Los Angeles Patient Recruiter For L.A. Medical Clinics And DMEs Sentenced To 21 Months In Federal Prison By Judge Walter: Lesson On Due Diligence In Hiring Marketers For Your Practice

A recent federal heath care fraud case alerts clinics as to how some marketers could be recruiting patients by paying those patients to go to clinics or receive DME. Before any marketer is hired, it is critical that the marketing methods be known. If a marketer pays for a patient to go to a clinic, all billing by that clinic to Medicare could be deemed a false claim. Physicians and medical providers cannot hide behind the marketer any longer and due diligence is required by the provider hiring the marketing company or individual.

In this case, James Roland Fuquay, 49, a patient recruiter who sold the personal information of Medicare beneficiaries from San Diego and Los Angeles to Los Angeles medical clinics and durable medical equipment (DME) companies was sentenced on October 26, 2010 to 21 months in prison  by U.S. District Judge John F. Walter of the Central District of California. Mr. Fuquay was also ordered to pay $556,815 in restitution and serve three years of supervised release following his prison term.

The sentence follows Mr. Fuquay's guilty plea over a year ago (May 11, 2009) to conspiracy to commit health care fraud. According to court documents, Mr. Fuquay was a patient recruiter known as the “Red, White, and Blue Man,” which is a reference to the colors on a Medicare card. Mr. Fuquay admitted to  recruiting Medicare beneficiaries from homeless shelters in San Diego and Los Angeles using the sales pitch, “Red, white, and blue. Let’s make it do what it do.”

Mr. Fuquay then paid the beneficiaries to go with him to fraudulent medical clinics and DME supply companies to receive medical services, power wheelchairs, hospital beds and other medical equipment the beneficiaries did not want, need or receive. Mr. Fuquay’s network of Medicare beneficiaries and fraudulent DME supply companies was large enough for him to make approximately $220,000 in illegal recruiter fees.

According to court documents, one of the fraudulent DME supply companies that paid Mr. Fuquay to recruit beneficiaries was Airport Medical Supply, whose owner, Eli Gichon, pleaded guilty on Sept. 1, 2010, to health care fraud and tax charges. According to court documents, Airport Medical Supply operated out of a dry cleaning business where Gichon directed Mr. Fuquay and others to bring beneficiaries so that Gichon could take pictures of them sitting in power wheelchairs or standing next to empty hospital bed boxes. Gichon used these pictures to try to fraudulently prove to Medicare inspectors that he had in fact provided the beneficiaries with power wheelchairs and hospital beds. Gichon’s sentencing is scheduled for Jan. 10, 2011.

Posted by Tracy Green, Esq.
Green and Associates, www.greenassoc.com
Phone: 213-233-2260
Email: tgreen@greensasoc.com

Mental Health Community Clinic & Its Owners/Managers Indicted In Miami For Paying Kickbacks To Assisted Living Facilities & Halfway Houses And For Admitting Ineligible Patients To Partial Hospitalization Programs

On October 21, 2010, the Departments of Justice and Health and Human Services (HHS) announced that two Miami health care companies who provide mental health care services and four owners and senior managers of the companies were indicted in the Southern District of Florida.

At the time the indictment was unsealed, a related civil action was unsealed and a temporary restraining order was obtained to freeze the assets of the indicted companies and individuals. It is becoming more common for criminal indictments to be accompanied by civil actions to seize the assets of Medicare providers and their owners and managers. The government is concerned about recovering restitution for the Medicare program.

A 13-count indictment unsealed in U.S. District Court charges American Therapeutic Corporation (ATC) and Medlink Professional Management Group Inc. (Medlink), as well as Lawrence S. Duran, Marianella Valera, Judith Negron and Margarita Acevedo, aka Margarita De La Cruz, with one count of conspiracy to commit health care fraud.

Please note: An indictment contains allegations that a defendant has commtited a crime. Every defendant is presumed innocent until and unless proven guilty. 

ATC, Mr. Duran and Ms. Valera were also charged with 11 counts of health care fraud. ATC, Mr. Duran, Ms. Valera and Ms. Acevedo are charged with one count of conspiracy to defraud the United States, to receive health care kickbacks and to pay health care kickbacks. The individuals were all arrested in Miami and federal agents served search warrants at six ATC and Medlink locations on the date of the arrests.

The government argued at the detention hearing that Mr. Duran and Ms.Valera are romantically involved and that they should be held in custody pending trial on the ground that they are a flight risk. The government pointed to their international travels and alleged expensive lifestyle including luxury cars and other goods allegedly purchased with proceeds from the companies.

In a separate action, a civil complaint for injunctive relief was unsealed and a temporary restraining order was obtained to freeze the assets of Mr. Duran, Ms. Valera, Ms. Negron, Ms. Acevedo, ATC and Medlink. This will likely make it difficult for the individuals and corporations to use their assets to defend themselves and retain private counsel although there are ways in which counsel can move the court and the U.S. Attorney's Office for funds for their criminal defense.

According to the criminal and civil court documents, it is alleged that there was a scheme to defraud the Medicare program by submitting false claims for mental health services administered at ATC facilities that were medically unnecessary or were not provided. ATC, headquartered in Miami, operated purported partial hospitalization programs (PHPs) in seven different locations throughout Florida, from Homestead to Orlando. A PHP is a form of intensive treatment for mental illness.

Court documents allege that Mr. Duran, Ms. Valera, Ms. Acevedo and ATC paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses in exchange for the ALFs and halfway houses delivering patients from their facilities to ATC. According to the indictment, in many instances, the patients received a portion of the kickbacks from the owners and operators of the ALFs and halfway houses.

ATC allegedly billed Medicare for services purportedly provided to these recruited patients. According the indictment, the services were not medically necessary or were not provided at all. According to the civil complaint, ATC routinely admitted patients to the PHP program who suffered from Alzheimer’s and severe dementia and therefore were not eligible for the PHP program because their mental capacity did not allow them to benefit from group therapy.

Court documents allege that patient charts and notes from therapy sessions were routinely altered at ATC in order to make it appear that the patients being treated at ATC qualified for PHP treatments when, in fact, they did not. According to the indictment, Mr. Duran and Ms. Valera allegedly instructed employees and doctors at ATC to alter diagnoses and medication types and levels to falsely make it appear that the patients qualified for PHP treatments. Court documents also allege that Ms. Valera manipulated the length of patients’ stays in order to maximize the number of days Medicare would pay for the PHP services.

The civil complaint and temporary restraining order also name American Sleep Institute Inc. (ASI) and D and V Development Inc., as participants in the health care fraud. Civil court documents allege that ASI was owned and operated by Ms. Valera and Mr. Duran and that ASI submitted false claims to the Medicare program for sleep studies. According to the civil complaint, D and V Development was owned and operated by Ms. Valera and Mr. Duran and was established in an effort to divert funds received by ATC and ASI.

Attorney Commentary: We can expect to see an increase in the number of health care fraud indictments filed in the various federal districts in the U.S. Significant resources are being expended and these cases are a priority in the Justice Department. This case does not mention the fact that the individual defendants are of Cuban heritage but in Miami a number of the health care fraud cases filed have involved those of Cuban ethnicity. In each of the major U.S. cities, Medicare fraud is more preeminent among the ethnic communities. The allegations in this particular case also allege that the patients received kickbacks. In order to combat the fraud, the patients need to be educated and face some consequences if they allow their Medicare card to be used for fraud or agree to receive payment for medical services.

The alteration of patient record allegations are important in that such evidence is used to show "criminal intent" in that the defendants "knew" that there was no medical necessity and ordered the charts to be altered in order to establish the need and basis for payment. The owners of the clinic would normally be expected to argue that the doctors saw the patients and determined medical necessity. If there is credible evidence of ordering doctors and other staff to alter the charts, this could effect this particular defense.  

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.

Any questions or comments  should be directed to Tracy Green, a very experienced California health care and Medicare fraud attorney 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 in health care fraud related matters in California and throughout the country. Their website is: http://www.greenassoc.com/

Attorney Tracy Green Quoted By San Diego Union-Tribune On Medical Board Investigation Of Doctor For San Diego Chargers

Attorney Tracy Green was quoted in a December 19, 2009 article in the San Diego Union-Tribune about the longtime doctor for the San Diego Chargers entitled "Complaint Filed Against Chargers Doctor." Ms. Green was interviewed about the Medical Board investigation into Dr. Chao. Ms. Green was quoted as follows:

“All the boards are on high alert because of the scrutiny that’s been placed on the nursing board,” said Tracy Green, an attorney with expertise representing professionals in health care. “They are getting alert to anything with drugs or alcohol or any convictions. The boards are being more aggressive than they used to be.”

Green is not involved in this case but said she doubted it would result in serious punishment. She said the board’s intent is to “look at it and see if he has an alcohol problem.”

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.

Operation “Diagnosis Dollars” -- 10 Individuals Indicted In Los Angeles & 28 Charged In New York Indictment - Allegations Of Medicare Fraud Where Services Never Provided At Phony Clinics & Armenian Organized Crime

L.A Times Photo

The Los Angeles Times and New York Times (44 Charged In Huge Medicare Fraud Scheme) reported on a number of federal criminal indictments in New York,  Los Angeles, New Mexico, Cleveland and Atlanta arising from an alleged scheme to defraud Medicare allegedly involving phony clinics, no patients (just Medicare cards), and physician identity theft. The above-referenced New York Times article has a copy of the Southern District New York Indictment embedded in it in which there were 28 defendants (including some from Los Angeles). The New York Indictment included RICO crime charges involving alleged Armenian organized crime. This nationwide investigation was called  Operation “Diagnosis Dollars.”

Three Los Angeles Indictments.  According to the indictments returned under seal by a federal grand jury in Los Angeles on October 7, the defendants (many of whom are related) played roles in the operation of at least eight fraudulent medical clinics and sought reimbursement from the Medicare health care benefit program for services that were never delivered to patients with coverage under that program, The defendants are also charged with laundering the money derived from the fraudulent scheme. In addition, 12 search warrants were executed in Los Angeles to seek evidence.

The Los Angeles indictments alleges crimes including Conspiracy to Commit Bank Fraud; Conspiracy to Launder Monetary Instruments; Money Laundering; Bank Fraud; Aggravated Identity Theft; and Criminal Forfeiture. The defendants charged in three separate Los Angeles indictments unsealed this morning are:
Pogos Satamyan, of Glendale
Vachagan Dishchian, 34, of Van Nuys
Vahe Dischian, 36, of Van Nuys
Andranik Satamyan, 20, of Glendale
Haroutyoun Dischian, 62, of Van Nuys
Nicolae Candu, 24 (not arrested or surrendered yet)
Vitalina Shcherbyak, 24 (not arrested or surrendered yet)
Nikolay Agishev, 24 (not arrested or surrendered yet)
Grisha Sayadyan, 59, of Glendale
Allen Sayadyan, 30, of Glendale

According to the main eight-defendant indictment, the scheme worked in the following way: individuals would obtain the stolen identities of physicians to enroll as providers in the Medicare program, which requires a medical doctor's name, Social Security number and date of birth. Using the stolen physician identities, applications to become providers were submitted applications to Medicare. The defendants would then open clinics by leasing office space or by renting a post office box. Other defendants would then open fraudulent bank accounts into which Medicare could transfer fraudulent claims. These bank accounts were opened in either the name of the physician whose identity had been stolen, a business, or in the name of a co-conspirator.

Once the application was approved and the Medicare provider account was opened, the defendants allegedly began to bill Medicare utilizing stolen beneficiary identifications. In reality, the Medicare beneficiaries were never seen or treated.

Medicare would then pay the fraudulent claims and transmit the funds directly into the fraudulent bank accounts. As the Medicare funds were received, they were withdrawn immediately and laundered. Some of the defendants laundered the funds by forging signatures of the alleged account holder, and then delivered the signed checks to a third party, who was actually a confidential informant working for the FBI. The confidential informant would then cash the checks and return the proceeds in cash to the defendants, less a fee.
Eight fraudulent clinics are specifically identified in the Los Angeles case, and investigators estimate the defendants submitted more than $17 million in fraudulent claims for which Medicare paid approximately $8 million.

Attorney Comments:  In my experience, one way that physician identities are obtained for fraudulent billing is through advertisements for physician employees at clinics. Physicians must be very careful not to place their physician number, UPIN number, Social Security number or other identifying information on blind resumes or CVs sent in response to advertisements.If physicians do not guard this information, the fraudulent use of their information for billing can cause huge problems with Medicare that can take years to unwind including overpayment demands, tax issues and related problems.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.

Any questions or comments  should be directed to Tracy Green, a very experienced Medicare fraud attorney  and health care fraud attorney 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 in health care fraud related matters in California and throughout the country. Their website is: http://www.greenassoc.com/

Attorney Tracy Green quoted in L.A. Times Article: "Medical workers in California were allowed to keep practicing despite failing drug, alcohol tests"

Attorney Tracy Green was quoted in the Los Angeles Times on October 8, 2010 regarding the errors by Maximus in administering drug and alcohol tests to nurses in California diversion program. The article can be found at:

Medical workers in California were allowed to keep practicing despite failing drug, alcohol tests - latimes.com

Los Angeles Medical Equipment Supplier Sentenced to 46 Months in Prison for Role in Billing Power Wheelchairs to Medicare

Another sentence has been imposed in the power wheelchair Medicare fraud cases. On October 4, 2010, Sylvester Ijewere, 49,  the owner and operator of Los Angeles durable medical equipment (DME) company Maydads Medical Supply, was sentenced to 46 months in prison by U.S. District Judge Dale S. Fischer of the Central District of California. Mr. Ijewere was also ordered to pay $211,755 in restitution. In addition, Mr. Ijewere was ordered to serve three years of supervised release following his prison term.

This sentence came after a guilty plea. Mr. Ijewere pleaded guilty on April 12, 2010, to health care fraud. Mr. Ijewere admitted that between June 2007 and October 2009, he conspired with others to purchase fraudulent prescriptions and medical documents which he used to submit false claims to Medicare for expensive, high-end power wheelchairs, and other DME.

Mr. Ijewere's company received approximately $4,000 in reimbursement payments for each power wheelchair claim he submitted to Medicare. Approximately 50 percent of the Medicare beneficiaries to whom Mr. Ijewere claimed Maydads had supplied power wheelchairs and other equipment lived more than 100 miles from Maydads’ Los Angeles-area offices in Central and Northern California. When patients are brought in from long distances it is a red flag to Medicare that there is patient marketing or fraudulent prescriptions. 

Mr. Ijewere admitted in his plea that he submitted or caused the submission of approximately $471,345 in false and fraudulent claims to Medicare through Maydads.

Mr. Ijewere’s alleged co-conspirator, Donna Wells, a patient recruiter, was charged for her role in the scheme in October 2009, and is scheduled to begin trial on November 9, 2010.

Attorney Comments:  In 1997, total billings to Medicare for power wheelchairs was $150 million. By 2003, this grew to $1.1 billion. The number has increased since 2003.  In addition, there was an OIG study indicating that sixty percent (60%) of all prescriptions for power wheelchairs did not meet documentation requirements imposed by Medicare. Many of the current federal and state investigations commence with documentation issues that are triggered when the physician who writes the prescription has seen the patient only one or two times and when the patient resides more than 30 miles from the DME or physician. 

In addition to documentation and medical necessity, there has been considerable concern raised about improper marketing of power wheelchairs. There were allegations that minority neighborhoods were targeted, using door-to-door solicitation, and that fully ambulatory older residents were offered kickbacks for participating and bounties for recruiting others. These individuals were then directed to specific physicians, some of whom also received kickbacks from the power wheelchair distributors. One factor contributing to the abuse was the large profit margin for suppliers of power wheelchairs. Medicare was paying more than $5,000 per power wheelchair claim in 2003, while the Veteran’s Administration paid closer to $3,000 per chair, which suggests that there was substantial profit in power wheelchairs reimbursed by Medicare.

The federal and state governments works on "projects."  The power wheelchair is a longstanding project by federal and state authorities. The first phase of prosecutions targeted those DMEs where wheelchairs were not delivered or where there was identity theft of Medicare beneficiaries. The second phase is for those DMEs where there was illegal marketing and a lack of medical necessity. I expect to see more prosecutions in the Central District of California over the next two years.

Posted by Tracy Green, Esq.
Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.

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 in health care fraud related matters in California and throughout the country.
Their website is: http://www.greenassoc.com/

Workers Comp Premium Insurance Fraud: Two Painting Contractors Sentenced To 6 Months' Jail And 3 Years' Probation After Paying Over $500,000 In Restitution In Ventura County

On September 8, I posted an article about Two Painting Contractors Plead Guilty To Workers' Compensation Insurance Premium Fraud in Ventura County.  Now for the follow-up post on their sentence.

At the time they plead they were not sentenced and had no firm agreement on sentencing from what I understand.  There probably was a "lid" or cap on what the sentence would be with the judge to have discretion on the amount of jail time imposed.

Last week, the two painting contractors, Michael Nuciforo and James Nuciforo were sentenced to 36 months formal probation and ordered to serve 180 days in the Ventura County jail as a result of their convictions for felony workers' compensation premium fraud. Ventura County is known as a tough county in sentencing defendants. In order to obtain the 6 months' sentence (for which they will have to serve 3 months), the Nuciforos paid $517,433 in restitution before sentencing. In Los Angeles County, they may have received a different result showing that venue is important in your case. It also shows that payment of restitution is key to getting an excellent result. 

 

In this case, the allegations were that Michael and James Nuciforo, owners of D and J Drywall Painting, Inc., in Newbury Park, lied to their workers' compensation insurance carriers over a period of nine years in order to lower their workers' compensation insurance premiums. The Nuciforos allegedly earned an extra $50,000 a year by underreporting their workers' compensation premiums.  

 

Attorney Commentary: The government views this case and other premium workers' compensation fraud cases as indicative of an epidemic of workers' compensation premium fraud in California . A comprehensive study out of U.C. Berkeley by researchers Frank Neuhauser and Colleen Donovan indicated the losses caused by premium fraud in California during 2005 (the most recent year reflected in the study's statistics) were as much as $2.8 billion. 

According to the study, this $2.8 billion loss translates to approximately $75 for every person in California per year. According to the study, insurance companies do not suffer a net loss; they simply pass on the losses to businesses in the form of higher workers' compensation premiums. The businesses, in turn, increase their costs of goods and services to the consumer. In the end, the belief is that the average citizen bears the brunt of this crime.

 

The other reason the government targets workers' compensation premium fraud is the belief that it creates an unlevel playing field for businesses, particularly contractors (where premiums are high). This occurs in the construction industry, garment industry, farm worker industry and any other industry where certain jobs are deemed "high risk."  Contractors who improperly classify workers at lower premium rates or underreport their payroll are able to keep the money they would be using to pay premiums and then can underbid the competition. Honest employers are disadvantaged by having to pay even higher premiums than they otherwise would, and then lose jobs to the other company who pays lower workers' compensation premiums.   

The workers' compensation carriers are conducting more audits and are now obtaining the records that the employers have filed with EDD (which previously were ruled confidential). Thus, there is now a greater likelihood of an audit and a criminal investigation.  If your company has engaged in premium workers' compensation misrepresentations, it is better to address these issues early and amend prior submissions or ensure that future submissions comply with the law.  

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation. 

Any questions or comments  should be directed to Tracy Green, a very experienced California workers compensation fraud attorney, workers compensation premium fraud attorney, and white collar criminal defense attorney.

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 professionals in fraud related matters in California and throughout the country. Their website is: http://www.greenassoc.com/