Friday, April 15, 2011

Owners, Managers, Employees & Patient Recruiter of Los Angeles Durable Medical Supply Business Convicted Of Health Care Fraud

One Los Angeles medical supply company that was billing Medicare for power wheelchairs has resulted in six arrests and convictions. Five were convicted by plea agreement and one defendant went to trial and was convicted. Not everyone has been sentenced in this case but even with plea agreements, the sentences so far have been lengthy (30 to 57 months) and show a trend in prosecuting employees who are not owners.

In September 2008 after an investigation by the federal Medicare Fraud Strike Force, the following people associated with Santos Medical Supply in Los Angeles were arrested and have plead guilty:

(1) Marlon Oslvaldo Palma, co-owner of Santos Medical Supply (57 months sentence);

(2) Elsie Edmonds, other co-owner of Santos Medical Supply (57 months sentence);

(3) Heber Josue Gonzalez, 30, manager of Santos Medical Supply (30 months sentence);

(4) Kelechi Ajoku, 29, a registered nurse purportedly in charge of Santos’ facility and its prescription items (sentencing scheduled May 6 by Judge Snyder after a jury convicted him of making false statements in connection with health care matters);

(5) Leslie Duarte, 25, defendant Elsie Edmond’s daughter and a manger at Santos (pleaded guilty to conspiracy and is scheduled to be sentenced); and

(6) Gloria Cristina Hernandez, 62, a patient recruiter (pleaded guilty to conspiracy and is scheduled to be sentenced by Judge Snyder on April 27).

According to the government, Santos Medical Supply submitted nearly $3 million worth of fraudulent claims to Medicare for alleged unneeded electric wheelchairs and other DME, which paid out $1,822,016. The $3 million in billing is important since that is used to calculate "intended loss" under federal sentencing laws.

For example, in Mr. Palma's plea agreement, he admitted to submitting claims to Medicare for $5,000 power wheelchairs and other medical equipment that were unnecessary and, in many instances, never provided to patients. Mr. Palma also admitted to having bought Medicare patient information and bogus prescriptions from a medical clinic and patient recruiters and then used that information to bill Medicare. 

As I have written before, the power wheelchair cases are part of a project by the Medicare Fraud Task Bureau.  There are more cases to come in both the state and federal jurisdictions.  If you owned or worked at a DME where power wheelchairs were billed, you should consult counsel to determine if you have any exposure in these investigations. Issues to analyze include: (1) cost of wheelchair and markup to Medicare; (2) delivery records; (3) medical necessity; (4) use of marketers; (5) transportation of patients to referring clinics; (6) cash withdrawals from bank accounts; and (7) numerous other issues that are case dependent.

Further, if you are a physician who wrote prescriptions for power wheelchairs in Los Angeles County or California, you should also consult counsel. Even if physicians are not charged, Medicare and Medi-Cal are aggressive about suspending provider privileges based on suspicion of fraud and abuse and physicians could be witnesses in criminal cases or be subject to complaints to the Medical Board. 

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 fraud, Medi-Cal fraud 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:


DISCLAIMER: Green & Associates' articles and blog postings are prepared as a service to the public and are not intended to grant rights or impose obligations. Nothing in this website should be construed as legal advice. Green & Associates' articles and blog postings may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents and contact their attorney for legal advice. The primary purpose of this website is not the commercial advertisement or promotion of a commercial product or service and this website is not an advertisement or solicitation. Anyone viewing this web site in a state where the web site fails to comply with all laws and ethical rules of that state, should disregard this web site.

The information provided on this website is for informational purposes only. It is not intended to create, and does not create, a lawyer-client relationship with Green & Associates, Attorneys at Law. Sending an e-mail to Tracy Green does not contractually obligate them to represent you as your lawyer, or create any type of client relationship. No attorney-client relationship will be formed absent a written engagement or retainer letter agreement signed by both Green & Associates and client and which specifies the scope of the engagement.

Please note that e-mail transmission is not secure unless it is encrypted. E-mail messages sent to Ms. Green should not include confidential or sensitive information.