. 

Beltre has been ordered to surrender to the United States Marshals Service (USMS) on  June 14, 2010, in Houston to begin serving his sentence. Alana must surrender on June 21, 2010, to the USMS in McAllen to begin serving her sentence.

The investigation leading to the charges in this case was conducted by the Department of Health and Human Services-Office of Inspector General, the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Assistant United States Attorney Carolyn Ferko prosecuted the case.  

May 24, 2010

Owner of St. Mary’s Ambulance Inc. Sentenced to Prison for Health Care Fraud Conviction (Southern District of Texas)

McAllen, TX - Jesus Jorge Flores Jr., 38, the owner and operator of St. Mary’s Ambulance Inc., has been sentenced to prison for defrauding Medicare and Medicaid of more than $1 million by submitting false and fraudulent claims, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on May 24, 2010.  

United States District Judge Randy Crane sentenced Flores, of Weslaco, Texas, to 24 months in federal prison without parole during a sentencing hearing today. In addition to the prison term, Flores has been ordered to pay restitution to the Center for Medicare and Medicaid Services in the amount of $658,2581.13 and to serve a three-year-term of supervised release following the completion of his prison term. Flores pleaded guilty on July 7, 2008, to conspiracy to commit health care fraud -admitting that between February 2004 until September 2005 to having defrauding the two federal health care benefit programs by means of false and fraudulent claims in connection with the medically unnecessary delivery of ambulance transportation services to Medicare and Medicaid beneficiaries to and from area hemodialysis centers.

Flores, who has been free on bond since his October 2007 arrest has been permitted to remain on bond until June 7, 2010, when he is ordered to surrender to the U.S. Marshals Service in McAllen, Texas, to be transported a Bureau of Prisons facility where he will serve his sentence.

The investigation leading to the charges in this case was conducted by FBI and the Texas Attorney General’s Office Medicaid Fraud Control Unit. Assistant United States Attorney Carolyn Ferko prosecuted the case.   

May 20, 2010

Medical Equipment Supplier Sentenced on Health Care Fraud Conviction (U.S. Attorney for the Northern District of Texas)

DALLAS - Obele Ife Chidi, of Nigeria, was sentenced today by U.S. District Judge Reed O’Connor to 30 months in federal prison following her guilty plea in February 2010 to one count of conspiracy to commit health care fraud and money laundering, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  Chidi was also ordered to pay $744,576 restitution to the Medicare program.

According to documents filed in court, Chidi and her husband, Iheanyi David Nzekwe, owned a durable medical equipment supply business, Specialty Medical Supply & Health Management, Inc., formerly in Richardson, Texas.  In 2003, Chidi and Nzekwe unlawfully used the identifying information of two physicians to submit more than $991,000 in false claims to Medicare, seeking reimbursement for power wheelchairs.  The claims falsely reflected that these physicians had examined the patients and issued prescriptions for the wheelchairs when in fact, the patients and the physicians had never even met.

In total, more than 200 fraudulent claims were submitted to Medicare through Chidi’s scheme, resulting in Medicare payments of $744,576.  Additionally, Chidi assumed multiple aliases and wrote checks for $11,000 and $63,000, among others, payable to her husband and herself under one alias and signed by her under another alias.  These checks were issued from the Specialty Medical bank account into which fraudulently-obtained Medicare payments had been deposited. 

Chidi and Nzekwe left the U.S. while under investigation in late 2003.  Federal agents apprehended Chidi at a Houston airport in December 2009 as she attempted to re-enter the country.  The case remains pending against Nzekwe.

“Any time false claims are submitted for payment, the nation’s health insurance programs suffer,” said Special Agent in Charge Mike Fields of the HHS Office of the Inspector General's (OIG) Dallas Regional Office.  ”Our HHS OIG investigators will continue to work closely with our law enforcement partners to identify providers who deliberately manipulate the system to obtain crucial Medicare or Medicaid dollars.”

U.S. Attorney Jacks praised the excellent investigative work of HHS OIG, the FBI and IRS-Criminal Investigation.  Assistant U.S. Attorneys Katherine Miller and Sean R. McKenna prosecuted.

May 05, 2010

Federal Jury Convicts Local Ambulance Company Owner (U.S. Attorney for the Northern District of Texas)

Dallas - The owner/operator of Royal Ambulance Service, Inc. and First Choice EMS, Inc., Muhammed Nasiru Usman, was convicted May 5, 2010, by a federal jury on all 14 counts of a superseding indictment charging various offenses, including health care fraud and money laundering, related to a health care fraud scheme he ran, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  The trial began on Tuesday, April 27, 2010, before U.S. District Judge Jorge A. Solis.  Two other defendants charged in the case, Shaun Outen, 32, of Aubrey, Texas, and David McNac, 35, of Dallas, pleaded guilty to their role in the conspiracy prior to trial.

“This verdict is the culmination of a concerted and joint effort by the HHS Office of Investigations, the FBI and the Texas Medicaid Fraud Control Unit to quickly bring to justice those who prey on our poor and elderly for financial gain,” said Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations, Dallas Regional Office.

Specifically, the jury found Usman, 50, of Arlington, Texas, guilty on one count of conspiracy to commit health care fraud, 12 counts of health care fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity. The conspiracy count carries a maximum statutory sentence of five years in prison and a $250,000 fine. Each of the health care fraud counts carries a maximum statutory sentence of 10 years in prison and a $250,000 fine. Usman, who is federal custody, is scheduled to be sentenced by Judge Solis on July 28, 2010. McNac pleaded guilty on April 22, 2010, and is scheduled to be sentenced on July 21, 2010. Outen pleaded guilty on March 24, 2010; his sentencing is set for June 16, 2010.

When in business, Royal had offices in Dallas and DeSoto, Texas. First Choice EMS, Inc. was previously located in Carrollton, Texas. McNac worked as the director and/or manager of Royal and First Choice from April 2004 to July 2007. Outen served as the director of operations of Royal from August 2004 to October 2005 and then from May to November 2006, Outen served as an upper-level supervisor for Royal and First Choice.

Royal and First Choice primarily transferred patients on a non-emergency basis to and from dialysis treatments three times per week. The government presented evidence that Usman, Outen and McNac conspired to defraud Medicare, Medicaid and the Federal Employee Health Benefits Program by submitting fraudulent claims related to the transportation of dialysis patients. As part of the conspiracy, the defendants told Royal and First Choice employees to omit facts when documenting their transports of Royal and First Choice patients, such as whether the patients walked to the ambulance, in order to qualify the transports for reimbursement. Additionally, many of the companies’ records revealed that patients simply rode to their appointments in a captain’s chair in the back of the ambulance rather than lying on a stretcher.

The government presented further evidence that Usman, Outen and McNac were responsible for submitting more than $3.5 million in fraudulent claims to Medicare and Medicaid through Royal Ambulance and First Choice EMS, resulting in payments of more than $1.2 million.

The case is being investigated by the U.S. Department of Health and Human Services - Office of Inspector General, the FBI, Texas Attorney General Greg Abbott’s Office - Medicaid Fraud Control Unit, the U.S. Office of Personnel Management and IRS - Criminal Investigation.

Assistant U.S. Attorney Katherine Miller and Special Assistant U.S. Attorney Michael McCarthy are prosecuting the case.

May 03, 2010

Corpus Christi Couple and San Antonio Orthotist Sentenced for Health Care Fraud (U.S. Attorney for the Southern District of Texas)

Corpus Christi, Texas - A Corpus Christi couple and an orthotist from San Antonio, Texas, have been sentenced to lengthy terms in federal prison for defrauding Medicare, Medicaid and United HealthCare Group, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on May 3, 2010.

Jeanette Garcia, 43, of Corpus Christi, was sentenced 80 months in prison following her conviction in February 2010 of one count of conspiring with her husband Eleazar (Eli) Castillio Garcia, 53, to commit health care fraud and 13 counts of submitting false and fraudulent claims to Medicare, Medicaid and United HealthCare Group. Eli Garcia was convicted by the same jury of one count of conspiring with his wife to commit health care fraud and five counts of submitting false and fraudulent claims to Medicare and Medicaid and was sentenced to 51months in prison. The Garcia’s, the co-owners of Orthopedic Specialists DME Inc., formerly located on the 2200 block of Morgan Avenue in Corpus Christi, will both serve a three-year-term of supervised release following their completion of their prison terms and are responsible for paying $492,000 in restitution. John D. Martinez, 51, a licensed orthotist and co-owner of San Antonio Orthotics & Artificial Limbs (SAOAL) located on the 7200 block of Louis Pasteur Drive in San Antonio, Texas, was convicted by the same jury in February 2010 of 12 counts of submitting false and fraudulent claims to Medicare, Medicaid and United HealthCare Group. Today, he was sentenced to 35 months in prison and is responsible for paying $201,000 in restitution.

Through the testimony of investigators from the Medicaid Fraud Control Unit of the Texas Attorney General’s Office, United Healthcare Group, patients as well as representatives of the Medicare and Medicaid programs, the jury learned that Jeanette Garcia hired her husband to provide orthotic and prosthetic goods and services to diabetic patients and others on behalf of OSDME. Eli Garcia, however, never held a license to practice orthotics in the State of Texas, having taken and failed the test six times and been ordered by the Texas Board of Orthotics and Prosthetics to cease and desist practicing orthotics since Oct. 9, 2001.

Nonetheless, beginning in February 2002 and continuing until at least Dec. 23, 2008, Jeanette and Eli Garcia conspired to and did execute a scheme to submit false and fraudulent bills to Medicare and Medicaid for medical services and supplies allegedly provided by Eli Garcia. As part of that scheme, the Garcias obtained and maintained reinstatement of the facility accreditation of OSDME and its Medicare provider number through representations that Martinez would be the licensed orthotist on-site at OSDME in Corpus Christi. Martinez only traveled to Corpus Christi once a week. Although Eli Garcia continued to supply medical devices (including shoes and inserts) to diabetic patients and others in Corpus Christi, he did not tell the patients that he had not provided the necessary customization of the devices to meet the specific needs of the individual patients. Although Eli Garcia supplied no customized items to the patients, OSDME submitted bills to Medicare and Medicaid which claimed the patients had received customized medical devices. OSDME then paid Martinez a percentage of the money obtained from Medicare and Medicaid.

The diabetic patients went to OSDME with prescriptions from their doctors for special shoes and inserts that were supposed to be individually customized for each patient's foot. Instead of providing the customized shoes and inserts needed to protect the patient’s feet from the complications of their disease, Eli Garcia provided the patients with nothing more than off-the-shelf shoes and inserts that could have been found in any shoe store at the mall. Testimony also proved that although Jeanette and Eli Garcia provided absolutely no customized items to the patients, they billed Medicare and the Texas Medicaid program more than $530,000 for customized shoes and inserts and were paid more than $294,000. The shoes and inserts did not always fit and at least one patient lost a toe after wearing the shoes provided to him by Eli Garcia.

The jury also heard that from November 2003 through December 2008, OSDME had contracts with United Health Group to be in United's network of preferred providers and that during that time, OSDME (through Jeanette Garcia) billed United more than $576,000 and was paid more than $324,000 for medical services and items that were claimed to have provided to persons insured by United. The bills were false and fraudulent because the United members were actually treated by SAOAL which did not have a network provider contract with United. United would have denied the bills from SAOAL or paid them at a reduced rate. To get around United’s billing restrictions, SAOAL sent patient records to Jeanette Garcia to fraudulently bill United. OSDME and SAOAL split the money received from the false claims submitted to and paid by United.

United States District Court Judge Janis Graham Jack has permitted Martinez and Eli Garcia to remain free on bond pending the issuance of orders to surrender to a Bureau of Prison’s facility to be designated in the near future. Jeanette Garcia, who had also previously been out on bond, was immediately remanded to the custody of the United States Marshals Service.

This case was prosecuted by Assistant U.S. Attorney Michael Hess and Special Assistant U.S. Attorney Rex G. Beasley.

April 13, 2010

Medical Supplier Sentenced to Federal Prison for Motorized Wheelchair Scam (U.S. Attorney for The Eastern District of Texas) 

Beaumont, Texas - U.S. Attorney John M. Bales announced that the owner of a medical supply business has been sentenced to federal prison for federal health care fraud violations in the Eastern District of Texas.

Enitan Osagie Isiwele, 44, of Sugarland, Texas, was convicted by a jury on Mar. 19, 2009, of 16 counts of health care fraud and one count of conspiracy to pay illegal kickbacks and was sentenced to 97 months in federal prison on Apr. 9, 2010 by U.S. District Judge Marcia Crone.  Isiwele was also ordered to pay restitution in the amount of $201,000.

According to information presented in court, Isiwele owned and operated Galaxy Medical Supplies, a medical equipment provider, based in Houston, Texas, but with customers throughout the state, including many in the Eastern District of Texas.  From June 2005 until April 2008, Isiwele purchased Medicaid and Medicare patient information from door-to-door solicitors who canvassed neighborhoods in search of Medicare or Medicaid beneficiaries.  Isiwele then used this information to bill Medicaid and Medicare for motorized wheelchairs when the patients did not meet the diagnostic requirements to receive a motorized wheelchair and had never been prescribed one by a physician, as required by Medicare and Medicaid rules.

On at least one occasion, Isiwele contacted a Medicare recipient in Crockett, Texas and told him he had won a free power wheelchair, and that he would be by to deliver it.  That recipient, along with all the others who appeared in court, testified he was never prescribed a power wheelchair by a physician.

In order to circumvent Medicare and Medicaid diagnostic requirements, Isiwele took advantage of a temporary relaxation of the normal safeguards.  In the wake of hurricanes Katrina and Rita, in an effort to expedite aid to those affected, Medicare allowed providers to submit claims without prescriptions and other required paperwork if the beneficiary reported that their previously prescribed equipment or supplies had been destroyed by a hurricane.  In total, Isiwele fraudulently over-billed Medicare and Medicaid approximately $587,000.  Isiwele was indicted by a federal grand jury on December 3, 2008.

The case was investigated by the Texas Attorney General's Office Medicaid Fraud Control Unit and the Health and Human Services - Office of Inspector General and was prosecuted by Assistant U.S. Attorney Christopher Tortorice and Special Assistant U.S. Attorney Howard Blackmon.

April 12, 2010

Durable Medical Equipment (DME) Business Owner in Dallas Sentenced to 24 Months in Federal Prison in Aggravated Id Theft/Medicare Fraud Scheme (U.S. Attorney for the Northern District of Texas) 

Dallas - The owner of Beltline Medical Supplies, Inc., formerly in Dallas, Texas, Rafayel Movsesyan, 38, was sentenced today by U.S. District Judge David C. Godbey to 24 months in prison, following his guilty plea in December to one count of aggravated identity theft, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  Movsesyan has been in custody since the time of his arrest in June 2009.

According to documents filed in the case, Movsesyan opened Beltline Medical Supplies, Inc. in Dallas in 2007 and submitted more than $1,028,000 in false claims to the Medicare program.  Medicare issued payments to Beltline Medical totaling more than $166,000 as a result of Movsesyan’s fraudulent claims.

Documents filed in the case reveal that Movsesyan’s fraudulent Medicare claims, primarily for orthotic braces and supplies, falsely represented that the items had been prescribed and provided to the Medicare beneficiaries located in Ohio, California, South Texas, Florida, and other states.  In reality, no items were ever ordered or provided.  Additionally, Movesyan’s claims falsely stated that multiple physicians across the country had examined such beneficiaries and ordered these items, when in fact, the patients and physicians had never heard of each other and no examinations ever occurred.  Movsesyan’s unlawful use of the names and Medicare numbers of patients and physicians led to the charges of aggravated identity theft.

The case was investigated by the U.S. Department of Health and Human Services - Office of the Inspector General.  Assistant U.S. Attorneys Katherine Miller and Sean R. McKenna were in charge of the prosecution.

April 8, 2010

Federal Jury Convicts Lubbock Masseuse in Health Care Fraud Case (U.S. Attorney for The Northern District of Texas) 

Lubbock, Texas: Following a two-day trial before U.S. District Judge Sam R. Cummings, a jury has found Kawai Ary-Berry guilty on all 10 counts of an indictment charging offenses related to a health care fraud scheme she ran, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Ary-Berry, 38, of Lubbock, is a licensed massage therapist.

Specifically, Ary-Berry was convicted on one count of making a false statement involving a health care matter and nine counts of health care fraud.  The false statement count carries a maximum statutory sentence of five years in prison and a $250,000 fine.  Each of the health care fraud counts carries a maximum statutory sentence of 10 years in prison and a $250,000 fine.  She will be sentenced at a later date, pending the completion of the Court’s pre-sentence investigation.  She will be allowed to remain on bond until she is sentenced.

Immediately following the jury verdict, the government sought a money judgment for $1.8 million and the forfeiture of certain of Ary-Berry’s assets to satisfy the judgment.  Judge Cummings entered a preliminary order of forfeiture, ordering that $1.6 million be forfeited to the federal government, allowing an offset for massage services that were actually rendered to the three patients.  After hearing evidence that the Ary-Berry no longer had the money in her accounts of record and that no additional funds could be located, the Court ordered that certain property, such as Ary-Berry’s personal vehicles, farm equipment, all-terrain vehicles and two mobile homes be forfeited to the government to satisfy the money judgment.

Although Ary-Berry was a licensed massage therapist, she enrolled in the federal worker’s compensation program to provide therapy to injured workers as a physical therapist.   Over the course of four years, she billed the federal government’s worker’s compensation program using physical therapy and other billing codes, purporting to have provided physical therapy and other services to three patients.

Evidence presented during trial showed that on some dates, Ary-Berry billed in excess of 24 hours for services that were not rendered, and on other dates, billed for services provided during periods when she was out of town.  The evidence also showed that Ary-Berry continued billing for two patients after they had discontinued their treatment with her.  In addition, Ary-Berry provided two of her patients with hot tubs and one of her patients a dry sauna, all of which were billed to the government program as “rentals,” using codes for a physician office visits and educational materials. Witnesses from the federal Office of Worker’s Compensation Programs, as well as the three former patients, provided testimony against Ary-Berry.

Federal authorities began investigating the case in early 2008, when they received a referral from a nurse examiner employed by the federal government who believed the claims coming in from Ary-Berry appeared excessive.  Federal agents began an intensive review of Ary-Berry’s billing records and conducted surveillance on her office.  The agents discovered that the federal government had been billed for services on days when no patients were seen coming or going from Ary-Berry’s business, PTMT The Pain Relief Center, located on 50^th Street  in Lubbock.

On April 29, 2008, federal agents executed search warrants on PTMT The Pain Relief Center and on Ary-Berry’s residence, located in a rural area between Lubbock and New Deal, Texas.  Officers found evidence that Ary-Berry had completed and mailed billing forms before services had been rendered and found evidence that she was billing the dry sauna and hot tubs to the government using codes that disguised the true nature of the goods being provided. 

The case was jointly investigated by the U.S. Postal Service - Office of the Inspector General and the U.S. Department Labor- Office of the Inspector General. The case was prosecuted by Assistant U.S. Attorney Amy Burch and Assistant U.S. Attorney Steve Sucsy. Assistant U.S. Attorney Walt Junker pursued the asset forfeiture.

April 5, 2010

Co-Owner of Houston Medical Equipment Company Convicted of Health Care Fraud (U.S. Attorney for the Southern District of Texas) 

Houston, Texas - Fred Jessie Cole Jr., of Houston, has pleaded guilty to 14 counts of health care fraud, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced today. Cole, 44, was a co-owner of Crusade Integrated Health Services, a durable medical equipment company located in Houston.

In a hearing before United States District Court Judge Lee H. Rosenthal today, Cole admitted to submitting false and fraudulent claims to the Texas Medicaid Program for incontinence supplies such as diapers and briefs that were not delivered to Medicaid beneficiaries, not wanted by Medicaid beneficiaries and not medically necessary. He also admitted to submitting claims to Medicaid for the delivery of 1,338,466 units of diapers and briefs when he only purchased 314,571 units for delivery and to forging the signatures of Medicaid beneficiaries on delivery tickets to cover up the fact that he was billing Medicaid for more than he was providing. Between May 3, 2003, and Sept. 1, 2006, Cole submitted approximately $1,068,387 worth of claims for diapers and briefs to Medicaid and was paid approximately $937,567 for those claims.

Cole remains free on bond pending his sentencing which is scheduled for Aug. 11, 2010. He faces a maximum of up to 10 years in prison, a fine of up to $250,000 and up to three years of supervised release for the health care fraud convictions.

The investigation into Cole was the result of a joint investigation by agents of the Texas Attorney General Medicaid Fraud Control Unit and the FBI. Special Assistant United States Attorney Julie Redlinger prosecuted the case.

March 24, 2010

Local Ambulance Company Supervisor Pleads Guilty in Health Care Fraud Case (U.S. Attorney for the Northern District of Texas)

Dallas, Texas - A former high-level employee of Royal and First Choice ambulance services, Shaun Outen, 32, of Aubrey, Texas, pleaded guilty, on March 24, 2010, in federal court to one count of conspiracy to commit health care fraud, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  Outen faces s a maximum statutory sentence of five years in prison, a $250,000 fine and restitution.  Sentencing is set for June 16, 2010, before U.S. District Judge Jorge A. Solis.

According to filed documents, Outen worked as an emergency medical technician, supervisor, and director of operations during parts of 2004, 2005 and 2006 for Royal Ambulance Services, Inc. and First Choice EMS, Inc.  Both companies were controlled and operated by co-defendant Muhammed Nasiru Usman, 50, of Arlington, Texas.  When in business, Royal had offices in Dallas and DeSoto, Texas.  First Choice EMS, Inc. was previously located in Carrollton, Texas.

Royal and First Choice primarily transferred patients on a non-emergency basis to and from dialysis treatments three times per week.  As part of his guilty plea, Outen admitted conspiring with co-defendants Usman and David McNac, 35, of Dallas to defraud Medicare, Medicaid and the Federal Employee Health Benefits Program by submitting fraudulent claims related to the transportation of dialysis patients.  Outen also admitted that he and his co-defendants told Royal and First Choice employees to omit facts when documenting their transports of Royal and First Choice patients, such as whether the patients walked to the ambulance, in order to qualify the transports for reimbursement.  Additionally, many of the companies’ records revealed that patients simply rode to their appointments in a captain’s chair in the back of the ambulance rather than lying on a stretcher.

Usman and McNac were responsible for the submission of more than $1.57 million in fraudulent claims to Medicare and Medicaid through Royal Ambulance and First Choice EMS, resulting in payments of more than $500,000.  Both are charged with conspiracy to commit health care fraud and 12 counts of health care fraud and aiding and abetting.  In addition, Usman is charged with one count of money laundering and McNac is charged with two counts of tampering with a witness by harassment.  Both men are scheduled for trial before Judge Solis on April 26, 2010.

The case is being investigated by the U.S. Department of Health and Human Services - Office of Inspector General, IRS - Criminal Investigation, U.S. Office of Personnel Management, Texas Attorney General Greg Abbott’s Office –Medicaid Fraud Control Unit, and the FBI.   Assistant U.S. Attorney Katherine Miller and Special Assistant U.S. Attorney Michael McCarthy are prosecuting the case.

March 11, 2010

Waco Psychologist Sentenced On Health Care Fraud and Money Laundering Charges (U.S. Attorney for the Western District of Texas)

United States Attorney John E. Murphy announced on March 11, 2010, that in Austin today, 55-year-old Mercy Chieza of Hewitt, Texas, was sentenced to 37 months imprisonment as a result of her conviction on Health Care fraud and money laundering charges. In addition to the prison term, Senior United States District Judge James R. Nowlin ordered Chieza to serve three years of supervised release after completing her imprisonment and pay $664,215 restitution to the Texas Medicaid Program.

Chieza, a licensed psychologist, owned and operated Chieza Psychological Services in Waco, Texas. Pleading guilty to the charges in December 2009, Chieza admitted that from at least 1999 until October 2007, she executed a scheme to defraud the Texas Medicaid Program that involved: submitting multiple fraudulent billings; filing claims for services rendered that were not personally performed by Chieza, as required by law; and filing claims for services that were not provided at all.

In particular, as part of her scheme, Chieza admitted she billed for services which totaled more than twenty-four hours in a single day; billed for services in a single day which amounted to more than double the normal business hours of her practice; billed for services allegedly rendered during weekends, holidays, and times that she was known to be out of town and away from her practice; submitted claims for services for multiple time periods which were, in fact, rendered during a single time period; and, submitted claims for services and evaluations not actually performed by Chieza, as she was required by law to perform herself.

This case was investigated by the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigation, and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office. Assistant United States Attorney Matthew Devlin prosecuted this case on behalf of the government.

March 9, 2010

McAllen Physician’s Assistant and His Wife Charged in Scheme to Defraud Medicaid (U.S. Attorney for the Southern District of Texas)

McAllen, Texas – Manuel Anthony Puig, 44, and his wife Romelia Sanchez Puig, 41, both of Edinburg, Texas, have been indicted by a federal grand jury for health care fraud, mail fraud and conspiracy to commit health care fraud, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on March 10, 2010. The three-count indictment was returned on Tuesday, March 9, 2010. The Puigs surrendered themselves to the United States Marshals Service this morning and made their initial appearance before United States Magistrate Judge Dorina Ramos who ordered them released on $174,000 bond. They are scheduled for arraignment on March 15, 2010, at 11:00 a.m.

According to allegations in the indictment, Manuel Puig, a licensed physician’s assistant, and Romelia Puig, a certified nursing assistant, operated the La Hacienda Family Clinic, near Alton, Texas. Husband and wife are charged with conspiring to defraud the Texas Medicaid program, with executing a scheme to defraud Medicaid and with mail fraud by means of false and fraudulent claims to Medicaid in connection with the use of unlicensed medical personal, billing for medical services not rendered and for billing for medical services which were allegedly provided without any supervision or delegation from a licensed physician.

As a physician’s assistant, Mr. Puig is required to have a licensed physician supervising his work and delegating responsibilities to him. According to allegations in the indictment, in May 2005, Mr. Puig filed a written notice with the Texas State Board of Physician Assistant Examiners fraudulently claiming he would be supervised by a licensed physician in Mission, Texas.

Between May 2005 and January 2006, the indictment alleges Mr. Puig provided and attempted to provide medical services at La Hacienda Clinic which were not delegated to him nor supervised by a licensed physician. The indictment further alleges he and Mrs. Puig billed Medicaid for medical services illegally provided by Mr. Puig, illegally provided by unlicensed individuals and for medical services that were never rendered then sent more than 6,000 claims for payment to Medicaid charging in excess of $268,000 for these illegal/ineligible services. 

Mr. and Mrs. Puig face up to 10 years in prison and a maximum fine of $250,000, if convicted of conspiracy to commit health care fraud or executing the scheme to commit health care fraud and up to 20 years in prison and a $250,000 fine if convicted of mail fraud. 

The investigation leading to the charges in this case was conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Assistant United States Attorney Casey N. MacDonald and Special Assistant United States Attorney Rex G. Beasley are prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.  The defendants are presumed innocent unless and until convicted through due process of law.

March 3, 2010

Houston Area Behavioral Counseling Business Owner Charged With Defrauding Medicaid (U.S. Attorney for the Southern District of Texas)

HOUSTON – A 17-count indictment charging the owner of a Houston area behavioral counseling business arising from a scheme to defraud Medicaid of more than one million dollars and aggravated identity theft has been unsealed, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced on March 3, 2010.

The indictment, returned under seal on Feb. 24, 2010, was unsealed today following the arrest of Edward Birts, 51, the owner of Courage to Change - a Houston area behavioral counseling business. Birts is expected to make his initial appearance in federal court today.

Birts is accused of aggravated identity theft for allegedly unlawfully acquiring Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers, then using the information to file false claims through his counseling business. Birts allegedly routinely billed Medicaid for group therapy sessions and psychiatric counseling that were not provided to the beneficiaries.

The conspiracy to commit health care fraud and health care fraud counts arise from allegations that Birts, who has reportedly represented himself as a doctor in psychology (PhD), regularly billed Medicaid and Medicare for psychiatric counseling services he provided. However, the indictment alleges Birts purchased a doctoral degree online and then awarded himself several bogus professional certifications in counseling, thus is not legally licensed or professionally qualified as a psychiatrist, psychologist or a counselor. Other health care fraud counts arise from accusations that Birts routinely billed Medicaid and Medicare for psychiatric counseling services provided by “Dr. R. B.” on behalf of Courage to Change Inc. when “Dr. R.B.” did not provide the services and was neither employed nor contracted by Courage to Change Inc.

The indictment alleges the scheme to defraud the federal medical benefits program began in January 2003 and continued through September 2006. During that time period, Birts allegedly billed Medicaid and Medicare for claims totaling approximately $ 1,282,466.87 and received payments for those claims totaling approximately $968,583.58. 

The conspiracy and each of the 12 health care fraud counts carry a maximum sentence of 10 years imprisonment and a $250,000 fine upon conviction. A conviction for aggravated identity carries a mandatory two-year-term of imprisonment for each of the four counts of aggravated identity theft.

This case was the result of the investigative efforts of the Department of Health and Human Services-Office of Inspector General and the Texas Attorney General’s Medicaid Fraud Unit in Houston. Special Assistant United States Attorney Justo A. Mendez is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless and until convicted through due process of law.

March 2, 2010

DME Owner Pleads Guilty To Health Care Fraud and Aggravated Identity Theft (U.S. Attorney for the Southern District of Texas)

HOUSTON – Mento Nnana Kaluanya, a Texas resident born in the Federal Republic of Nigeria, entered a plea of guilty on March 2, 2010, to one count of health care fraud and one count of aggravated identity theft, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced today.

Kaluanya, 50, was the sole owner of HyCentral Medical Supplies and Equipment (HyCentral), a durable medical equipment (DME) company set up in Derry, N.H. In a hearing before Judge Nancy Atlas on Monday, March 1, 2010, Kaluanya admitted to engaging in health care fraud and aggravated identity theft in the Southern District of Texas.

Kaluanya admitted that HyCentral, a false store front in New Hampshire, falsely and fraudulently submitted claims to Medicare for equipment that was not ordered nor prescribed by treating physicians, that was not medically necessary, was not delivered to some Medicare beneficiaries nor wanted by some Medicare beneficiaries. The majority of the Medicare beneficiaries were in the Southern District of Texas.

Kaluanya admitted to purchasing Medicare beneficiary numbers and patient documentation and, in return for a portion of the fraudulent proceeds, to allowing other individuals to bill Medicare under HyCentral’s Medicare provider number. He also admitted to using the Universal Provider Identification Number and National Provider Identification Number of a local physician to submit false claims. Documents obtained during the course of the investigation showed that HyCentral did not have any of the required Medicare documentation for claims filed on behalf of approximately 300 Medicare beneficiaries and much of the documentation that did exist was incomplete and inaccurate. Physician orders with the forged signatures of at least 12 Houston area physicians were found in the documentation.

Between May 1, 2006, and Dec. 11, 2008, HyCentral billed Medicare for approximately $3.9 million and was paid approximately $1.6 million.

Kaluanya remains free on bond pending his sentencing which is scheduled for May 17, 2010. He faces a maximum of up to 10 years in prison, a fine of up to $250,000 and up to three-year-term of supervised release for the health care fraud and a minimum punishment of two years in prison, a fine of up to $250,000 and up to one year of supervised release for the aggravated identity theft. The sentence for aggravated identity theft must be served consecutive to the sentence imposed for the health care fraud.

The investigation into Kaluanya and HyCentral was the result of a joint investigation by agents from the Boston, Mass., and Concord, N.H., Department of Health and Human Services-Office of Inspector General and the Texas Medicaid Fraud Control Unit. Special Assistant United States Attorney Julie Redlinger prosecuted the case.

February 5, 2010

Owner of DME Storefront Charged with Health Care Fraud and Aggravated Identity Theft (U.S. Attorney for the Southern District Texas)

(Houston) – A federal grand jury has returned a 14-count superseding indictment charging Mento Nnana Kaluanya with health care fraud and aggravated identity theft arising from a $3.9 million health care fraud scheme, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced on Feb. 4, 2010.

Kaluanya, 50, a Texas resident born in the Federal Republic of Nigeria, was the sole owner of an alleged false storefront durable medical equipment company in Derry, N.H., called HyCentral Medical Supplies and Equipment. Kaluanya allegedly set up the false store front in New Hampshire and submitted claims for DME on behalf of Medicare beneficiaries living in Texas which were not ordered or prescribed by physicians, not medically necessary, not delivered to Medicare beneficiaries and not wanted by Medicare beneficiaries. In addition to the health care fraud charges, the indictment, returned by a Houston grand jury on Wednesday, Feb. 3, 2010, alleges that Kaluanya submitted claims to Medicare using the Universal Provider Identification Numbers and National Provider Identification numbers of seven Medicare physicians without authorization leading to the aggravated identity theft charges.

Kaluanya received approximately $1.6 million from Medicare for the allegedly fraudulent DME equipment claims.

The maximum possible punishment upon conviction for health care fraud is up to 10 years in prison, a $250,000 fine and up to three years of supervised release. A conviction of aggravated identity theft carries a mandatory two-year-term of imprisonment which must be served consecutive to any sentence imposed for the underlying felony. Kaluanya remains on bond set by a New Hampshire federal court on the original charges pending trial. A summons ordering Kaluanya to appear on a date in the near future for arraignment on the charges in the superseding indictment is expected to issue.

The investigation leading to the charges was conducted by Health and Human Services - Office of the Inspector General and the Texas Medicaid Fraud Control Unit. Special Assistant United States Attorney Julie Redlinger is prosecuting the case.

An indictment is an accusation of criminal conduct and not evidence.

All defendants are presumed innocent unless and until convicted through due process of the law.

February 4, 2010

Owner of DME Company Indicted for Medicaid Fraud (U.S. Attorney for the Southern District Texas)

(Houston) – The majority owner and operator of a Houston durable medical equipment (DME) company was arrested yesterday in connection with a $1 million health care fraud investigation, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced on Feb. 4, 2010.

Fred Jessie Cole Jr., 44, of Houston, the majority owner and administrator of Crusade Integrated Health Care Services, was arrested on Feb. 3, 2010. Following an initial appearance before a U.S. Magistrate Judge, Cole was ordered released on $100,000 bond pending trial. Cole is charged with 14 counts of health care fraud in an indictment returned under seal by a grand jury on Jan. 19, 2010. The indictment was unsealed by the court following Cole’s arrest and appearance in federal court yesterday.

According to allegations in the 14 count-indictment, Cole engaged in a scheme to defraud the Texas Medicaid Program by submitting claims for incontinence supplies - namely diapers and briefs - that were not delivered, not wanted and not medically necessary. Forged delivery tickets with inaccurate quantities of supplies were allegedly created to cover up the fraud. Approximately $937,567 was paid by the Medicaid program for incontinence supply claims submitted by Cole to Medicaid through his DME company between May 3, 2003, and Sept. 1, 2006.

The maximum possible punishment upon conviction for health care fraud is 10 years in prison, a $250,000 fine and up to three years of supervised release.

The joint investigation leading to the charges against Cole was conducted by agents of the Texas Attorney General Medicaid Fraud Control Unit and the FBI. Special Assistant United States Attorney Julie Redlinger is prosecuting the case.

An indictment is an accusation of criminal conduct, not evidence.

All defendants are presumed innocent unless and until convicted through due process of the law.

February 3, 2010

Former Hospital Patient Care Assistant Sentenced to Prison for Stealing Identity of Patients (U.S. Attorney for the Southern District of Texas)

(HOUSTON) – A former patient care assistant of a Houston area hospital has been sentenced to prison for bank fraud and stealing the identities of patients, United States Attorney Tim Johnson announced on Feb. 3, 2010.

Nakeshia Brown, 30, of Houston, was sentenced to a total of 60 months in prison by United States District Judge David Hittner at a hearing today. Brown pleaded guilty Aug. 10, 2009, to bank fraud and aggravated identity theft. Thirty-six months of the 60 months sentence is for the bank fraud conviction, while the remaining 24 months is the mandatory sentence for an aggravated identity theft conviction which by law must be served consecutive to the bank fraud conviction sentence.

Brown worked for approximately five years as a patient care assistant at Memorial Hermann Hospital. At the time of her guilty plea, Brown admitted she used her employment to steal printouts of patient medical records, referred to as “face sheets,” which included the patient’s name, date of birth, Social Security number, address, employment information and other personal identifying information. Brown then used that information to apply for credit cards without the patients’ consent. 

In February 2009, a patient was admitted to the hospital while Brown was present and performing her duties. The patient died at the hospital on Feb. 26 and Hospital records show Brown  accessed the patient’s medical records without justification on March 3 and 4. On March 15, 2009, Brown used the patient’s identity to apply for a Target credit card. The application was received online from an internet protocol address associated with Brown and Brown’s home address was listed in the account application. When confronted by investigators, Brown admitted she had used the patients information to apply for the credit card.

Immediately the pronouncement of the sentence, Judge Hittner revoked Brown’s bond and immediately remanded her into the custody of the United States Marshals Service to begin serving her sentence pending transfer to a U.S. Bureau of Prisons facility.  

This case was investigated by the United States Secret Service and was prosecuted by Assistant United States Attorney Jay Hileman.

February 3, 2010

Federal Indictments Returned In Eastern District Of Texas (U.S. Attorney for the Eastern District of Texas)

TYLER, TX – U.S. Attorney John M. Bales announced that indictments were returned on Feb. 2, 2010, charging individuals with federal crimes in the Eastern District of Texas.

JIM BOB SHIPP, 60, of Mount Pleasant, Texas, was indicted and charged with health care fraud; false statement relating to health care matters; felon in possession of a firearm; and false statement during the purchase of a firearm.  If convicted, Shipp faces up to 10 years in federal prison for each of the health care and firearms charges and up to 5 years for the false statement during the purchase of a firearms charge.

According to the indictment, from March 1987 to December 2009, Shipp is alleged to have committed health care fraud and made false statements in relation to obtaining health care services from the Veterans Disability Program.  It is alleged that Shipp falsely represented to doctors that he had extreme loss of vision in both eyes.   As a result of these false claims, the Veterans' Affairs Disability Compensation Program awarded the Defendant special monthly compensation during the time period alleged.  Also, the indictment alleges that on Sep. 11, 2006, in Titus County, Shipp, possessed a firearm after having been previously convicted of a felony.  The Indictment also alleges that on Feb. 7, 2006, in Titus County, Shipp attempted to purchase a firearm from a licensed dealer, during which time, Shipp made false statements by representing that he had not been convicted of a felony or a crime which would prohibit him from legally purchasing a firearm.

This case is being investigated by the Veterans Affairs Office of Inspector General, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Assistant United States Attorney Denise O. Simpson is prosecuting the case.

January 21, 2010

Nurse, CEO Arrested for Health Care Fraud (U.S. Attorney for the Eastern District of Texas)

SHERMAN, Texas – U.S. Attorney John M. Bales announced today that two Dallas County men have been arrested in a health care fraud scheme in the Eastern District of Texas.

Brandon Allen Ray, 30, appeared for arraignment before U.S. Magistrate Judge Amos Mazzant on Jan. 12, 2010, on charges of health care fraud, conspiracy and embezzlement in connection with health care. Stewart Powers, 56, also appeared on charges of conspiracy and embezzlement in connection with health care. Ray and Powers were arrested on Jan. 6, 2010.

According to the indictment, from 2005 to 2007, Ray, a registered nurse, is alleged to have billed Medicaid $280,550 for private-duty nursing services he did not actually provide to an invalid patient. Additionally, from 2005 to 2006, Ray was employed as a part time registered nurse for Senior Health Services, Inc., d/b/a Community Specialty Hospital located in Sherman, Texas and Powers was the Chief Executive Officer of the hospital. During this time, Ray and Powers are alleged to have conspired to embezzle funds from the hospital in a scheme which involved Ray submitting false work-and-time records to the hospital for payment and Powers approving the false records and directing hospital personnel to process time cards and write payroll checks. The loss to the hospital is estimated to be $54,000. Ray and Powers were indicted by a federal grand jury on Dec. 9, 2009. If convicted, they each face up to 10 years in federal prison. It is important to note that an indictment is merely a charge and should not be considered as evidence of either guilt or innocence.

"When Medicare and Medicaid providers are motivated by greed, our most vulnerable citizens, the old and the poor, are put at risk", said Special Agent in Charge Mike Fields of the HHS Office of Inspector General's (OIG) Dallas Regional Office. "Our HHS OIG agents will continue to work closely with our law enforcement partners to investigate providers who will stop at nothing to loot the Medicare and Medicaid programs." This case is being investigated by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General – Office of Investigations, the Texas Attorney General's Office – Medicaid Fraud Control Unit and prosecuted by Assistant U.S. Attorney Kevin D. Collins.

January 14, 2010

General Manager of Houston Medical Supply Company Pleads Guilty to Conspiracy to Commit Health Care Fraud (Criminal Division)

Manual Deluna has pleaded guilty to one count of conspiracy to commit health care fraud.

Deluna, 48, pleaded guilty on Jan. 14, 2010, before U.S. District Court Judge Ewing Werlein Jr., in connection with Deluna’s role in Memorial Medical Supply, a Houston durable medical equipment company. Deluna was the general manager of Memorial Medical Supply, and began his association with the company in approximately October 2007. Deluna, along with co-defendants Sunny Robinson, Lisa Jones and Shirley A. Chavis, was originally indicted on July 22, 2009.

In connection with his plea, Deluna admitted that he and others illegally obtained protected Medicare beneficiary health information including names, dates of birth, medical histories, and Medicare and Social Security numbers from individuals and home health agencies. Deluna admitted that this health information was used to submit false and fraudulent claims to Medicare for reimbursement for equipment such as "Arthritis Kits," power wheelchairs, and diabetic and incontinence supplies. Deluna admitted that the Medicare beneficiaries in many instances did not order or even need the medical equipment, nor did a physician actually prescribe these items. Deluna admitted that in several instances, Memorial Medical Supply also submitted false claims to Medicare in the names of Medicare beneficiaries who were deceased. Deluna admitted that from May 2006 through January 2009, Memorial Medical Supply submitted claims to Medicare in excess of $4.3 million.

Deluna remains on bond pending sentence, which is currently scheduled for April 9, 2010. Robinson, Jones and Chavis remain on bond pending trial.

This case is being prosecuted by Special Assistant U.S. Attorney Justin Blan, and was investigated by agents of the HHS-OIG, the Office of Personnel Management, the FBI and the Texas Attorney General’s Office - Medicaid Fraud Control Unit. This prosecution is the latest in the Medicare Fraud Strike Force’s efforts in the Houston area. The Strike Force is supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.

Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 475 individuals and organizations that collectively have billed the Medicare program for more than $1 billion. In addition, HHS’s 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.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) go to: www.stopmedicarefraud.gov

January 14, 2010

Dallas Doctor Indicted for Kickback Scheme (U.S. Attorney for the Eastern District of Texas)

PLANO, Texas - U.S. Attorney John M. Bales announced on January 14, 2010, that a 52-year-old Dallas doctor has been indicted on charges of receiving illegal kickbacks in the Eastern District of Texas. Harold Wagner, of DeSoto, Texas, was indicted by a federal grand jury on Jan. 14, 2010, charging him with 7 counts of accepting illegal kickbacks.

According to information provided by prosecutors, Wagner is alleged to have accepted cash payments, also referred to as kickbacks, from a Plano based durable medical equipment supplier in return for recommending power wheelchairs for Medicare and Medicaid recipients that were his patients. It is a violation of Medicare and Medicaid rules for a treating physician to receive any compensation from a medical equipment supplier in return for referring patients for medical supplies If convicted, Wagner faces up to 5 years in federal prison.

This case is being investigated by the Federal Bureau of Investigation, the Office of Inspector General of the U.S. Department of Health and Human Services and the Medicaid Fraud Control Unit of the Texas Attorney General's Office and is being prosecuted by Special Assistant U.S. Attorney Howard Blackmon.

January 4, 2010

Arlington Memorial Hospital To Pay U.S. Nearly $1 Million To Resolve Allegations Of Improper Physician Payments (U.S. Attorney for the Northern District of Texas)

DALLAS — Arlington Memorial Hospital (AMH), located in Arlington, Texas, has agreed to pay the U.S. $990,509.50 to resolve allegations that it violated the civil False Claims Act, announced U.S. Attorney James T. Jacks of the Northern District of Texas on Jan. 4, 2010.  AMH allegedly violated the civil False Claims Act by submitting improper claims for payment to the Medicare program between July 1, 2003, and July 1, 2007, for pulmonology-related items and services.  By entering into such a settlement, AMH does not admit any wrong-doing and denies liability.

In August 2007, AMH’s corporate parent self-disclosed to the Office of Inspector General for the Department of Health and Human Services (OIG) that a long-standing contract with a physician group for the interpretation of arterial blood gas (ABG) tests potentially violated federal law.  The self-disclosure prompted an investigation, during which AMH cooperated fully with the government.  Based upon information provided by AMH, and learned during the investigation, the U.S. alleged AMH, through its former president, paid a physician group for ABG tests even though such tests no longer required any professional interpretation.  Rather than reduce the compensation, or revise the terms of the contract, AMH’s former president agreed to pay the group for uncompensated charity care and oversight of AMH’s blood gas lab, despite the fact that the contract indicated payments were for interpretation of ABG tests.  Medicare ultimately paid AMH for pulmonology-related items and services referred by the group’s physicians between July 1, 2003, and July 1, 2007.

The U.S. contended that AMH knowingly failed, through the actions of its former president, to eliminate payments to the group for the interpretations of ABG tests that were not performed, and that AMH knew such payments were not in compliance with federal legal requirements.

U.S. Attorney Jacks praised the investigative efforts of the OIG.  The case was handled by Assistant U.S. Attorney Sean R. McKenna.

December 21, 2009

FOR IMMEDIATE RELEASE   ANGELA DODGE   
MONDAY, DEC. 21, 2009   PUBLIC AFFAIRS OFFICER 
WWW.USDOJ.GOV/USAO/TXS  713-567-9388   

PHARR WOMAN PLEAS GUILTY TO HEALTH CARE FRAUD

(McALLEN, Texas) – A former employee of a foot care clinic in Pharr/San Juan, Texas, has pleaded guilty to health care fraud, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today.

Manuela K. Alana, 40, of Pharr, Texas, pleaded guilty to submitting false and fraudulent claims to both the Medicare and Medicaid health care programs for payment of services performed as an unlicensed podiatrist today before United States District Judge Randy Crane.  

Alana was indicted in September 2009 along with the licensed podiatrist who owned and operated the Valley Medical Foot Care in Pharr/San Juan, Texas. Alana admitted that from April 29, 2006, through May 6, 2006, claims totaling approximately $17,069 were submitted to both Medicare and Medicaid for podiatric services that falsely claimed the licensed podiatrist had performed the service when, in actuality, Alana - an unlicensed and unsupervised podiatrist - performed the services. Overall, since August 2004, more than $536,000 was submitted in false and fraudulent claims to both Medicare and Medicaid for podiatric services performed by Alana. 

Alana faces a maximum punishment of up to 10 years in prison and a fine not to exceed $250,000 at sentencing which has been set for March 9, 2010, at 2:00 p.m. The court has permitted Alana to remain on bond pending sentencing.

The investigation leading to the charges in this case was conducted by the Department of Health and Human Services - Office of Inspector General (HHS-OIG), the FBI and the Texas Attorney General’s Office. Assistant United States Attorney Carolyn Ferko is prosecuting the case.

December 17, 2009

Houston Physician Pleads Guilty to and Sentenced for Operating an Illegal Pill Mill (U.S. Attorney for the Southern District of Texas)

(HOUSTON) - Dr. Michael D. Kim, 69, pleaded guilty and was sentenced to prison on Dec. 17, 2009, for engaging in a conspiracy to illegally distribute more than 1.7 million tablets of hydrocodone to drug users and addicts and was also sentenced to prison for conspiring to defraud Medicare of more than $1.7 million in a separate case, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today.

At a hearing before United States District Judge Lee H. Rosenthal this morning, Kim pleaded guilty under a plea agreement with the government which imposed a five-year-term of imprisonment for the drug conspiracy conviction and a 10-year-term of imprisonment for Kim’s previous convictions for conspiring to and defrauding the Medicare program.

According to the factual basis supporting the guilty plea in the drug conspiracy included in the plea agreement executed this morning, Kim sold "drug cocktail" prescriptions to drug users and addicts for cash. These prescriptions were usually for hydrocodone, alprazolam and carisoprodol and were not for a medical purpose. Kim's "patients" began arriving in the clinic parking lot to see Kim as early as 6:00 a.m. even though Kim routinely arrived at 10:00 a.m. From January 2005 through July 2008, many of Kim's illegal prescriptions were filled by agreement with the pharmacist at Prime Pharmacy. Prime Pharmacy, which is no longer in business, was located next door to Kim's medical clinic at 477 West Parker Road in Houston and filled Kim’s prescriptions totaling 1,766,517 tablets of hydrocodone in a two-year-period. Per the term of the agreement, Judge Rosenthal sentenced Kim to five years imprisonment to be followed by a three-year-term of supervised release for this drug conviction.

Kim was also sentenced for his role in an extensive Medicare fraud conspiracy that was one of the "motorized wheelchair fraud schemes” that were prevalent in the Greater Houston area from 2002 to 2004. Kim was previously convicted of conspiracy to defraud the Medicare program and 17 counts of health care fraud in a scheme to defraud Medicare of $29 million by a jury’s verdicts following trial in September 2008.

The evidence presented at trial proved Kim fraudulently certified physically-fit Medicare beneficiaries for motorized wheelchairs. The evidence further proved Kim was also receiving kickbacks of $200 cash from the owners of several Durable Medical Equipment companies who solicited Medicare beneficiaries for Kim to evaluate. Recruiters were transporting Medicare beneficiaries to Kim from various parts of Texas and Louisiana. From April 2002 through October 2003, Kim fraudulently signed more than 500 certificates of medical necessity for motorized wheelchairs for Medicare beneficiaries residing in Louisiana. Kim routinely approved motorized wheelchairs for 20-60 patients a day who clearly did not meet the Medicare guidelines to receive such a device, fraudulently approving motorized wheelchairs for 3240 Medicare beneficiaries in a 16-month period. Medicare paid out more than $10.3 million based on Kim's fraudulent certificates of medical necessity.\

Judge Rosenthal sentenced Kim to 10 years imprisonment for the fraud convictions and further ordered Kim to pay Medicare $10.8 million in restitution and to forfeit $1.1 million to the United States.

The court ordered that the two sentences be served concurrently, meaning Kim will serve a total of 10 years for his crimes. Kim has been in federal custody without bond since July 2008. The criminal charges were the result of a joint investigation conducted by agents of the U.S. Department of Health and Human Services - Office of Inspector General, the FBI and the Medicaid Fraud Control Unit of the Texas Attorney General's Office. Both cases were prosecuted by Assistant United States Attorney Al Balboni.

More information on the website for the United States Attorney's Office for the Southern District of Texas - www.justice.gov/usao/txs/

December 11, 2009

Former Owners of Medical Equipment Company Sentenced to Prison for Defrauding Medicare in Wheelchair Scam (U.S. Attorney for the Southern District of Texas)

The former owners of several Houston area durable medical equipment (DME) companies have been sentenced to prison for their roles in a scheme to defraud Medicare in connection with motorized wheelchairs, United States Attorney Tim Johnson announced on Dec. 11, 2009.

At a hearing this morning, U.S. District Judge Ewing Werlein Jr. sentenced Amudat Williams, 54, and his spouse and co-defendant Sunday Adebisi to 44 months each in federal prison without parole and ordered them to jointly to pay $2,190,772 in restitution to Medicare. Williams and Adebisi, both of Houston, were convicted after pleading guilty on Dec. 18, 2008, to conspiracy to commit health care fraud and receiving kickbacks. During today’s proceedings, Judge Werlein further ordered that neither Williams nor Adebisi were to have any involvement with the operation of a business that submits claims to the Medicare program.

Williams and Adebisi were originally charged in an 13-count indictment with executing a well organized scheme to defraud the Medicare program by operating several DME companies and billing Medicare for providing motorized wheelchairs when less expensive equipment known as scooters were actually provided. Alpha Medical and Safety Supply Inc., a medical supply company operated by Williams, falsely billed Medicare more than $2 million and was paid $1.1 million. Adebisi operated a medical supply company called Da-Fem Medical Supply Inc., falsely billed Medicare more than $1.9 million and was paid $1 million. In addition, Williams and Adebisi owned and operated a medical clinic named Dominion Treatment and Rehab Center. Beginning in September 2002 and continuing through August 2003, recruiters and other owners of DME companies transported Medicare beneficiaries to Dominion for the sole purpose of being examined by a physician to qualify the beneficiaries to receive motorized wheelchairs and accessories. Medical forms signed by a physician authorizing beneficiaries to receive motorized wheelchairs were then sold by Williams and Adebisi for approximately $200 to owners of DME companies. These companies would, in turn, use these forms to fraudulently bill Medicare.

Both Williams and Adebisi have been permitted to remain on bond pending the issuance of an order to surrender to a Bureau of Prisons facility to be designated in the near future.

This case was jointly investigated by the FBI and the United States Department of Health and Human Services - Office of Inspector General. This case was prosecuted by Assistant United States Attorneys Samuel J. Louis and Vernon Lewis.

More information on the website for the United States Attorney's Office for the Southern District of Texas - www.justice.gov/usao/txs/

December 11, 2009

Lead Defendant in Health Care Fraud and Rogue Internet Pharmacy Scheme Sentenced to 12 Years in Federal Prison and Ordered to Pay $68 Million in Restitution (U.S. Attorney for the Northern District of Texas)

Rakesh Jyoti Saran, 47, of Arlington, Texas, was sentenced late yesterday by U.S. District Judge Jorge A. Solis to 144 months (12 years) in federal prison and ordered to pay $68 million in restitution for his involvement in an elaborate rogue internet pharmacy scheme, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  Saran, who is the last defendant to be sentenced in this case, pleaded guilty to one count of conspiracy to commit health care fraud and other federal offenses; two counts of mail fraud; and one count of conspiracy to distribute controlled substances.  He has been in federal custody since May 2009.

Saran was arrested on September 21, 2005 on charges outlined in a 201-count federal indictment alleging that from November 1999 through September 20, 2005 he and  co-defendants conspired with each other and others to commit health care fraud, wire fraud, mail fraud, and money laundering and to engage in the illegal distribution of controlled substances in a drug diversion scheme. 

According to plea papers filed in court, Saran operated 23 Texas-incorporated pharmacies through two companies that he owned, Carrington Healthcare Systems, Inc. and Infinity Services Group, Inc., and purchased expensive pharmaceuticals at significant discounts from pharmaceutical wholesale suppliers, including AmerisourceBergen, located in Valley Forge, Pennsylvania; Anda, Inc., located in Florida; Cardinal Health, located in Dublin, Ohio; H.D. Smith, located in Fort Worth, Texas; and Morris & Dickson Co., L.L.C. in Shreveport, Louisiana.  Saran’s pharmacies purchased controlled substances such as hydrocodone (an addictive painkiller), phentermine hydrochloride (an appetite suppressant), alprazolam (used to treat anxiety, depression, panic disorder and premenstrual syndrome), and promethazine cough syrup (containing codeine) and obtained significant price discounts by obtaining fraudulent memberships in Group Purchasing Organizations (GPOs).

To qualify for the significantly discounted “contract pricing” available to GPOs, Saran fraudulently represented to wholesale suppliers that his purchases were for “institutional distribution” and signed contracts containing “own use” or “closed door pharmacy” provisions restricting his distribution of the pharmaceuticals to institutions such as prisons, long-term care facilities and rehabilitation hospitals.  However, Saran sold the significantly-discounted pharmaceuticals outside the scope of the provisions, making substantial profits from the diverted transactions.  Saran did not disclose to the wholesalers that the pharmacies were alter ego businesses he had created and that he had obtained individual DEA registration numbers for each one to camouflage his identity as the actual purchaser.

Saran also used his pharmacies to operate a “store front” website designed to facilitate the distribution of controlled substances to internet customers.  Using the website, drug users illegally acquired controlled substances and dangerous drugs without valid prescriptions and without doctor intervention, paying up to four times the cost if the substances had been acquired legally.  Saran also used his pharmacies to fill pharmaceutical orders from other Internet Facilitation Centers (IFC) involved in the illegal distribution of dangerous drugs and controlled substances.  Additionally, Saran also played an integral role in providing promethazine cough syrup with codeine, hydrocodone, and alprazolam to individuals who illegally sold these drugs “on the street,” acquiring approximately $20 million in proceeds for doing so. 

Guilty pleas were also entered on behalf of twenty corporations Saran controlled and used in the criminal conspiracy, including Alliance Pharmacy Services, Inc.; AMS Pharmaceuticals Group, Inc.; Carrington Health Care System, Inc.; Dalamar Services, Inc.; East Pointe Pharmacy Services, Inc.; Everest Services, Inc.; Infiniti Services Group, Inc.; Med-Care Infusion Services, Inc.; National Executive Management, Inc.; Orion Pharmacy Services, Inc.; Precision Pharmacy Services, Inc.; Premium Pharmacy Services, Inc.; Quantum Infusion, Inc.; Reliance Pharmaceutical, Inc.; Southwest Infusion, Inc.; SWS Pharmacy Services, Inc.; Texas Home Infusion, L.L.C.; Tri-Phasic Pharmacy, Inc.; Trinity Infusion Services, Inc.; and Trinity Pharmacy Services, Inc.

As part of his plea agreement, Saran forfeited assets earned from his illegal activities, including more than $1,000,000 in cash seized at his residence; more than $375,000 found in bank accounts; approximately $390,000 in cashier’s checks and money orders; several vehicles; and a custom home under construction in Arlington, which was sold by the U.S. Marshals Service (USMS) for $1,200,000 through an Internet auction, www.bid4assets.com in May 2008.

All other defendants charged in the case, including managers and employees of Saran’s various pharmacies, have pleaded guilty to their roles in the scheme and have been sentenced.  Notable sentences include:

Sherman Ted Solomon, 65, currently of Plano, Texas, who operated one of the IFC’s, was sentenced on Wednesday to 60 months (five years) in federal prison and ordered to forfeit nearly $5.7 million in funds, a vehicle and two pieces of real estate in Orange, County Florida.  He must surrender to the Bureau of Prisons on March 3, 2010.

Steven Rosner, 56, was sentenced to 33 months in prison for his role in the scheme.  He was also ordered to pay $400,000 in restitution and forfeit approximately $385,000.  He also was arrested on September 21, 2005, at his home in Boca Raton, Florida, on charges outlined in the “Saran indictment.”

Leslie Wayne Davidoff, a pharmacist, is currently serving a 96-month (eight-year) sentence for his role in the scheme. He was arrested along with most of the other defendants on September 21, 2005.  He is a Lewisville, Texas, resident.

David Kaiser is currently serving a 60-month (five-year) sentence.  Kaiser was the president and part owner of Saran’s Alliance Pharmacy.  In addition, Saran and Kaiser represented that Kaiser was Saran’s General Manager-Pharmaceutical Services for Saran’s companies.

Cherie Ann Word is currently serving a 34-month prison sentence for her role in the scheme.  She was ordered to forfeit real estate in Mansfield, Texas, which was sold by the USMS in May 2008 for more than $540,000.  U.S.  Cherie Word was a director of National Executive Management, Inc., a Saran business whose chief operating officer was Word’s father-in-law, Stacy Fred Word.  Word also owned a portion of Collective Services, Inc., Dalamar Services, Inc., and Precision Pharmacy Services, Inc.  Word was also the president of Precision Pharmacy Services, Inc. And Quantum Infusion, Inc., and was a director of Texas Home Infusion, LLC.  She admitted that these pharmacies were used to disguise from the manufacturers and wholesalers Saran’s identity as the actual purchaser of large quantities of pharmaceutical products.

U.S. Attorney Jacks recognized the investigative efforts and teamwork of the U.S. Food and Drug Administration - Office of Criminal Investigations; Federal Bureau of Investigation; Drug Enforcement Administration; Internal Revenue Service - Criminal Investigation; U.S. Department Social Security Administration - Office of the Inspector General; U.S. Department of Veteran Affairs - Office of the Inspector General; U.S. Office of Personnel Management; Texas Department of State Health Services; and the Texas State Board of Pharmacy.

Assistant United States Attorneys Chad Meacham, C.S. Heath, Sean McKenna,  John de la Garza and Chris Stokes prosecuted the case.

For more information, visit the website of the United States Attorney's Office for the Northern District of Texas at http://www.justice.gov/usao/txn/index.html

December 6, 2009

Durable Medical Equipment (Dme) Business Owner In Dallas Pleads Guilty To Aggravated ID Theft In Medicare Fraud Scheme (U.S. Attorney for the Northern District of Texas)

DALLAS — The owner of Beltline Medical Supplies, Inc., formerly in Dallas, Texas, pleaded guilty to an Information charging aggravated identity theft, announced U.S. Attorney James T. Jacks of the Northern District of Texas. According to plea documents filed in the case, Rafayel Movsesyan, 38, a resident of Los Angeles, California, opened Beltline Medical Supplies, Inc. in Dallas in 2007 and submitted more than $1,028,000 in false claims to the Medicare program. He faces a statutory penalty of two years in prison and a $250,000 fine. A sentencing date will be set by U.S. District Court Judge David Godbey.

Documents filed in the case reveal that Movsesyan’s fraudulent Medicare claims, primarily for orthotic braces and supplies, falsely represented that the items had been prescribed and provided to the Medicare beneficiaries located in Ohio, California, South Texas, Florida, and other states. In reality, no items were ever ordered or provided. Additionally, Movsesyan’s claims falsely stated that multiple physicians had examined such beneficiaries and ordered these items, when in fact, the patients and physicians were wholly unknown to each other and no examinations had ever occurred. Movsesyan’s unlawful use of the names and Medicare numbers of patients and physicians led to the charges of aggravated identity theft. Medicare issued payments to Beltline Medical totaling more than $325,000 as a result of Movsesyan’s fraudulent claims.

U.S. Attorney Jacks praised the excellent investigative work of the U.S. Department of Health and Human Services - Office of the Inspector General.

The case is being prosecuted by Assistant U.S. Attorneys Katherine Miller and Sean McKenna.

For more information, visit the website of the United States Attorney's Office for the Northern District of Texas at http://www.justice.gov/usao/txn/index.html

October 26, 2009

Three Charged in $45 Million Physical Therapy Fraud Case (U.S. Attorney for the Southern District of Texas)
(HOUSTON) – A 51-count superseding indictment charging three additional defendants for allegedly conspiring with Umawa Oke Imo to commit health care fraud and other offenses arising from a $45 million health care fraud scheme has been unsealed, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced on Oct. 29, 2009.

Imo, 54, born in the Federal Republic of Nigeria and owner of City Nursing Services of Texas Inc., has been in federal custody without bond since June 26, 2009, awaiting trial on 36 counts of conspiracy, health care fraud, mail fraud and money laundering. Today, a superseding indictment which incorporates the original 36 counts and adds 15 new counts and names three new defendants was unsealed. Two of the newly named defendants, Kenneth Anokam, 54, a naturalized citizen, and Joann White, 45, both Houston residents, were arrested by agents from the FBI, Internal Revenue Service–Criminal Investigation Division (IRS-CID), Texas Attorney General’s Office Medicaid Fraud Control Unit (MFCU) and the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) on Thursday, Oct. 22, 2009. The third defendant, Dr. Thaddeus Hume, 62, a Houston-area physician, surrendered himself to federal authorities this morning. All three newly named defendants appeared before United States Magistrate Judge Stephen Wm. Smith this afternoon. The United States has moved for the detention of Anokam and White; Hume will be released on bond.

The superseding indictment returned under seal on Oct. 19, 2009, charges all four defendants with 39 counts of health care fraud and conspiracy to commit health care fraud. Imo, Anokam and White are also charged with three counts of mail fraud and Imo is charged with five counts of money laundering.

According to the superseding indictment, approximately $45 million dollars worth of claims were billed to Medicare and Medicaid by City Nursing over approximately two and a half years, almost all for physical therapy services not provided to patients at City Nursing, not provided by a licensed or qualified physical therapist and not provided by appropriately-supervised physical therapy assistants and physical therapy aides. Approximately $30 million dollars was paid by Medicare and Medicaid for these claims.

Imo allegedly did not hire any licensed or qualified physical therapists to work at City Nursing, although City Nursing billed Medicare for millions of dollars worth of physical therapy services. It is further alleged that Imo, Anokam and White paid money to Medicare beneficiaries and recruiters and created false and fraudulent patient files to reflect physical therapy services that were not provided. Hume allegedly allowed City Nursing to bill for physical therapy services under his Medicare number, even though he did not perform or supervise any physical therapy and only went to the clinic on one occasion. The mail fraud charges center around three paper checks valued at approximately $180,448 that were mailed by the Medicaid contract administrator, Texas Medicaid and Healthcare Partnership (TMHP) to City Nursing in lieu of electronic fund deposits. The money laundering charges relate to five transactions totaling $2,805,195 from a City Nursing bank account for referrals, the purchase and shipping of tankers to Lagos, Nigeria, and a check for more than $1 million payable to Imo himself.
The possible punishment upon conviction for health care fraud, conspiracy to commit health care fraud and money laundering are up to 10 years in prison and a $250,000 fine. Mail fraud carries a possible punishment of up to 20 years in prison upon conviction.

The investigation into Imo, Anokam, White, Hume and City Nursing is the result of a joint investigation being conducted by agents of the FBI, IRS–CID, HHS-OIG and the MFCU. Special Assistant United States Attorney Julie Redlinger is prosecuting the case.

More information on the website for the United States Attorney's Office for the Southern District of Texas - www.justice.gov/usao/txs/

October 21, 2009

Medicare Fraud Strike Force Operations in Houston Lead to Charges Against Six Area Residents (U.S. Attorney for the Southern District of Texas)

WASHINGTON – Medicare fraud charges have been filed against six individuals in the continuing operation of the Medicare Fraud Strike Force in Houston, Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Southern District of Texas Tim Johnson and Daniel R. Levinson, Inspector General of the Department of Health & Human Services (HHS), announced on Oct. 21, 2009.

In an indictment unsealed today, Bassey Monday Idiong, 30, owner of B.I. Medical Supply LLC, Linda Eteimo Ere Kendabie, 27, an administrative assistant at B.I. Medical, and Modupe Babanumi, 42, a patient recruiter for B.I. Medical, all of whom reside in the Houston area, were each charged with participating in a scheme to submit claims to Medicare for medically unnecessary durable medical equipment (DME). In many instances, the DME was not given to the purported patients. This equipment included so-called “arthritis kits,” which consist of sets of orthotic braces that are purportedly used for the treatment of arthritis-related conditions.

The indictment alleges that the defendants caused to be submitted to Medicare more than $840,000 in false and fraudulent claims for the kits at a billing cost of approximately $4,000 per kit. The indictment alleges that in one instance, B.I. Medical billed a kit to Medicare that included two knee braces for a Medicare beneficiary who had only one leg.

Charges were also unsealed yesterday against Ana Quinteros, 28, and Michelle Turner, 42, both of Houston, who were each charged in a superseding indictment with one count of conspiring to defraud Medicare for their participation in a scheme to submit false and fraudulent claims, also for arthritis kits. Four individuals charged in the original indictment of July 2009, Clifford Ubani, Princewill Njoku, Mary Ellis and Rolondae Mitchell-Straughter, were also charged with various healthcare frauds in the superseding indictment. The scheme resulted in approximately $1.1 million in billings to the Medicare program.

And, Charles L. Roberts, 57, of Houston, was arrested on Oct. 2, 2009, on a complaint in connection with his role as a recruiter for KO Medical, a DME company owned and operated by Kate and Oliver Nkuku. Charges against Kate and Oliver Nkuku were announced previously. The complaint charges Roberts, aka “Chucky Roberts,” with conspiracy to commit health care fraud and alleges that he provided Medicare beneficiary information to KO Medical so false and fraudulent claims for power wheelchairs and other DME could be submitted to Medicare.

The complaint also alleges that KO Medical billed Medicare for power wheelchairs under special codes indicating that a new piece of DME was being provided as a replacement for a similar piece of DME that was lost, damaged or destroyed during a natural disaster, such as a hurricane. Use of this modifier when a bill is submitted to Medicare allows DME to be billed without a physician’s prescription, because it is merely intended to replace a destroyed item that Medicare presumes was initially obtained with a proper prescription. The complaint alleges that in fact none of the beneficiaries involved actually had a power wheelchair that was lost or damaged. The complaint alleges that Oliver Nkuku paid Roberts a kickback of $400 each time Medicare paid for a power wheelchair for a beneficiary referred by Roberts.

The cases are being prosecuted by attorneys from the Criminal Division’s Fraud Section, including Assistant Chief John S. (Jay) Darden, Trial Attorneys Charles Reed and Katherine Houston, and Special Trial Attorney Anthony Burba.

An indictment or a complaint is merely an allegation, and defendants are presumed innocent until and unless proven guilty.

The Strike Force in Houston is the fourth phase of a targeted criminal, civil and administrative effort against individuals and health care companies that fraudulently bill the Medicare program.

Since inception in March 2007, Strike Force operations in four districts have resulted in indictments of 331 individuals who collectively have falsely billed the Medicare program for more than $720 million. In addition, 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.

More information on the website for the United States Attorney's Office for the Southern District of Texas - http://www.justice.gov/usao/txs/

September 11, 2009

Houston Man Sentenced To Prison In Adult Diaper Fraud Case (U.S. Attorney for the Southern District of Texas)

(HOUSTON) – Ene Etim Hogan, of Houston, has been sentenced to two years in federal prison without parole and ordered to pay restitution for defrauding Medicaid of more than $680,000 through an adult diaper fraud scheme, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today.

Hogan, 60, aka Ernest Hogan, owned and operated Shanet Medical Source, a durable medical equipment company. He routinely billed Medicaid for adult urinary incontinence supplies that he did not deliver to the Medicaid beneficiaries or for an amount of supplies provided which were significantly less than the amounts stated in the claims. Finally, Hogan routinely billed Medicaid for adult urinary incontinence supplies when the supplies were provided to Medicaid beneficiaries who did not need the supplies and whose physicians had not prescribed the supplies. Adult incontinence supplies includes adult diapers, underpads, wipes and pull-up briefs.

Beginning in 2004 through the filing of his last claim in March 2006, Hogan billed Medicaid for incontinence supplies even after his delivery staff and/or delivery contractors were told by the beneficiaries they did not need or want the incontinence supplies. He regularly billed Medicaid the maximum allowed amount for incontinence supplies each month per beneficiary for extra large size diaper briefs which have the highest Medicaid reimbursement rate without consideration to the actual size needed by the beneficiary and for delivering a quantity of adult diapers far in excess of the amount he purchased from wholesale suppliers. Hogan billed Medicaid for a total of $1,108,667 and received payments for those fraudulent claims totaling $683,360.

At the sentencing hearing this afternoon, United States District Judge Sim Lake denied Hogan’s request for a lower sentence stating that his conduct was not a single event but a systematic scheme to defraud the Medicaid program. In addition to the prison term, the court imposed a three-year-term of supervised release and further ordered Hogan to pay $550,000 in restitution to the federal medical benefits program finding that Hogan had already paid $133,360 of the total $683,360 he fraudulently received in payments following the filing of a state civil suit to recover an overpayment. 

This case was the result of the investigative efforts of the Texas Attorney General’s Medicaid Fraud Unit in Houston and the FBI. Special Assistant United States Attorney Justo A. Mendez prosecuted the case.

More information on the Office of the U.S. Attorney for the Southern District of Texas: http://www.usdoj.gov/usao/txs/

September 11, 2009

Broaddus Couple Guilty Of Health Care Fraud In Eastern District Of Texas (U.S. Attorney for the Eastern District of Texas)

BEAUMONT, TX –   U.S. Attorney John M. Bales announced today that a Broaddus, Texas couple has been convicted of health care related fraud in the Eastern District of Texas.

CLAUDETTE READ and ROBERT EARL READ, both 44, were found guilty by a jury of one count of conspiracy to commit health care fraud and 20 counts of mail fraud today following a 3–week trial before U.S. District Judge Marcia A. Crone.

According to information presented in court, Claudette Read and Robert Earl Read owned and operated C.R.R. ENTERPRISE, d.b.a. as Priority One EMS, an ambulance transport business with its main office in Jasper, Texas.  From 2004 to November 2007, the Reads defrauded Medicare, Medicaid, and Blue Cross and Blue Shield by obtaining money from these programs by making false representations about the patients they transported.  An investigation into these crimes revealed that the fraudulent amount paid to Priority One from Medicare totaled $1,414.877.33, the amount paid to Priority One by Medicaid was $265,454.52, and the amount paid by Blue Cross and Blue Shield to Priority One was $68,088.83.  The Reads were indicted by a federal grand jury in Beaumont on Mar. 18, 2009. 

The Reads each face up to 20 years in federal prison at sentencing.  A sentencing date has not been set. 

This case was investigated by the Department of Health and Human Services – OIG and the Texas Medicaid Fraud Control Unit and prosecuted by Assistant U.S. Attorney Denise Simpson and Special Assistant U.S. Attorney Nathaniel Kummerfeld.

More information on the Office of the U.S. Attorney for the Eastern District of Texas: http://www.usdoj.gov/usao/txe/

September 11, 2009

Registered Nurse Sentenced to 18 Months in Federal Prison, Without Parole, for Stealing From Medicaid (U.S. Attorney for the Northern District of Texas)

AMARILLO, Texas — Carol Lynn Glover, a registered nurse who worked for a home health agency, was sentenced yesterday by U.S. District Judge Mary Lou Robinson, to 18 months in federal prison and ordered to pay nearly $135,000 in restitution to that home health agency, announced U.S. Attorney James T. Jacks of the Northern District of Texas.  In May 2009, Glover pleaded guilty to one count of theft in connection with health care.  Judge Robinson ordered that Glover surrender to the Bureau of Prisons by October 13, 2009.

According to documents filed in the case, Glover, worked for Nurses By Prescription, Inc. (NBP), a skilled nursing service located in Amarillo, Texas.  Glover admitted that from April 2005 through December 2006, she submitted false time sheets to her employer indicating that she had provided care for a particular patient, when she well knew that such care was not provided.  In addition to falsifying dates and times of service, Glover forged the signature of the patient’s guardian on documents, certifying that care had been performed when it had not. 

Glover caused NBP to submit claims to Medicaid for services that were never performed.  Medicaid ultimately paid $134,980.88 for skilled nursing services that were never performed.  NBP has since reimbursed Medicaid for the services not rendered, but NBP paid Glover nearly $100,000 in wages for services that were never rendered, representing the funds stolen by Glover.

U.S. Attorney Jacks praised the excellent investigative work of Texas Attorney General Greg Abbott’s Office - Medicaid Fraud Unit.  The case was prosecuted by Assistant U.S. Attorneys Amy R. Burch of the Lubbock, Texas, U.S. Attorney’s Office and Christy L. Drake of the Amarillo, Texas, U.S. Attorney’s Office.

More information on the Office of the U.S. Attorney for the Northern District of Texas: http://www.usdoj.gov/usao/txn/

August 20, 2009

McAllen Cardiologist Sentenced To Prison On Health Care Fraud Violations (U.S. Attorney for the Southern District of Texas)

McALLEN – Fabian Aurignac, M.D., the owner and operator of Cardiology Care Center has been sentenced to prison for committing more than $1 million in Health Care Fraud for submitting false and fraudulent claims to both the Medicare and Medicaid health care programs, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced on Aug. 20, 2009.

Aurignac, 46, of McAllen, was sentenced today to 57 months incarceration and fined $20,000 by United States District Judge Randy Crane to be followed by a three-year-term of supervised release. In addition to the prison term, Aurignac, who has already forfeited $1.1 million dollars which represents the amount he was paid From January 2007 until October 2007 for the false and fraudulent claims he had submitted to Medicare and Medicaid, was also ordered by the court to forfeit an additional $7,187 seized from a bank account and a 1995 GMC recreational vehicle. Indicted in October 2008 and re-arraigned on a superseding indictment in May 2009, Aurignac pleaded guilty on May 8, 2009, to health care fraud.

At the time of his guilty plea, Aurignac admitted to defrauding two health care benefit programs, specifically Medicaid and Medicare, by means of false and fraudulent claims in connection with the use of unqualified medical personal and for billing for medical services not rendered as described in count eight of the superseding indictment. From July 12, 2007, through July 28, 2007, while vacationing in Buenos Aires, Argentina, Aurignac billed approximately $900,000 to Medicare and Medicaid for cardiac services he never performed and received approximately $260,000 in payments from Medicare/Medicaid for cardiac services that were either not performed or performed by unsupervised, unqualified personnel. Aurignac has been in custody since his arrest in December 2008.

The investigation leading to the charges in this case was conducted by the FBI and the Texas Attorney General’s Office. Assistant United States Attorney Carolyn Ferko prosecuted the case and AUSA Allan Hoffmann handled the civil forfeiture.

More information on the Office of the U.S. Attorney for the Southern District of Texas: http://www.usdoj.gov/usao/txs/

August 19, 2009

Massachusetts Man Indicted For Health Care Fraud in East Texas (U.S. Attorney for the Eastern District of Texas)

BEAUMONT, TX – U.S. Attorney John M. Bales announced today that a 49-year-old Lynn, Massachusetts man has been indicted and charged with health care fraud in the Eastern District of Texas.

John Nasky Okonkwo was indicted on Aug. 19, 2009, on 98 counts of health care fraud, one count of conspiracy to commit health care fraud, and one count of conspiracy to pay illegal remunerations. According to the indictment, from January 2004 until December 2008, Okonkwo operated Nasky & Goldfinger, a medical equipment provider, located in Lawrence, Massachusetts, and Salem, New Hampshire. Nasky & Goldfinger primarily sold durable medical equipment, including power wheelchairs and orthotic devices. Medicaid and Medicare will pay for the cost of durable medical equipment, but the equipment must be medically necessary for the beneficiary, and must be prescribed by a physician.

It is alleged that from 2004 through 2008, Okonkwo paid door-to-door solicitors to canvass neighbourhoods in Beaumont and East Texas in search of Medicaid and Medicare beneficiaries. The recruiters would obtain the beneficiaries' information and sell it to Okonkwo, who in turn would bill Medicaid and Medicare for orthotic devices, such as back braces and knee braces, and power wheelchairs. The beneficiaries, however, did not meet the diagnostic requirements to receive the equipment, and had never been prescribed the equipment by a physician in accordance with Medicare and Medicaid rules.

In total, Okonkwo billed Medicare and Medicaid approximately $7 million for orthotic devices and was paid approximately $3.5 million for those claims. Okonkwo billed the programs approximately $5 million for power wheelchairs and related accessories and was paid approximately $1.3 million for those claims.

If convicted, Okonkwo faces up to 10 years in federal prison for each of the 98 health care fraud charges; up to 10 years for the conspiracy charge and up to 5 years for the illegal remunerations charge.

This case is being investigated by the Texas Attorney General's Office, Medicaid Fraud Control Unit, Health and Human Services – Office of Inspector General, and the Federal Bureau of Investigation and is being prosecuted by Special Assistant U.S. Attorney Christopher T. Tortorice. A grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

More information on the Office of the U.S. Attorney for the Eastern District of Texas: http://www.usdoj.gov/usao/txe/

August 19, 2009

Grand Jury Charges Two Houston Area Doctors With 35 More Counts Of Illegally Distribute Narcotics, Medicare/Medicaid Fraud And Money Laundering (U.S. Attorney for the Southern District of Texas)

HOUSTON - A federal grand jury has returned a superseding indictment adding 35 more counts to the previously returned 29-count indictment against Dr. Arun Sharma and his wife, Dr. Kiran Sharma, M.D., United States Attorney Tim Johnson announced on Aug. 17, 2009. Drs. Arun and Kiran Sharma, both 59, operated the Allergy, Asthma, Arthritis and Pain Centers located at on Cole Street in Webster, Texas, and another on Garth Road in Baytown, Texas.

In the original 29-count indictment, the Sharmas were accused of conspiracy to defraud Medicare/Medicaid and private health care providers of more than $31 million by falsely claiming to have administered facet joint injections and blocks to patients and routinely prescribing excessive amounts of hydrocodone, Soma and Xanax to patients that were not for a legitimate medical purpose in exchange for cash payments. The doctors were alleged to have stored large amounts of cash received from the sale of hydrocodone prescriptions at their home. Kiran Sharma allegedly transported large amounts of cash received from the sale of the hydrocodone prescriptions to two safe deposit boxes - one each at Bank of America and Prosperity Bank.

The superseding indictment was returned late Thursday, Aug. 13, 2009. It charges Drs. Arun and Kiran Sharma with three new counts of illegally distributing controlled substances for hydrocodone and methadone prescriptions written to specific patients, four new counts of health care fraud, nine counts of mail fraud, conspiring to launder illegal proceeds and 18 counts of laundering their illegal proceeds by hiding the drug cash in their safe deposit boxes, moving the fraud proceeds between several accounts they controlled and sending fraud proceeds back to India. It is alleged Kiran Sharma visited the two safe deposit boxes a total of 61 times and transported more than $816,000 in cash to the boxes.

The new charges include accusations against the Sharmas of prescribing more than 8,000 tablets of hydrocodone to one patient over an eight-month period. In two other counts, they are charged with prescribing 540 tablets of hydrocodone to one patient on May 23, 2005, and another 540 tablets to the same patient on Dec. 5, 2005.

Additionally, the forfeiture notice provision of the original indictment has been expanded to include the following assets which the government intends to forfeit as proceeds/property derived from their alleged illegal activity: 12 pieces of real estate including the defendants’ Kemah residence and both of their clinics, 32 investment accounts, 23 bank accounts and the $1.5 million in cash seized from the defendants’ home and safe deposit boxes for a total of $31 million.

The court has ordered the Sharmas, who are free on bond, to appear in federal court on Aug. 21, 2009, for arraignment on the new charges.

Upon conviction, health care fraud carries a maximum penalty of 10 years in a federal prison and a $250,000 fine. The fraud conspiracy charge and the mail fraud counts each carry a maximum penalty of 20 years in a federal prison and a $250,000 fine. The drug conspiracy and the 10 Schedule III drug distribution counts carry a penalty of five years imprisonment and a $250,000 fine. The three new Schedule II drug distribution counts carry a penalty of 20 years imprisonment and a $1 million fine. The money laundering conspiracy and the individual money laundering counts carry a maximum penalty from 10 to 20 years and a fine of $250,000 to $500,000.

The criminal charges are the result of a joint investigation being conducted by agents of the FBI, Drug Enforcement Administration, the Department of Health and Human Services-Office of Inspector General and the Medicare Fraud Control Unit of the Texas Attorney General's Office in conjunction with the Webster, League City and Baytown Police Departments. The case will be prosecuted by Assistant United States Attorney Al Balboni.

An indictment is an accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.

More information on the Office of the United States Attorney's Office for the Southern District of Texas: http://www.usdoj.gov/usao/txs/

July 24, 2009

Physical Therapy Clinic Owner Charged In Multi-Million Dollar Fraud Case (U.S. Attorney for the Southern District of Texas)

The owner of City Nursing Services of Texas Inc., an alleged Houston physical therapy clinic, has been indicted for conspiring to commit health care fraud, health care fraud, mail fraud and money laundering arising from an alleged multi-million dollar health care fraud scheme, U.S. Attorney Tim Johnson and Texas Attorney General Greg Abbott announced on July 24, 2009. The 36-count indictment was returned by a federal grand jury this morning.

Umawa Oke Imo, 54, a permanent resident alien in the U.S. and native of the Federal Republic of Nigeria, was taken into federal custody on Friday June 26, 2009, following the filing of a criminal complaint which accused him of health care fraud. He has remained in court-ordered custody without bond since his arrest.

Imo is accused Imo of filing approximately $42 million worth of claims, predominantly for physical therapy services which were not performed at City Nursing, not performed by a licensed physical therapist and not performed by an appropriately supervised physical therapy assistant, with Medicare and Medicaid between Jan. 1, 2007, through April 30, 2009. Approximately $30 million was paid by Medicare and Medicaid for these claims. According to indictment, Imo did not hire any licensed physical therapist to work at the clinic and did not have licensed physical therapy aides appropriately supervised. Imo allegedly paid Medicare and Medicaid beneficiaries approximately $100 to sign multiple blank forms indicating they received physical therapy when no such services were provided. Some beneficiaries reportedly received additional payments for not complaining to authorities. Imo also allegedly paid marketers for bringing beneficiaries to the clinic. The mail fraud charges center around three paper checks valued at approximately $180,448 that were mailed by the Medicaid contract administrator as payments to City Nursing in lieu of electronic fund deposits between March and May 2008.

Imo is also charged with money laundering and is accused of engaging in five transactions occurring between April 2008 and March 2009, each more than $10,000 and totaling $2,805,195 from a City Nursing bank account for referrals, the purchase and shipping of tankers to Lagos, Nigeria, and a check for more than $1 million payable to Imo himself.

The investigation leading to the charges is the result of a joint investigation conducted by agents from the FBI, the Texas Attorney General's Medicaid Fraud Control Unit, Internal Revenue Service - Criminal Investigation Division and U.S. Department of Health and Human Services - Office of Inspector General.

If convicted of health care fraud, conspiracy to commit health care fraud and money laundering, Imo faces up to 10 years in prison and a $250,000 fine. The mail fraud carries a sentence of up to 20 years in prison. Special Assistant United States Attorney Julie Redlinger is prosecuting the case.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Texas at: http://www.usdoj.gov/usao/txs/releases/July%202009/072409Imo.htm

July 17, 2009

Two Houston Area Doctors Charged in Conspiracy to Illegally Distribute Narcotics and Medicare/Medicaid Fraud (U.S. Attorney for the Southern District of Texas)

(Houston) - Dr. Arun Sharma and his wife, Dr. Kiran Sharma, M.D., both 54, have been charged in a 29-count indictment alleging conspiracy to unlawfully dispense and distribute controlled substances outside the scope of professional practice and not for a legitimate medical purpose, United States Attorney Tim Johnson, Drug Enforcement Administration (DEA) Special Agent in Charge Zoran B. Yankovich and Texas Attorney General Greg Abbott announced on July 17, 2009. The indictment alleges the two doctors illegally distributed 1.3 million tablets of hydrocodone and further charges the two doctors with conspiracy to defraud Medicare, Medicaid and several private health insurance companies of $31 million by filing false claims for medical procedures that were never performed.

“This indictment reflects the DEA’s effort to identify and target doctors who discredit the medical health profession who are nothing more than drug peddlers in doctors’ gowns motivated by greed with no regard for the well being of the public,” said DEA Special Agent in Charge Zorn B. Yankovich. “By obtaining the voluntary surrender of DEA registration’s from questionable doctors, the DEA Tactical Diversion Squad is able to put these illegal practices out of business. The DEA will continue to pursue these pain clinic-pill mill operations that have taken root in the Houston area.”

According to the allegations in the indictment returned by a federal grand jury late yesterday afternoon, the Sharmas operate the Allergy, Asthma, Arthritis and Pain Centers located at on Cole Street in Webster, Texas, and another on Garth Road in Baytown, Texas. The indictment alleges that Dr. Arun Sharma routinely saw in excess of 70 patients per day and that he routinely wrote prescriptions for hydrocodone that were not for a legitimate medical purpose in exchange for cash payments. Dr. Sharma allegedly received the cash payments for his hydrocodone prescriptions directly from the patient and that he instructed his patients to take the prescriptions to certain pharmacies to be filled.

Arun and Kiran Sharma, according to the indictment, stored large amounts of cash received from the sale of hydrocodone prescriptions at their home. Kiran Sharma allegedly transported large amounts of cash received from the sale of the hydrocodone prescriptions to two safe deposit boxes - one each at Bank of America and Prosperity Bank.

The doctors also were charged with specific counts of illegal drug distribution for hydrocodone prescriptions written to specific patients. In one count, they are charged with prescribing more than 8,000 tablets of hydrocodone to one patient over an eight month period. In two other counts, they are charged with prescribing 540 tablets of hydrocodone to one patient on May 23, 2005, and another 540 tablets to the same patient on Dec. 5, 2005.

Both doctors are also accused of conspiring to defraud Medicare, Medicaid and private healthcare insurers including Blue Cross Blue Shield of Texas, Aetna, Cigna and United Healthcare of more than $31 million for facet joint injections and other medical procedures that were allegedly never performed.

The United States also gave notice in the indictment to the doctors that it intended to forfeit their interest in all of the proceeds of the fraud and the drug distribution.

The court has ordered that a summons issue directing the Sharma’s to appear in federal court for arraignment on Aug. 3, 2009.

Upon conviction, each of the 17 health care fraud counts and the healthcare conspiracy charge carries a maximum penalty of 10 years in a federal prison and a $250,000 fine. The drug conspiracy and each of the 10 drug distribution counts carries a penalty of five years imprisonment and a $250,000 fine. Parole has been abolished in the federal prison system.

The criminal charges are the result of a joint investigation being conducted by agents of the FBI, the DEA, the Department of Health and Human Services-Office of Inspector General and the Medicare Fraud Control Unit of the Texas Attorney General's Office in conjunction with the Webster, League City and Baytown Police Departments. The case will be prosecuted by Assistant United States Attorney Al Balboni.

An indictment is an accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless and until convicted through due process of law.

For more information, visit the website of the U.S. Attorney of the Southern District of Texas http://www.usdoj.gov/usao/txs/

July 16, 2009

Local Psychologist Sentenced for Fraud (U.S. Attorney for the Southern District of Texas)

Corpus Christi, Texas - A Corpus Christi area psychologist has been sentenced to five years of probation and six months house arrest for defrauding Medicaid, United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today. Chief United States District Judge Hayden Head handed down the sentence against Sam Smith Hill III, 61, a licensed psychologist with a professional office in Corpus Christi and further ordered him to pay $48,739 in restitution to Medicaid and a $40,000 fine.

Hill was convicted by a federal jury’s verdict in June 2008 on six counts of health care fraud for defrauding the Texas Medicaid program. Hill was sentenced to five years of probation and six months of house arrest on each of six counts of conviction for submitting bills to Medicaid under his Texas Provider Number (TPI) for psychological services he claimed to have provided when, in fact, the services had not been provided by him. The court also order Hill to complete 150 hours of community service and to submit to financial surveillance by the United States Probation Department. Each of the six sentences are to be served concurrently.

During his June 2008 trial, the United States proved that Hill billed Medicaid for Psychological Testing conducted by psychological associates hired by Hill to conduct the testing. Under Medicaid regulations, psychologists could not bill for the services performed by others and psychological services provided by psychological associates, regardless of physician or licensed psychologist supervision, are not benefits of the Medicaid program.

The trial evidence revealed that this investigation began in 2004, when the Medicaid Fraud Control Unit received an investigative case referral concerning Hill. The investigation uncovered that Hill hired individuals with Master level degrees in psychology to administer psychological testing but that Hill billed Medicaid as if he had performed the tests himself. In addition, Hill was using un-paid students from his classes at Texas A&M University Corpus Christi to administer psychological testing. Undisputed testimony at trial was that the associates administered between 95 to 100 percent of the psychological tests for defendant. The Texas Medicaid Manual for the years in question states that psychologists cannot bill for the services of others and that psychiatric services provided by a psychological associate, regardless of physician or licensed psychologist supervision are not a benefit of the Medicaid program. Hill was interviewed by agents from the Medicaid Fraud Control Unit and the FBI in August 2007 about his billing practices. Hill’s Medicaid billings continued thereafter and three counts for Medicaid billings in 2008 were included in the original indictment and three additional post-indictment billings were included in the superseding indictment. These counts concerning Hill’s conduct in 2008 are the counts of which the jury convicted Hill.

Hill was convicted on June 30, 2008, of knowingly violating a longstanding Medicaid rule that expressly and unequivocally prohibited him billing for testing work of his associates. No exceptions existed in that rule.

Hill billed the Medicaid program for tests administered by his LPAs at times when he was not immediately available to provide assistance and direction because he was not present in the same office, building or facility when and where the service were provided. In addition, Hill billed the Medicaid program for the testing of his LPAs as if he had done the work himself using the CPT billing procedure code for testing by licensed psychologists.

The court has permitted Hill to remain free on bond pending the imposition of his six-month house arrest.

The investigation leading to the criminal charges was conducted by the FBI and the State of Texas Office of Attorney General - Medicaid Fraud Control Unit, Corpus Christi Division. Special Assistant United States Attorney Rex G. Beasley and Assistant United States Attorney Julie K. Hampton prosecuted the case.

For more information, visit the website of the U.S. Attorney of the Southern District of Texas http://www.usdoj.gov/usao/txs/

June 24, 2009

Husband and Wife Doctors Charged With Operating a Pill Mill (U.S. Attorney for the Southern District of Texas)

Houston - Two Houston area doctors have been charged by criminal complaint for operating their pain management clinic as a pill mill, United States Attorney Tim Johnson, Texas Attorney General Greg Abbott, FBI acting Special Agent in Charge Russel Robinson, Drug Enforcement Administration (DEA) Special Agent in Charge Zoran B. Yankovich and U.S. Department of Health and Human Services - Office of Inspector General (HHS-OIG) Assistant Special Agent in Charge Joseph Prekker announced today.

Dr. Arun Sharma and his wife, Dr. Kiran Sharma, M.D., both 54, are charged with conspiracy to commit health care fraud and conspiracy to unlawfully dispense and distribute controlled substances outside the scope of professional practice and not for a legitimate medical purpose. Dr. Kiran Sharma was taken into federal custody today and will remain in custody pending her appearance before a U.S. Magistrate Judge tomorrow. Her husband, Dr. Arun Sharma, is expected to surrender to federal authorities tomorrow. A warrant remains outstanding for his arrest.

According to the allegations in the criminal complaint filed today, the Sharmas operate the Allergy, Asthma, Arthritis and Pain Centers located at on Cole Street in Webster, Texas, and another on Garth Road in Baytown, Texas. Records obtained from the Texas Department of Public Safety (DPS) demonstrate that Dr. Arun Sharma has allegedly prescribed 615,671 tablets of hydrocodone (Vicodan), 66,000 tablets of alprazolam (Xanax), and 26,000 tablets of diazepam (Valium) between Sept. 1, 2008, to May 22, 2009.

The affidavit supporting the federal criminal complaint details some examples of Dr. Arun Sharma’s alleged prescription pattern. One patient, PP, received 92 hydrocodone prescriptions, totaling 8,040 tablets between September 2008 and April 2009. On seven occasions, PP received two prescriptions on the same day from Dr. Arum Sharma which were filled at two different pharmacies. A second patient, AP, who resides at the same address as patient PP, allegedly received 31 hydrocodone prescriptions, totaling 2,430 tablets, between September 2008 and April 2009 from Dr. Arun Sharma. In yet another example alleged in the complaint, patients EZ and KZ, who reside together, each allegedly obtained prescriptions for almost 2000 tablets of hydrocodone from Dr. Arum Sharma between September 2008 and March 2009.