Saturday, July 11, 2009

Medi-Cal Fraud Indictment Names 42 Persons Who Worked At Two Related Companies Using Unlicensed Nurses For Home Health Care

On June 25, 2009, a 41-count indictment was returned in the Central District of California and charged 42 defendants with conspiracy to commit health care fraud relating to allegedly using unlicensed individuals to provide in-home health care to disabled patients, many of them children with cerebral palsy or developmental disabilities.

It is alleged that these services were billed to Medi-Cal as if licensed nurses performed the services. The total billings at issue amount to $4.6 million. On July 9, 2009, approximately 20 of the defendants were arrested.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

The indictment is part of a joint state and federal investigation called “Operation License Integrity” that related to the operation of two related Santa Fe Springs-based companies: Medcare Plus Home Health Providers and one of its subsidiaries Medcare Excel Plus Home Health Services.

There have already been two prior federal criminal cases that involved the owner of these entities and a key assistant. Last year, Priscilla Villabroza, a registered nurse who ran Medcare Plus Home Health Providers, pleaded guilty in federal court last year to five counts of health care fraud. Ms. Villabroza has yet to be sentenced and is most likely cooperating in the new case.

In a separate federal health care fraud case, Susan Bendigo, who was a registered nurse and allegedly a key assistant to Ms. Villabroza, was indicted and fled the country. Government officials believe that she has fled to the Philippines. Both Ms. Villabroza and Ms. Bendigo are originally from the Philippines.

According to court documents, Villabroza and others hired unlicensed individuals to provide care to disabled Medi-Cal patients at home and in school, many of whom were children and young adults served under a program called Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Supplemental Services. None of the children are alleged to have suffered any injuries from these services.

The indictment alleges that from August 2004 through the end of 2007, Villabroza and others hired unlicensed individuals at the rate of $8 to $12 per hour to provide services to the disabled Medi-Cal patients and billed Medi-Cal as if they were licensed vocational nurses (LVNs). Some of the unlicensed individuals allegedly had foreign training, but never passed a nursing exam here. Some of them allegedly had no medical training at all.

It is alleged that the identities of actual licensed nurses were unlawfully appropriated by using the license of former workers of the registry or by placing ads in Craigslist and seeking resumes at job fairs. The home health agency then indicated in the health care records and billing that the work was perform by licensed individuals using the misappropriated license numbers.

The unlicensed nurse defendants visited the patients at home and at school and provided nursing services that included administering medications, adjusting ventilators, and feeding through gastronomy tubes. Some parents and patients reported to authorities that the “nurses” lacked basic skills.

Villabroza, Bendigo and supervisors involved in the scheme allegedly directed the unlicensed nurse defendants to lie about their licensing and qualifications by telling the parents or guardians of the disabled Medi-Cal beneficiaries that they were LVNs, according to the indictment. The unlicensed nurse defendants falsely presented themselves as professionals, concealed their unlicensed status from the parents or guardians of the disabled Medi-Cal beneficiaries, and in some cases affirmatively misrepresented themselves as LVNs.

Attorney Commentary: This new indictment has been claimed by the U.S. Attorney’s Office to be "the largest Medi-Cal fraud case ever filed in the State of California." Health care fraud cases are starting to sound like drug cases where each new indictment is the largest ever.

This claim appears to contain some hyperbole since the defendants are supervisors and workers from the same two entities. There are 42 defendants but many of them are low-level individuals who were probably earning only $8 to $12 an hour and were used by the company and were probably desperate for a job. All these defendants appear to be Filipina women. In years past, these lower-level individuals would probably not have been charged but would have been treated as victims who were being used. However, in this case it appears that the owner/operator plead first and now the case against all the others proceeds.

There is some logic to tagging these defendants with felonies so that none of these people can work in the health care field again where it is proven that they knew they were required to be licensed and were misrepresenting themselves to patients and to Medi-Cal. However, a federal felony can adversely affect their lives for many years and for almost off of them it is certainly their first contact with the criminal justice system. Unlike a state charge which can be expunged, these federal felony charges can have a devastating impact on the individuals' ability to obtain any future employment.

We urge the prosecutors to use their discretion to ensure that only those who are knowingly engaging in fraud are charged. We further would like the government to educate licensed personnel (especially those in the ethnic communities) about the rules and consequences of engaging in any fraudulent conduct or working for those who may be engaging in fraudulent conduct.

For law abiding providers, does this case hold any lessons? It is still important to remember that it is important to be careful about which services can be billed as "incident to" physician services and what services require a licensed physician professional. We have handled many audits where there were issues of unlicensed personnel providing the services. For example, we have handled cases where physical therapy was billed but unlicensed medical assistants provided the services. Or we have seen cases where the medical assistant has started an IV, given a shot or written in the chart and the physician has later co-signed the chart. There are many more examples and it especially occurs where the medical assistant was a physician or a nurse in a foreign country before moving to the U.S.

In prior years, these types of cases may have simply gone administrative with an audit and a demand for overpayment where the services were provided. However, providers need to be vigilant that there is no pattern of having unlicensed personnel provide services that can only be provided by licensed personnel.

Any questions or comments should be directed to: 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. They have a specialty in representing licensed health care providers. Their website is:


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