Tuesday, March 16, 2010

Los Angeles Jury Convicts Fresno Patient Recruiter of Medicare Fraud Involving Power Wheelchairs


On Friday, February 26, 2010, a federal jury in Los Angeles found Maria Nela Moreno of Fresno guilty of conspiracy to commit health care fraud and six counts of health care fraud. The jury found that she committed Medicare fraud by recruiting patients for the purpose of receiving unnecessary power wheelchairs.

U.S. District Court Judge John F. Walter presided over the case. Sentencing is scheduled for May 10 before Judge Walter. Ms. Moreno faces a maximum penalty of 10 years in prison and a $250,000 fine for each count of conspiracy and health care fraud for which she was convicted.

This case is a lesson in itself of how Medicare fraud occurs at every level -- from the recruitment of patients, to examination of patients, to purchasing prescriptions (or certificates of medical necessity) of power wheelchairs and how the patients are involved.

Factual Background Presented At Trial

Patient Recruiting. The evidence introduced at trial showed that Ms. Moreno allegedly solicited Medicare beneficiaries (patients) by meeting with groups of seniors and going door-to-door at low-income, senior living communities in Sanger and Parlier, California, near Fresno. The government claimed that Ms. Moreno recruited beneficiaries to receive expensive, high-end power wheelchairs that the beneficiaries did not need. Several beneficiaries testified that Ms. Moreno wore a badge with her picture on it that appeared to resemble a hospital identification badge.

According to the beneficiaries who testified at trial, Ms. Moreno "tricked them" into giving her their identification cards and Medicare insurance numbers by telling the beneficiaries that they should take a power wheelchair because Medicare would soon run out of money, and the beneficiaries would not be able to get a chair if the beneficiaries were to need them in the future. Ms. Moreno allegedly copied the beneficiaries' identification cards and Medicare insurance numbers with the portable scanner she carried with her.

Thus, the patients are in on the fraud even though they were not prosecuted in this case. The "trick" was simply to get them to ask for a wheelchair in advance when they did not need it.

The patient recruitment is targeted at senior communities offering "free" wheelchairs to Medicare beneficiaries. We all see this on late night TV commercials but this was more extreme. Sometimes, handouts such as free grocery store gift cards are provided to Medicare beneficiaries to "sweeten the deal."

If Medicare wants to stop these frauds from happening - they need to educate patients that it is fraud if they accept gifts for unnecessary medical services or equipment and that they can lose their benefits. Usually it is the low-income elderly (especially in the immigrant non-English speaking communities) that are targeted and for them an extra $25 or $50 is enough of an incentive.

Involvement of medical clinics. Usually one of the defenses available to the DME (durable medical equipment company) is that they received a valid prescription or order form from the medical clinic and that they cannot refuse to fill a valid physician order which states that there is medical necessity. Usually the medical clinics have a manager or employee complete the physician order and use a stamp or forge the physician's name. In this case, a couple of physician's testified that their identity was used for these wheelchair orders/prescriptions.

However, in this case, this potential defense was made more difficult when witnesses testified at trial that they took the beneficiary information they received from Ms. Moreno to a fraudulent medical clinic in Los Angeles, which then used the information to create bogus prescriptions.

Why would the medical clinics write prescriptions where there was no medical necessity? Usually it would be for money or for the referral of patients.

Black market for wheelchair prescriptions. DME companies are buying prescriptions. In Ms. Moreno's trial, witnesses testified that they purchased the fraudulent power wheelchair prescriptions and medical documents from the medical clinic. These witnesses were an intermediary between the clinics and the DMEs. Usually, the "purchase" of Medicare cards is not made by licensed doctors but by unlicensed, non-physician managers or secret owners or investors.

The witnesses testified that they then sold the prescriptions for more than $1,000 per prescription to DME supply companies in and around Los Angeles. These individuals do not have Medicare provider numbers or licenses. Even if these prescriptions for wheelchairs were needed and the wheelchairs are delivered to the patients -- the sale of the prescription would turn this into a false claim.

Lack of medical necessity. Ms. Moreno's defense was made more difficult when witnesses testified that at the Elderberry Apartments in Sanger -- one of the locations where Ms. Moreno and people who worked with her recruited beneficiaries to receive power wheelchairs -- many residents left the wheelchairs unused. This is evidence that there was no medical necessity.

In these type of cases, the DME delivers the power wheelchairs to patients. Often times, a photo is taken to document the fact that a power wheelchair was actually delivered to a Medicare beneficiary. However, if there is no medical necessity the fact that the wheelchair was delivered to the beneficiary will not be a sufficient defense.

How did Ms. Moreno get paid? The government contended that Ms. Moreno was paid a kickback for each power wheelchair that the DME companies were able to bill Medicare using the beneficiary information Ms. Moreno obtained and provided to the medical clinics .

One of the DME supply companies that billed Medicare using the identities of Ms. Moreno's recruits was Cooper Medical Supply of Canoga Park, California. Trial evidence was introduced contending that between January 2006 and September 2009, Cooper Medical Supply submitted approximately $828,835 in false and fraudulent claims to Medicare, almost all of which were for power wheelchairs.

Trial evidence was also introduced indicating that additional DME companies across southern California also purchased prescriptions that were from the beneficiaries recruited by Ms. Mareno. Cooper Medical Supply's owner, Ajibola Sadiqr, previously pleaded guilty to Medicare fraud and appears to have been cooperating with the government. Mr. Sadiqr's sentencing is currently scheduled for April 12, 2010.

Overbilling or Markup Medicare. The government contended that each of the power wheelchairs could be purchased for less than $1,000 wholesale and each sale resulted in approximately $6,000 in false claims to Medicare. Even if this was not used as grounds for charging Ms. Moreno, the fact helped the government show how the DME company had the extra money to pay referral fees for prescriptions.

In sum, at every level, all the players get a piece of the action. Those involved in these types of power wheelchair businesses often feel confident that there is no fraud since there is a prescription signed by a doctor and the wheelchair is actually delivered to a live elderly Medicare patient. They believe that there is "plausible deniability" because a wheelchair was actually delivered to the Medicare beneficiary. As we can see from the case of Ms. Moreno, the jury did not believe her defense and found there was proof beyond a reasonable doubt that she was involved in this conspiracy to defraud Medicare.

Posted by Tracy Green, Esq.
Any questions or comments should be directed to Tracy Green at tgreen@greenassoc.com.

The firm focuses its 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 and unlicensed individuals in insurance and health care fraud related matters in California and in other states, including New York and Florida. Their website is: http://www.greenassoc.com/

Thursday, March 4, 2010

L.A. Times Article On Lap Band Surgery Centers: What Other Legal & Consumer Issues Are Raised Here?


The Los Angeles Times has recently run two articles on TopSurgeons, its recent regulatory issues and the limited jurisdiction that the State of California has over freestanding ambulatory surgery centers. Free-standing surgical centers owned by a physician are exempt from licensing by the Department of Public Health.

Here is a link to the March 4, 2010 article (which links to the writer Michael Hiltzik's prior article):

Lap-band promoters' troubled history - latimes.com
(photo is from the L.A. Times article)

The L.A. Times article is trying to protect the consumer which I applaud. However, I question whether the writer understands the business well enough to give advice to the consumer or State on what needs to be done to better regulate free-standing surgery centers or companies such as TopSurgeons.

I think the real issue here is that a company is advertising aggressively directly to consumers for lap-band surgeries. The company then refers those potential lap-band patients to physicians who, in turn, perform the surgeries in centers which may be owned or affiliated with the referring company. This is what I see as the real crux of the issue - even in terms of better protecting the consumer. The surgery center accreditation is the tip of the iceberg.

So if I drive by and call the 1-800 number, is a doctor employed by TopSurgeons going to perform the surgery? No, not to my understanding. TopSurgeons is going to "refer" the case to a physician who will meet with the patient and evaluate whether he or she is a candidate and then this physician performs the surgery. This physician is under the jurisdiction of the Medical Board by the way.

Then usually other big issues will be:

(1) Who provides the financing for the patients who want these surgeries?
(2) What is the business relationship between the physician who performs the surgery and TopSurgeons?
(3) How does the surgeon decide which surgery center to use? and
(4) What is the business relationship between the referring agency TopSurgeons and the surgery center?

The purpose of laws prohibiting referral fees is to ensure that patients are referred to the best place or physician and not because someone has a business relationship with the referring business. Who do I want to be referred to? Best lap-band surgeon in L.A. or a second-rate or poorly trained one that pays fees to a company that advertises on billboards and the Internet.

Now if the best lap-band surgeons are paying for advertising - that's great but that is what the consumer needs to know. Some consumers assume that all physicians are created equal. It's like any other profession in that some are more experienced than others. Bariatric surgery is a real specialty.

What does TopSurgeons do? According to TopSurgeon's website says "TopSurgeons is a premier referral provider of surgical services on the west coast." Thus, it appears that TopSurgeons people (such as Dr. Omidi) are not performing the surgeries. They are referring the business to physicians. Now there could be an issue of whether they are in compliance with the Business & Professions Code on referrals and how those referrals are paid. In addition, they may be referring the business to physicians with the understanding that those surgeries are to be performed in TopSurgeons' centers.

The article conceded that "Robert Silverman, an attorney representing the Omidis, points out that his clients "have no involvement in the performance of weight loss surgeries themselves." However, the article does not explain what role TopSurgeons has perhaps because that information was not provided to the writer.

It is important for patients to know who owns and operates a surgery center (since those fees often greatly exceed the surgeon's operating fees). In other words, surgery centers can be where the real money is made in health care.

It is critical for patients to know whether the surgery center has its accreditation. It appears that the present surgery center referenced in the article is certified by the Joint Commission.

It is critical for patients to know who will be the anesthesiologist and what the plan is if there is a complication that requires hospitalization.

It is also important for the patient to know the physician and how he or she decides which surgery center to select. Is the surgeon picking the best free-standing surgery center? Or is the physician selecting a surgery center that refers him or her the surgeries?

For the record, I have no involvement with TopSurgeon or anyone affiliated with it and have never represented them.

If you want real protection for the consumer -- understanding the facts is important. The article gives some of the facts but does not appear to understand how the business is run. The article discusses "the people behind TopSurgeons" who according to the article "are the Omidi brothers -- Julian, whose medical license was revoked in 2009, and Michael, who was placed on three years' probation for gross negligence in 2008, according to the Medical Board of California." However, neither of those men are performing surgeries.

The article claims that "TopSurgeons attracts customers in part by pitching the lap-band to people who, according to conventional medical guidelines, shouldn't need major surgery to shed weight." The article does not mention that a physician will have to make a determination whether the patient meets the medical criteria for having lap-band surgery. This would not be up to the Omidis or TopSurgeon but to the physician performing the surgery.

For health care providers, they need to ensure that their referral arrangements with surgery centers and companies that advertise (on the Internet and elsewhere) comply with California laws prohibiting the giving of any consideration (money or other things of value) for the referral of a patient. See, for example, California Business and Profession Code Section 650.

Remember as well that payment for advertising is different than payment for referrals but legal advice is needed to determine where the line is between advertising and referral fees. By the way, the District Attorney's Office and Attorney General's Office have jurisdiction over everyone (physician or not) since violation of such laws is a misdemeanor or felony.

Should you have any questions regarding your own situation or this post, you can email physician attorney Tracy Green at tgreen@greenassoc.com. Green and Associates is located in downtown Los Angeles, California and focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers. Ms. Green is a member of the Board of Directors of the California Naturopathic Doctors Association. The firm website is: http://www.greenassoc.com/


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Monday, March 1, 2010

Miami Resident Sentenced to 22 Years' Imprisonment for Healthcare Fraud & Codefendants Sentenced To Lengthy Terms | Legal and Regulatory


Becker's Hospital Review has an article about a recent Miami health care fraud case which resulted in one of the lengthiest sentences I've seen handed out in this type of case. This multi-defendant case involved numerous states and different kinds of health care frauds including Medicare-HIV infusion (i.e., the insertion of a needle into a patient's vein), stolen identities, and fraudulent billing to Medicare Advantage Program in 29 states.

The article can be found at the following link:
Miami Resident Sentenced to 22 Years' Imprisonment for Healthcare Fraud | Legal and Regulatory

The article summarizes the case in which on January 27, 2010 lead defendant Michel De Jesus Huarte was sentenced to 264 months' incarceration for various offenses including conspiracy to commit Medicare fraud, conspiracy to commit money laundering, and aggravated identity theft.

For their respective roles in two fraud schemes, the other co-defendants' sentences were: (1) Alyd Dazza - 179 months' imprisonment, (2) Ricco Dazza - 115 months' imprisonment, (3) Monika Blacio - 78 months' imprisonment, (4) Dayron Porrata - 84 months' imprisonment, (5) Wally Proenza - 17 months' imprisonment, and (6) Vicente Gonzalez - awaiting sentencing.

Medicare HIV-Infusion Fraud Scheme

The first conspiracy alleged that Mr. Huarte and other conspirators operated and controlled 6 purported medical clinics in Miami Dade County. According to the Indictment, these clinics submitted at least $50.2 million in false and fraudulent claims to Medicare for infusion therapy, injection therapy, and other expensive medical treatments designed treat Medicare beneficiaries suffering from a wide variety of ailments including cancer, HIV, AIDS, chronic pain, and varicose veins. Based on these fraudulent claims, Mr. Huarte and his conspirators were paid at least $19.2 million.

To conceal their involvement in the scheme, Mr. Huarte and his conspirators allegedly recruited nominee or “straw” owners for each company, and paid them large sums of cash to sign the corporate records, bank records, and other business documents.

The six purported clinics involved in the fraud were: Zigma Medical Care, Inc., Tender Loving Care Medical Center, Inc, Professional Medical Health, Inc., Metro Med Care, Inc., San Diego Medical & Rehab Center, Inc., and Eulogia's Diagnostic Medical Center, Inc.

Multistate Medicare Advantage Fraud Scheme

Mr. Huarte was involved in a second Medicare fraud conspiracy along with co-defendants Alyd Dazza, Ricco Dazza, Monika Blacio, and Dayron Porrata. In the second conspiracy, Mr. Huarte and his conspirators expanded the Medicare fraud scheme by opening 29 medical clinics in Florida, Georgia, Louisiana, North Carolina, and South Carolina. Many of the clinics were allegedly simply P.O. Boxes, or empty, abandoned storefronts.

These medical clinics collectively submitted approximately $55.5 million in alleged false and fraudulent claims to various private insurance companies that offered coverage to Medicare beneficiaries through Medicare Advantage programs. Based on these false and fraudulent claims, the Medicare Advantage programs claimed they paid approximately $14.6 million dollars to the "sham" clinics. A substantial portion of the billings were for expensive cancer and HIV medications that are often administered via infusion treatments.

This case reveals how the black market in Medicare and Medi-Cal cards works. According to court documents, defendant Wally Proenza stole and sold the identities of 718 Medicare beneficiaries living in at least five (5) states. Mr. Proenza allegedly stole the identities from his employer where he had access to personal identifying data of millions of Medicare beneficiaries. Mr. Proenza then sold the identifications to co-defendant Dayron Porrata.

Mr. Porrata then transferred the identifications to other conspirators, including Mr. Huarte, who used the Medicare beneficiaries identifications to submit false and fraudulent claims through the twenty-nine (29) sham clinics located in Florida, Georgia, Louisiana, North Carolina, and South Carolina.

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.

Any questions or comments should be directed to experienced health care fraud attorney Tracy Green at 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 health care providers in compliance, Medicare fraud, Medi-Cal fraud, and health care fraud related matters. Their website is: http://www.greenassoc.com/

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