Last week there were a number of large health care fraud indictments across the country. These indictments come at a time when the Obama administration is devoting more resources to prosecuting and preventing Medicare fraud as his administration is working with Congress on expanding government healthcare coverage for uninsured Americans.
On June 26, 2009, in the Southern District of Florida, eight residents of Miami-Dade County, Florida were indicted in connection with the operation of two home health agencies ABC Home Health Care, Inc. (ABC) and Florida Home Health Care Providers Inc. (Florida Home Health) which catered to Medicare beneficiaries. The owners and operators of the home health agencies were charged. In addition, the biller for both businesses and a medical assistant who allegedly falsified blood tests were charged. In this case, the beneficiaries were also alleged to have participated in the fraud although no beneficiaries were charged.
Gladys Zambrana, Javier Zambrana, Enrique Perez, Alejandro Hernandez Quiros (aka Alex Hernandez), Vanessa Estrada, Vicenta Tellechea, Modesto Hidalgo, and Carlos Castaneda were charged in the indictment with conspiracy to commit health care fraud (18 U.S.C. § 1349). Gladys Zambrana was also charged with four counts of health care fraud (18 U.S.C. § 1349). Gladys Zambrana and Hernandez Quiros were charged with three counts each of paying health care kickbacks, while Perez, Hidalgo, and Tellechea were charged with one count each of paying health care kickbacks (42 U.S.C. §1320a-7b(b)(2). Gladys Zambrana, Perez, Alejandro Quiros, Tellechea, and Castaneda were also charged with conspiracy to launder health care fraud proceeds (18 U.S.C. §1956(h)).
A copy of the criminal indictment has been posted by the Miami Herald:
http://media.miamiherald.com/smedia/2009/06/26/17/fraud.medicare.abc.indictment1.source.prod_affiliate.56.pdf
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
According to the indictment, Gladys Zambrana, Enrique Perez, and Hernandez Quiros were the “true owners” and operators of ABC, while Javier Zambrana was listed on the application and paperwork as the owner. Gladys Zambrana and Carlos Castaneda were the “true owners” and operators Florida Home Health, while Vicenta Tellechea (the mother of Carlos Castaneda) was listed on the application and paperwork as the owner.
The indictment alleges that at both agencies, cash kickbacks were paid to recruited Medicare beneficiaries in exchange for having them sign documents indicating that they had received the home health benefits when, in fact, the services were not provided and were not medically necessary. Ms. Hidalgo was charged with falsifying blood tests to make the billings for diabetic insulin injections and other services appear necessary.
The indictment alleges that ABC billed more than $17 million to the Medicare program for services provided from January 2006 through December 2008 that were allegedly medically unnecessary and were not actually provided. During that time frame, Medicare paid ABC approximately $11 million on those claims with $8.8 million of those paid claims were for alleged diabetic beneficiaries.
The indictment also alleges that from October 2007 through March 2009, Florida Home Health billed more than $5 million to the Medicare program for services that were medically unnecessary and not actually provided. During that time frame, Medicare paid approximately $4 million on those claims which were mostly for alleged diabetic beneficiaries.
The charge of conspiracy to commit health care fraud carries a potential maximum prison sentence of 10 years. Each charged count of health care fraud carries a potential maximum prison sentence of 10 years and each count of paying health care kickbacks carries a maximum prison sentence of five years. Conspiracy to launder health care fraud proceeds carries a potential maximum prison sentence of 10 years per count. However, any sentences would be imposed by the court (the assigned United States District) only after consideration of any trial or the plea agreement, the U.S. Sentencing Guidelines, and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Concurrent Civil Case
In conjunction with the criminal case, on June 24, 2009, the U.S. Attorney’s Office filed a civil complaint for injunctive relief under the fraud injunction statute and obtained a temporary restraining order freezing the assets of ABC, Florida Home Health, Gladys Zambrana, Javier Zambrana, Perez, Hernandez Quiros, Castaneda, and Tellechea. In addition, that temporary restraining order also freezes certain financial assets of four other companies the defendants owned or controlled and allegedly used to launder money allegedly fraudulently obtained from Medicare. The temporary restraining order is intended to preserve the remaining proceeds of the alleged fraud for recovery by the United States as part of the criminal case and any related civil proceedings.
Attorney Comments: This case raises several issues that tend not to be directly addressed by the U.S. Attorney’s Office or the press. First, in large cities such as Miami, Los Angeles and New York that have large low-income ethnic communities, these types of alleged health care fraud issues where the beneficiaries are participating with the providers are more common. Not only do these communities have serious health issues which allow the alleged fraud and abuse to foster but the language and ethnic commonalities between the providers and beneficiaries can create the potential for fraud and abuse. For example, this particular case involved the Cuban community where beneficiaries agreed to sell their Medicare card for a cash kickback.
Second, these fraud cases are causing serious problems for those in these communities who need medical services since some of the older beneficiaries will sell their Medicare card and ultimately may be designated as an "overutilized beneficiary" for whom services will not be paid. Further, when honest providers serve these these ethnic communities, those providers will be subject to great scrutiny and frequent audits due to the fraud and abuse issues in these communities. Honest and skilled providers who would like to serve the communities are finding the constant audits, the demands for overpayment for services provided and the treatment by the CMS contractors to be unacceptable. Thus, the honest and skilled providers are being driven out which will leave those who are either not as skilled or engaging in fraud and abuse. This is particularly true with board certified specialists.
Third, Medicare and Medicaid needs to educate these patients about the risks of taking cash kickbacks and allowing providers to bill for unnecessary services. Currently, the beneficiaries are not being penalized (except to the extent they are designated as an over-utilized beneficiary). There should be a global strategy in place for reaching out to these ethnic communities and educating them as to the problems in participating in any fraud or abuse. Namely, there will be less money in the system for those who really need it.
Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and 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.
