Miami Man Arrested for Obstructing a Health Care Fraud Investigation: Bail Condition Set Of Not Working In Health Care Industry While Charges Pending

On December 1 2009, Luis A. Baez of Miami was arrested and charged with obstruction of a health care fraud investigation in violation of Title 18, United States Code, Section 1518. The Indictment charging him was also unsealed.

An Indictment is only an accusation is not evidence of guilt. Mr. Baez is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

According to the Indictment, statements made in court, and documents filed in court, in January 2007, Mr. Baez allegedly told an FBI Special Agent who was conducting an investigation involving Med-Pro of Miami, Inc., that he had no knowledge of an entity known as the L. Baez Corporation or activities associated with the L. Baez Corporation. Mr. Baez allegedly knew this information was false.

The Med-Pro investigation ultimately resulted in several indictments and convictions of various individuals for health care fraud and money laundering schemes involving millions of dollars in fraudulent reimbursement claims submitted to Medicare. According to documents filed in one of the Med-Pro cases, the L. Baez corporation was used in connection with laundering proceeds of health care fraud.

At Mr. Baez's initial appearance in court, it was reported that Mr. Baez had been working at two local hospitals up until the time of his arrest. Mr. Baez’s bond was set at $50,000. As a condition of his bond, Mr. Baez is prohibited from working in the health care industry while charges are pending. Mr. Baez faces up to five years’ imprisonment and a fine of up to $250,000 if convicted.

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

Attorney Commentary: The lessons to be learned from this arrest and bail setting are two-fold. First, being interviewed by the government when you are going to be less than truthful is a terrible idea to be avoided at all costs. If an interview is in your best interest, you must have an attorney with whom you have been completely truthful so an objective person can evaluate whether or not you should be interviewed and whether or not you can be truthful by an objective standard. At that point, the attorney can negotiate the proffer with the prosecution or investigating agency.

If you are not truthful, you will either (1) be charged separately with obstruction of justice or (2) if other charges are filed against you, at sentencing in federal court there could be an upward adjustment for obstruction of justice. In addition, if the prosecution was considering not charging you and using you as a witness, your lies to the FBI agent, OIG special agent or other law enforcement official could result in your being charged since your lies could render you useless as a witness. Assume that the government investigators know much more than you think and that a good portion of your interview will essentially be a lie detector test to determine if you are being truthful.

Second, it is becoming more common for the condition of not working in the health care industry to be a condition of bail in federal cases. I will probably become more common in state cases. This condition should be anticipated before the initial appearance and if there are ways to differentiate your work (especially if it does not involve billing government programs) this should be brought forth to the government and there should be an effort to resolve this bail issue before the court appearance. I have seen in court the prosecution ask for this condition and the defense attorney and defendant are caught off-guard and without any ability to offer other work alternatives or the idea of having pretrial services supervise or approve the work position.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Los Angeles’ Kerlan Jobe Orthopaedic Clinic Pays $3 Million to Settle Kickback Allegations

The Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay the United States $3 million to settle allegations that it received illegal kickbacks from HealthSouth Corporation. The Justice Department announced this civil settlement on December 1, 2009.

The settlement resolves allegations that HealthSouth paid kickbacks to Kerlan Jobe in the form of stock option grants, donations to the Kerlan Jobe Foundation, loan forgiveness on an equipment lease, and a disproportionately high ownership interest in a jointly owned ambulatory surgery center. In exchange for the illegal kickbacks, Kerlan Jobe allegedly referred patients to HealthSouth facilities. As a condition of continued participation in government healthcare programs, Kerlan Jobe was required to enter into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services to address Kerlan Jobe’s financial relationships with referral recipients.

This settlement follows a December 2007 settlement between the United States and HealthSouth in which HealthSouth paid the United States approximately $14.7 million to resolve HealthSouth’s liability for improper financial relationships with Kerlan Jobe and an Alabama sports medicine clinic, which HealthSouth’s then-new management self-reported to the government.

The investigation was a joint effort by the Civil Division of the Justice Department, the U.S. Attorney’s Office for the Central District of California and the Office of Inspector General of the Department of Health and Human Services.

Any questions or comments should be directed to: tgreen@greenassoc.com or aschneider@greenassoc.com. Tracy Green is a principal and Ann Schneider is a senior associate at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Oxnard Man Pleads Guilty To Auto Insurance Fraud From 2007 Accident

Another case has arisen where a person's financial concerns about repairing their vehicle caused them to submit a false insurance report which resulted in criminal prosecution. On November 13, 2009, Ronald Lewis Dixon, of Oxnard, pleaded guilty in Ventura County Superior Court to one count of felony auto insurance fraud arising out of a 2007 auto accident.

The facts underlying the plea are as follows. On November 25, 2007, at 1:20 a.m., an Oxnard Police officer was dispatched to a traffic collision at the intersection of Ventura Boulevard and Alvarado Street. The officer found a 2006 Nissan truck crashed into a retaining wall. The truck was abandoned but locked. The officer noticed there was no evidence of forced entry or damage to the ignition lock. The officer checked the license plate and learned the vehicle was registered to Mr. Dixon , who lived less than half a block from the collision scene.

The officer went to Mr. Dixon 's residence. When Mr. Dixon opened the door, the officer noted that Mr. Dixon was dressed as if he just returned from a night out and his breath smelled of alcohol. Mr. Dixon would not admit he was driving his truck, fearing he would be arrested for DUI.

Two days later Mr. Dixon contacted his insurance company, Infinity Insurance, and reported someone stole his truck and crashed it. The following day, Mr. Dixon went to the Oxnard Police Department and tried to file a stolen vehicle report. After giving his account of how his truck was “stolen, but later found,” the Oxnard Police Department refused to take the report.

Infinity Insurance referred the case to the California Department of Insurance, Fraud Division. Fraud detectives eventually arrested Dixon for insurance fraud. Once arrested, Mr. Dixon admitted he crashed his truck and lied because he thought the insurance company would not repair his truck if it discovered he had been drinking prior to the accident.

Mr. Dixon will be sentenced on January 5, 2010, at 1:30 p.m., in courtroom 13 of the Ventura County Superior Court. He faces a maximum penalty of five years in state prison and a $50,000 fine. When Mr. Dixon pleaded guilty he turned over a cashier's check for $3,749 (the amount of restitution due to the victim in the case, Infinity Insurance).

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com or aschneider@greenassoc.com. Tracy Green is a principal and Ann Schneider is a senior associate at Green & Associates in Los Angeles, California. They focus their practice on the representation of professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have developed an expertise in insurance fraud cases over the past 20 years. The firm website is http://www.greenassoc.com/

California Doctor Sentenced To Nearly 5 Years In Prison For Writing Controlled Substance Prescriptions For Cash

On November 16, 2009, Vu Le, a physician who operated a medical clinic in Westminster was sentenced to 57 months in federal prison for illegally writing prescriptions for “patients” who paid cash for painkiller prescriptions for people he did not examine. Dr. Vu Le had faced a statutory maximum sentence of 135 years imprisonment and possible fines of $6,750,000. Dr. Le, who is 46 years old, was sentenced by United States District Judge James V. Selna in Santa Ana, California.

This sentence followed a guilty plea in June 2009 to all 15 felony counts contained in an indictment that accused him of charging up to $150 to write prescriptions for painkillers. Most of the prescriptions were for Oxycodone (sold in various forms, including the brand name OxyContin) and the painkiller Hydrocodone (available in various forms, including the brand name Vicodin).

When he pleaded guilty, Dr. Le admitted that in 2005 and 2006 he provided prescriptions to persons seeking controlled substances without a legitimate medical reason in exchange for cash payment. These individuals came to Dr. Le's medical office in Westminster and paid $150 in cash to be seen by the doctor. After claiming that they had pain and needed medication, Dr. Le prescribed controlled substances, usually Hydrocodone (a Schedule III controlled substance) and Oxycodone (a Schedule II controlled substance). Le wrote the prescritions without examination, without referral slips and without any other documentation showing a legitimate medical reason for the prescription.

As part of the investigation into Dr. Le, special agents with the Drug Enforcement Administration (DEA) conducted undercover operations in which they posed as individuals seeking controlled substances. During the undercover meetings, Dr. Le did not examine the undercover agents, nor did he take a thorough medical history from them. Instead, he simply wrote prescriptions for Oxycondone and Hydrocodone in a manner that he admitted was outside the usual course of professional practice.

After his arrest in December 2006, Dr. Le told the DEA that 70 percent of his total revenue came from his “pain management” and that he made approximately $50,000 a month from his practice.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Reminder To Adopt Compliance Plan: U.S. Intervenes In False Claims Act Suit Against Psychiatric Treatment Facility For Adolescent Boys

On November 4, 2009, the United States and the Commonwealth of Virginia intervened in a False Claims Act suit in the Western District of Virginia against the Medicaid providers Universal Health Services Inc., Keystone Marion LLC and Keystone Education and Youth Services LLC. The facilities at issue were Keystone Marion Youth Center, a residential facility in Marion, Virginia, that receives Medicaid funds to provide psychiatric counseling and treatment for boys ages 11-17.

This False Claims Act lawsuit was filed by several former therapists who worked at the Marion residential facility. The lawsuit alleges that the facilities provided sub-standard care to adolescents in violation of federal and state Medicaid requirements, falsified records to cover up their serious violations and filed false Medicaid claims.

Under the False Claims Act, a health care provider that submits false or fraudulent claims to a federal health care program is liable for three times the government’s damages, plus a civil penalty for each false claim.

Attorney Commentary: This type of qui tam lawsuit is a reminder to all health care providers and regulated industries to have a compliance plan. The employees would receive a copy of the compliance plan and they would sign a document acknowledging receipt of it and agreeing to follow it. In essence, they they would agree to report any alleged program violations or any wrongdoing to the employer.

In addition, it is necessary to have personnel policies in place to follow up and ensure that the employees believe they can report any perceived wrongdoing or perceived violations of policies. Where employees do not feel like team members, there can be problems. Many cases we handle were initiated by complaints by former employees.

In qui tam lawsuits which are contingency, the employees also will be compensated without having to spend any money for legal fees. Thus, terminated employees have an incentive to report alleged fraud or abuse to a qui tam attorney. Terminations of employees need to include exit interviews where specific questions are asked regarding any actual or perceived wrongdoing. If they report it then, the employer can take actions to investigate (internal or outside) and take actions in accordance with the compliance plan.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Miami Residents Sentenced In Federal Court For Roles At HIV Infusion Clinics That Fraudulently Billed Medicare

The Florida health care fraud cases continue to be the sore spot of the country. This was a case of outright fraud and abuse but it shows how the system allows $12 million in Medicare payments to be made where the HIV clinics were based on fraud and kickbacks.

On November 13, 2009, Manuel Camacho, was sentenced in Miami federal court for his participation in a Medicare fraud scheme at HIV infusion clinics in Miami-Dade and Broward Counties, providing infusion drug therapy treatments to patients suffering from AIDS or HIV.

Alejandro Gonzalez was sentenced on October 1, 2009 and Roberto Rodriguez was sentenced on November 3, 2009. These men were indicted in April 2009 and their sentences follow guilty pleas.

According to documents filed with the court, between November 2003 and November 2006, Mr. Gonzalez and Mr. Rodriguez established medical clinics in South Florida, purportedly to administer infusion therapies for the treatment of AIDS patients. In the plea agreement, it was admitted that no treatments were rendered and patients received a kickback for signing-in at the clinic. Messrs. Gonzalez and Rodriguez admitted to billing Medicare for millions of dollars for treatments that were not rendered and, were not medically necessary. In sum, they billed Medicare for approximately $40 million, of which Medicare paid about $12 million.

The role of Mr. Camacho according to court documents is that he was recruited by Messrs. Gonzalez and Rodriguez to be the nominee owner of one of the clinics and was listed on the clinic’s bank accounts. Mr. Camacho admitted to writing checks and purchasing boats and luxury automobiles as directed by Messrs. Gonzalez and Rodriguez to launder the proceeds of the Medicare fraud. Mr. Camacho admitted that he was involved in laundering more than $1 million from the clinic.

Manuel Camacho plead guilty to one count of money laundering conspiracy and received the lightest sentence. He was sentenced to 18 months’ imprisonment, to be followed by two years of supervised release. His lighter sentence reflects his role as having been recruited to be the nominal owner. In addition, based on the fact that he was sentenced last, it appears he also cooperated with the government against the other two men charged.

Roberto Rodriguez plead guilty to one count of conspiracy to commit mail fraud and was sentenced on November 3, 2009 to 102 months’ imprisonment, to be followed by 3 years of supervised release, and was ordered to pay restitution of $9,555,269.

Alejandro Gonzalez plead guilty to one count of conspiracy to commit mail fraud and was sentenced on October 1, 2009 to 96 months’ imprisonment, to be followed by 3 years of supervised release, and was ordered to pay restitution of $11,935,761.76.

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

Any questions or comments should be directed to: tgreen@greenassoc.com or aschneider@greenassoc.com. Tracy Green is a principal and Ann Schneider is a senior associate at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is: http://www.greenassoc.com/

Ventura County Employer Is Charged Criminally For Not Having Workers' Compensation Insurance

A recent Ventura County District Attorney's case shows a new willingness to prosecute employers criminally for not having workers' compensation insurance. On November 6, 2009, Edward Anthony Cortez of Lompoc, California was arraigned in Ventura County Superior Court on a misdemeanor criminal charge of violating California Labor Code section 3700.5 which is operating a business without obtaining workers' compensation insurance.

A criminal complaint is only an accusation is not evidence of guilt. Mr. Cortez is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Mr. Cortez is the operator and principal owner of TC Construction Company, a construction company headquartered in Lompoc, California , and doing business in Ventura County. Not surprisingly, this case arose out of a bad factual situation. The complaint arises out of a March 30, 2009, incident when a construction worker hired by Mr. Cortez was injured at a job site in Santa Paula. The injured employee fell about 15 feet and broke his back.

The state becomes involved in these cases since injured employees who work for uninsured employers are forced to seek compensation for their injuries from a program funded by taxpayers known as the Uninsured Employers Benefit Trust Fund. This program is administered by the California Department of Industrial Relations.

An investigation was conducted by the Contractors State License Board and the Ventura County District Attorney's Office Bureau of Investigation. Ventura County District Attorney's Office has a special Workers Compensation Fraud which Unit filed the criminal complaint against Mr. Cortez on or about October 16, 2009.

Labor Code §3700.5 is a misdemeanor and the punishment can include imprisonment in county jail for up to a year and/or a fee up to $10,000.00 for knowingly being uninsured for workers' compensation insurance.

Attorney Commentary: I forecast greater prosecution of these regulatory cases as crimes where state budgets are constrained and there are special prosecution units in the county District Attorney's Offices. In addition, in economically difficult times, employees will be more likely to file workers' compensation claims. We frequently see employees who were paid under the table file claims much to the employers' surprise and chagrin. Employers are being targeted by insurers and the government for premium fraud (underreporting payroll or misclassifying employees) and for not having workers' compensation insurance. Now is the time for employers to comply with the law.

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com or aschneider@greenassoc.com. Tracy Green is a principal and Ann Schneider is a senior associate at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have handled numerous workers' compensation fraud cases representing individuals, businesses, medical providers and attorneys. The firm website is http://www.greenassoc.com/