Thursday, July 31, 2014

Owner Of Los Angeles Home Health Agency Sentenced To Nearly Five Years For Health Care Fraud Case Involving Kickbacks to Doctors and Medicare Patients Who Did Not Qualify for In-Home Health Services. Related Qui Tam Lawsuit Settled.

On July 29, 2014, U.S. District Judge Dean D. Pregerson sentenced a registered nurse, Hee (“Angela”) Jung Mun, who operated GreatCare Home Health, Inc., a home health agency to 57 months in federal prison. In addition to the prison term, Judge Pregerson also ordered Mun to pay $5.144 million in restitution to Medicare. As part of the investigation, authorities previously seized $1.2 million from bank accounts owned by Mun and GreatCare. Another federal judge ordered Mun to pay nearly $15 million to resolve a “whistleblower” lawsuit associated with this case. 

Ms. Mun pleaded guilty in 2012 and admitted orchestrating a three-year scheme to defraud Medicare. In her plea agreement, Ms. Mun admitted that she defrauded Medicare out of millions by:

(1) paying illegal kickbacks to doctors and individuals known as “cappers” or “marketers” for patient referrals, and to patients themselves to sign up for home health services,

(2) billing Medicare for patients who were not homebound or who otherwise did not quality for home health services, and

(3) billing Medicare for services provided by unlicensed individuals or not provided at all.

The scheme targeted elderly, primarily Korean, Medicare beneficiaries. GreatCare was shut down by federal agents after the execution of a search warrant there in March 2011.

While Ms. Mun was the alleged leader, seven other defendants have been convicted in related cases for their roles in the Greatcare fraud case - four of whom have already been sentenced:

(1) Sang Whan Ahn, 60, who recruited many of GreatCare’s Medicare beneficiaries in exchange for illegal kickbacks, was sentenced to four months in prison;

(2) Doctor Whan Sil Kim, also known as “Victoria,” 71, was sentenced to a year and a day in prison for receiving illegal kickbacks for health care referrals;

(3) One of GreatCare’s nurses, Hwa Ja Kim, also known as “Helen,” 70, was sentenced to 18 months in prison for signing off on patient evaluations and visits she did not do;

(4) Yeong Ja Lee, 52, one of the unlicensed individuals Greatcare used to see patients and create fake paperwork, was sentenced to 15 months in prison just last week;

(5) Physical therapist Seonweon Kim, 48, is scheduled to be sentenced on October 6; 

(6) GreatCare employee Jung Sook Lee, 53, is scheduled to be sentenced on October 20; and

(7) Registered nurse Ji Hae Kim, 43, is a fugitive.

Attorney Commentary:

In a related “whistleblower” qui tam lawsuit brought in March 2010 by one of GreatCare’s former receptionists, two other GreatCare referring doctors, Dr. Dong Shin and Dr. Bo W. Paik, agreed to pay $217,810 and $530,000, respectively, to resolve allegations that they received cash payments and patient referrals in exchange for referring Medicare beneficiaries to GreatCare and signing false certificates of medical necessity. The government did not intervene in this case but participated in the settlement negotiations. Dr. Shin has paid $150,000 and is to make monthly payments.  

Defendant Dr. Kim has agreed to pay $1.088 million as a part of a consent judgment for her conduct, while Defendant Seonweon Kim has agreed to pay $205,000 to resolve his civil liability related to GreatCare. Defendant Mun defaulted in the case and has over a $14 million default judgment entered against her. 

The sentences in these cases are lengthy in large part because of the large amount of Medicare billings (in excess of $5 million) and the defendants are charged in conspiracy counts where they are held responsible for the entire billings even where they did not collect the amounts billed or were paid salaries. In this case, the search warrant was executed in March 2011 and there 

Posted by Tracy Green, Esq.
Phone: 213-233-2260

Green and Associates, Attorneys at Law

Monday, July 28, 2014

Three Indicted In California Federal Insurance Fraud Case Involving Allegations That Medically Unnecessary Procedures Were Performed For Free Or Discounted Cosmetic Surgery

On July 16, 2014, a federal grand jury indicted three Southern California residents in a scheme to defraud health insurance programs by submitting bills in alleged medically unnecessary medical procedures performed on insurance beneficiaries who received free or discounted cosmetic surgery. The Indictment claims that there were more than $50 million in unnecessary medical procedures billed. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

The indictment in Case No. SACR14-00110-JLSoutlines allegations in which marketers or cappers lured patients to a surgery center in Orange County, California known at various times as Empire Surgical Center, Vista Surgical Center and Princess Cosmetic Surgery. The marketers allegedly told patients that they could use their union or PPO health insurance plans to pay for cosmetic surgeries, which are generally not covered by insurance. This involved private insurance but was investigated by Department of Labor which indicates that there may have been some government beneficiaries 

When patients came to the surgery center for a consultation, they were told that they could receive free or discounted cosmetic surgeries if they underwent multiple, medically unnecessary procedures that would be billed to their union or PPO health care benefit program, the indictment alleges. The unnecessary procedures typically performed on the “patients” were endoscopies (usually esophagogastroduodenoscopies, or EGDs), colonoscopies and cystoscopies.

Once the health care benefit program paid the claims, the patients were given free or discounted cosmetic surgeries, including “tummy tucks,” breast augmentations, rhinoplasties (“nose jobs”) and liposuction. Further, according to the indictment, tummy tucks were billed as hernia repair surgeries, and rhinoplasties were billed as deviated septum repair surgeries.

The three defendants charged in the indictment are: (1) Vi Nguyen, 31, of Placentia, who was a consultant at the surgery center and who is charged with 10 counts of mail fraud; (2) Theresa Fisher, 44, of Tustin, who was another consultant at the surgery center and who is charged with five counts of mail fraud; and (3) Lindsay Hardgraves, 30, of San Pedro, who was a marketer and charged with two counts of mail fraud.

Attorney Commentary: There were similar state and federal criminal cases some years ago in Orange County with different surgery centers that also charged the physicians with performing the medically unnecessary surgeries. At this point, no physicians are charged but that could change depending on the evidence and whether these defendants later cooperate and present evidence that the physicians who performed the unnecessary procedures knew or should have known that they were unnecessary. This is a case where the fraud was driven by illegal marketing to patients. Physicians and owners of surgery centers must be careful on how patients are recruited and what promises, if any, are made in order for them to have procedures performed at a certain facility. 

Posted by Tracy Green, Esq.
Phone: 213-233-2260


Friday, July 25, 2014

California Man Pleads Guilty In Investment Schemes That Defrauded Physicians And Dentists Out Of More Than $2 Million

On July 21, 2014, David W. Rose, 57, of Orange County, pleaded guilty in United States District Court to one count of wire fraud and one count of mail fraud arising from defrauding dozens of doctors and others of more than $2 million in separate schemes that promised large returns on investments in the medical and dental fields.

According to court documents, over a six-year period that ran through May 2011, Mr. Rose solicited physicians to invest in an Irvine company he called M.D. Venture Partners (MDVP) and falsely promised lucrative returns on investments in emerging medical technologies. In a subsequent scheme, Mr. Rose used Technology Innovation Partners (TIP) to solicit dentists and orthodontists to invest, claiming funds would be pooled and invested in a company developing ablation technology that would be used to remove wisdom teeth in children without surgery.

Throughout both schemes, investor funds were misused, with Mr. Rose using victims’ money for personal expenses. According to a plea agreement filed in court, Mr. Rose used investor funds to pay $7,500-a-month rent for a house in Coto de Caza, college tuition, luxury vehicles, an $80,000 Sea Ray boat and shares in the Green Bay Packers.
The investigation revealed that no money was invested by either MDVP or TIP.
In the MDVP scheme, Mr. Rose caused approximately 32 victims to lose more than $900,000, according to court documents. In the TIP scheme, 45 victims lost more than $1.4 million. Mr. Rose was arrested in May 2013 and has remained in custody since that time.

Mr. Rose pleaded guilty before United States District Judge James V. Selna, who is scheduled to sentence the defendant on November 24. At sentencing, Mr. Rose has agreed there will be an enhancement since there were more than  50 victims. Under the plea agreement, Mr. Rose waives his right to appeal if the sentence is no more than the low end of level 23 on the federal sentencing guidelines (level 23 is 46 to 57 months).  

Thus, his likely sentence is around 4 to 5 years even thought Judge Selna is free to depart from the plea agreement as it is not binding upon him. The statutory maximum sentence of 40 years in federal prison and this shows that the sentencing maximum is not reflective of the actual sentence to be imposed. The government agreed to a one level departure due to Mr. Rose's efforts in helping secure restitution which is estimated over $2.3 million.

Posted by Tracy Green, Esq.

Phone: 213-233-2260

Saturday, July 19, 2014

Diagnostic Company’s Unlicensed Vice President Pleads Guilty To Health Care Fraud After Performing and Interpreting X-rays and Other Tests in Lieu of Qualified Physicians and Radiologists

On July 17, 2014, a licensed x-ray technician Timothy Emeigh who was a vice-president of a diagnostic company pleaded guilty to health care fraud in the District of Maryland arising from a scheme in which insurance providers and Medicare were fraudulently billed for tests interpreted by unlicensed personnel, and for tests and services which in fact had not been provided.

According to his plea agreement, Mr. Emeigh was a licensed x-ray technologist in Maryland but was not a licensed physician. Mr. Emeigh worked at Alpha Diagnostics Services beginning in 1993 as an x-ray technologist and by 1997, he was named vice president of the company’s operations.

Alpha Diagnostics was principally a portable x-ray supplier in Maryland, Delaware, Pennsylvania and Virginia. However, Alpha Diagnostics also supplied or provided portable ultrasound tests, electrocardiograms (“EKGs”), echocardiograms and Holter monitors. The majority of its clients were nursing homes, whose patients Alpha Diagnostics tested. Alpha Diagnostics was enrolled in the Medicare program. Medicare required that a licensed physician order and interpret the x-ray or other test, and render a formal report.

Nonetheless, in 1997, Mr. Emeigh began performing x-ray interpretations in lieu of a licensed physician or radiologist, and producing fraudulent reports using the names of actual physicians who had never seen the x-rays in question. In 2003, as technology improved, Mr. Emeigh began interpreting medical tests and writing reports in the name of registered licensed physicians from his home using his home computer.

In addition to x-rays, Mr. Emeigh began interpreting and drafting fraudulent reports for ultrasounds and EKGs from his home, while traveling out of state, and at times, from overseas. Sometimes Mr. Emeigh performed medical interpretations and transmitted x-ray images using a cell phone application.

By 2010, Emeigh performed more than 70% of the x-ray interpretations, masquerading as a licensed radiologist or physician. On an average month, more than 1,000 x-ray interpretations were conducted by Alpha Diagnostics in Maryland alone. Mr. Emeigh suggested to Alpha Diagnostics that he transmit particularly difficult medical interpretations to actual licensed physicians. If a patient caregiver contacted Alpha Diagnostics to question any of the medical interpretation reports generated by Mr. Emeigh or other unlicensed Alpha Diagnostics personnel, the diagnostic interpretation was reassigned to an actual licensed physician for a second interpretation, who would not be apprised of the first interpretation and conclusion.

There were other fraud allegations including one that Alpha Diagnostics would bill insurance providers for 2-view chest x-rays even where single-view x-rays had been ordered or performed. Another fraud allegation was that Alpha Diagnostics routinely submitted insurance payment claims which exaggerated the number of anatomical views performed by its x-ray and ultrasound technologists; and for multiple transportation charges on occasions when multiple patients had been examined at the same facility. Alpha Diagnostics would routinely bill Medicare for “global” x-ray procedures (i.e., both professional and technical components), along with transportation and setup charges, for studies interpreted "in-house" by Mr. Emeigh or other unlicensed Alpha Diagnostics personnel.

From January 2007 through October 2012, the financial loss to Medicare for the alleged misconduct was more than $2.5 million but this did not occur any losses to private insurance.  The statutory maximum on Mr. Emeigh’s sentence is 10 years in prison and a $250,000 fine. U.S. District Judge James K. Bredar scheduled sentencing for October 29, 2014.

Attorney Commentary: Diagnostic companies who perform tests and reports have been under scrutiny by OIG for the past eight years since diagnostic testing was targeted to the high reimbursements paid.  Audits were conducted of many diagnostic companies and once those audits were completed, some cases were referred to Office of Inspector General for criminal investigation.

There have been many cases where radiologists who had a high number of reports were suspected of having technicians write the reports but this case was extreme in that the technician used radiologists' names where the radiologist did not interpret the test. We have represented radiologists where this was done to them in part because the diagnostic company wanted to avoid paying the interpreting fee. In this case, the radiologists were not charged -- only the diagnostic company. However, the supervising physicians could have had some exposure if they knew or should have known of the misconduct. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260

Tuesday, July 15, 2014

How Do You Appeal A Medi-Cal Temporary Suspension?

The Department of Health Care Services (DHCS) has the authority under the Welfare and Institutions Code to impose administrative sanctions on Medi-Cal providers. Some of the most common sanctions are withhold and temporary suspension.

The primary basis for "Temporary Suspension" is Welfare and Institutions Code, Section 14043.36 which provides as follows:

“If it is discovered that a provider is under investigation by the Department or any state, local, or federal government law enforcement agency for fraud and abuse, that provider shall be subject to temporary suspension from the Medi-Cal program, which shall include temporary deactivation of all provider numbers used by the provider to obtain reimbursement from the Medi-Cal program.”

The Medi-Cal application has providers agree to temporary suspension if they are under investigation for fraud or abuse; fail to disclose all information in their application or provide false information; or fail to remediate discrepancies found after an unannounced visit; submit claims for payment for any provider who is excluded on on the Ineligible list; or “when necessary to protect the interests of the Medi-Cal program.”

How can I appeal from a Medi-Cal temporary suspension? You do not have the rights to a full appeal with a hearing and the right to bring witnesses. Instead, you only have the right to what is known as an “administrative” or paper appeal under Welfare and Institutions Code, Section 14043.65. 

For this reason, the most important thing to do from the beginning is to begin the meet and confer process with DHCS to seek to resolve the issues. The appeal can be filed at the same time. We have had many cases where we were able to satisfy DHCS that there was no viable fraud or violation of program rules or where we reached agreements that allowed the provider to maintain their Medi-Cal provider number under certain written settlement agreements.

Before these meetings, it is critical to meet with an attorney and evaluate the evidence and to determine whether there is any exposure for fraud. If there are concerns, it may be important not to have meetings where the provider’s Fifth Amendment rights are waived since anything that is said at a meeting in Sacramento is evidence.
While the meet and confer process is ongoing, the appeal is filed and it must be supported by substantial evidence under oath in order to have any chance of winning this “paper” appeal. A judge does not rule on the appeal. It is a “hearing officer” from DHCS and there is no hearing or opportunity to cross-examine witnesses. Thus, any appeal submissions must be thorough.

Seeking input from DHCS in Sacramento is critical since “temporary” can last as long as 3 years while the Department claims that an investigation is ongoing. The meet and confer process with an in-person meeting in Sacramento is very helpful in helping prove to the Department the issues in the claimed “fraud” are non-existent (we have seen cases where the evidence was flawed and the statements were false) or that the errors were minimal and not grounds for a true temporary suspension.

One of the recurring issues is that often DCHS will refer the case to the State Attorney General’s Office – Bureau of Medi-Cal Fraud – and it is often required that the case be closed by their office in order to reinstate the provider number and lift the temporary suspension. 

Every one of these cases is different and it is critical to evaluate them at the earliest time possible. Usually these cases commence when there are on-site inspections and it may be necessary to obtain an attorney’s input at that time to ensure that all is handled professionally and that a referral for fraud and abuse will not be made. Often, providers do not take the on-site inspections as seriously as they should and do not sufficiently address the auditor or investigator’s concerns at the earliest level. If you need assistance with your audit, on-site inspection or temporary suspension, feel free to contact our office.  

Posted by Tracy Green, Esq.
Phone: 213-233-2260

Sunday, July 13, 2014

Criminal Charges Are Brought Against Five For Allegedly Falsifying Life Insurance Applications To Collect More Than $600,000 In Commissions

In a coordinated case between San Diego County and Orange County, California Department of Insurance detectives arrested five people including a former life insurance agent Ian Frisch on multiple felony charges of grand theft. There was also a count of great taking allegation due to the loss amount.  The five suspects are accused of falsifying life insurance applications to collect more than $600,000 in commissions. The other alleged suspects charged are Tyler Wilkinson, and three life insurance applicants: Ruben Banuelos, Edward Putnam and Maxine Putnam.  

It was alleged that Mr. Wilkinson would use cappers (people paid to recruit policy applicants) and finders to locate potential policyholders and create false applications for life insurance. Mr. Wilkinson would then allegedly submit the fraudulent application to insurers through Mr. Frisch, a former life insurance agent. It was alleged that they profited by allowing the life and whole life policies to lapse after a year while retaining the commissions paid by the insurer for the initial policy application. Several insurers allegedly paid commissions totaling more than $600,000.

The life insurance applicants allegedly worked with Mr. Frisch and Mr. Wilkinson and are alleged to be complicit with them. The Putnams and Banuelos allegedly knowingly made false statements on life insurance applications. The policies were then allowed to lapse after just one year while the individuals involved profited from commissions. 

This case was investigated by the California Department of Insurance under its Life and Annuity Consumer Protection Program (LACPP). LACPP provides grant funds to counties for the prosecution of financial abuse in life insurance and annuity product transactions.

Mr. Wilkinson and Mr. Frisch were booked in the San Diego County Jail with bail set at $600,000 for both (the amount of the loss). Mr. Wilkinson and Mr. Frisch are being charged with four counts of Penal Code Section 487(a) PC felony Grand Theft charges, along with the Aggravated White Collar Crime Enhancement under Penal Code Section 186.11 PC, and the Great Taking Allegation under Penal Code Section 12022.6.

Mr. Banuelos and Mr. and Mrs. Putnam were booked at the Orange County Central jail -with bail set for Banuelos at $180,000 and $200,000 and $170,000 for Mr. and Mrs. Putnam, respectively. Mr. Banuelos and Mr. and Mrs. Putnam were charged June 23, 2014, by the Orange County District Attorney's office with one felony count each of Felony Grand Theft and one count each of the Great Taking Allegation.

This case is related to another case involving an elderly Morgan Laws, 84, who was arrested in January 2014, for investment fraud and grand theft related to this case. Mr. Laws pled guilty to Grand Theft and unlicensed sales.  

Commentary:  The prosecution of insurance fraud is on the rise. Companies and carriers are being more aggressive about investigating and turning these cases over to local county district attorney offices. Signing applications that are knowingly false is a crime and applicants cannot assume that insurance companies will not target them. If you are the subject of an investigation, it is important to seek legal advice at the earliest opportunity. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260


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