Monday, October 25, 2010

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 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

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:


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