Miami Federal Judge Imposes Longest Sentence Ever For Medicare Fraud - 50 Years - On Executive Of Mental Health Care Company

Mr. Lawrence Duran - Sentenced to 50 Years

After a 3-day sentencing hearing, Miami resident Lawrence Duran, the owner of a mental health care company, American Therapeutic Corporation (ATC), was sentenced on September 16, 2011 to 50 years in prison by U.S. District Judge James Lawrence King in the Southern District of Florida. This case arose from an alleged $205 million Medicare fraud scheme by a chain of Miami-based mental health clinics.

Judge King ordered Mr. Duran to pay more than $87 million in restitution, jointly and severally with his co-defendants. Mr. Duran was also sentenced to three years of supervised release following his prison term. Mr. Duran’s lawyer, Lawrence Metsch, urged the judge to be realistic and give him a sentence between 20 and 25 years, arguing that 50 years means a “death sentence because he would die in prison.” But Judge King sided with the government’s push for the extraordinarily high sentence, saying there is a “critical need for deterrence against healthcare fraud” in South Florida, the nation’s capital of Medicare corruption.

Previously, the highest Medicare fraud sentence was 30 years — given in 2008 to a Miami physician, Ana Alvarez-Jacinto, convicted in an HIV-therapy scheme.

35 year sentence for Ms. Valera.  On September 19, 2011, Judge King sentenced co-defendant, Marianella Valera, the other owner of ATC and Mr. Duran's girlfriend, to 35 years in prison and ordered her to pay the $87 million in restitution, jointly and severally. This was another long sentence. Miami judges, who were known for long sentences in large drug cases are not treating Medicare fraud cases any differently. Thus, where a defendant is charged can determine his or sentence or exposure to a sentence if they do not win at trial.

Plea Agreement After Superseding Indictment.  These sentences came after a plea agreement. On April 14, 2011, Mr. Duran and Ms. Valera pleaded guilty to all counts charged in a superseding indictment, which was unsealed on Feb. 15, 2011. The superseding indictment charged Duran with 38 felony counts and Valera with 21 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements.  One co-defendant went to trial and was convicted by a jury.


Mr. Duran and Ms. Valera were remanded to the custody of the U.S. Marshals Service after their arrest on Oct. 21, 2010, and have been detained since that time since there was concern that they were a flight risk. Their assets were frozen at the time of their arrests through civil forfeiture proceedings. ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.


In pleading guilty, Mr. Duran and Ms. Valera admitted that they orchestrated and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Duran and Valera submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Mr. Duran and Ms. Valera also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.


According to court documents, Mr. Duran, Ms. Valera and others paid bribes and kickbacks to recruit Medicare beneficiaries to attend ATC and ASI and billed Medicare for treatments purportedly provided to these recruited patients. According to court documents, the treatments were medically unnecessary or never provided at all. Mr. Duran and Ms. Valera supported the kickbacks through an extensive money laundering scheme that aimed to conceal the illicit conversion of Medicare payments to cash.


Mr. Duran, Ms. Valera and others admitted they paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. They and others actively recruited ALF and halfway house owners and operators and patient brokers. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $205 million in medically unnecessary services.


Alteration of patient records also played a role in this case. According to the superseding indictment to which they pleaded guilty, Mr. Duran, Ms. Valera, and others caused the alteration of patient files and therapist notes for the purpose of making it falsely appear that patients being treated by ATC qualified for PHP treatments. According to court documents, Mr. Duran and Ms. Valera also instructed employees and doctors to alter diagnoses and medication types and levels to make it falsely appear that ATC patients qualified for PHP services. Mr. Duran, Ms. Valera, and others charged as co-conspirators caused doctors to refer ATC patients to ASI even though the patientsdid not qualify for sleep studies.


According to the superseding indictment to which they pleaded guilty, the defendants also engaged in a money laundering conspiracy to enrich themselves and to provide cash for the millions of dollars in kickbacks paid to recruit Medicare beneficiaries. According to court documents, they used another company they owned and operated, Medlink, to conceal the health care fraud and kickbacks from Medicare and law enforcement.


Once Medicare paid ATC and ASI for the fraudulently billed services, Mr. Duran, Ms. Valera, and others transferred millions of dollars to Medlink. They and others opened phony corporations to receive checks and wire transfers from both ATC and Medlink to convert that money into cash for their personal enrichment and for the payment of kickbacks. According to court documents, Mr. Duran, Ms. Valera, and others cashed checks at different bank branches and different locations to conceal the true purpose of their activities and to evade reporting requirements.


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 fraud attorney  and California 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/

Physician Kevin Brown Sentenced To 12 1/2 Years. Commentary On Use Of Undercovers In Physicians' Offices & Importance of Chaperones

Photo by: Nick Ut AP

Dr. Kevin Brown, the son of a former Premier of Bermuda, was sentenced to twelve and a half years in state prison for sexually assaulting 9 female patients and was convicted of 23 counts relating thereto. The case was before Judge Pastor in the Los Angeles County Superior Court. 


Dr. Brown was convicted by a jury on August 15, 2011 of committing sex attacks on nine female patients under the guise of breast and pelvic examinations from 2003 to 2008. The majority of the alleged assaults occurred at the Crenshaw Expo Medic Center at 3631 Crenshaw Blvd., Los Angeles where Dr. Brown practiced. 

One of these “female patients” was an undercover LAPD officer who posed as a patient. The undercover female LAPD officer posed as a patient with an ankle injury, and Dr. Brown was found guilty of pulling her top up and exposing her breasts as she was getting ready to leave.

He dismissed the allegations as lies, and his lawyer, Edi Faal, questioned the credibility of the witnesses. However, he was found guilty of 21 counts including sexual battery by fraud, sexual exploitation by a physician, sexual penetration by a foreign object and committing a lewd act. The jury deadlocked on eight felony counts, including rape. Judge Michael Pastor declared a mistrial on those counts.

Although Dr. Brown had been free on $4 million bond while the case and trial were pending, he was taken into custody after the verdict was announced. The 40-year-old doctor faces a maximum term of 16 years and ten months in state prison. According to Deputy District Attorney Ann Marie Wise. Mr. Faal plans to argue once again that the victims were not credible, but did not file his motion in time for it to be heard yesterday. 

Dr. Brown filed an appeal to the Court of Appeal but in April 2013 all of the convictions were upheld except for two which were deemed to have been barred by the statute of limitation since the acts occurred in 2005.

ATTORNEY COMMENTARY: There are two important things to learn from this case regardless of how well or clean you run your practice. 

•  First, the Medical Board is being much more proactive and is using undercover officers in order to obtain recordings and definitive proof in cases. Whether it is a physician or health care provider suspected of prescribing medically unnecessary drugs (especially pain medications or medical marijuana) or one who has boundary issues with patients and makes unwanted physical or sexual advances -- the Board is cooperating with local law enforcement and sending in undercover officers. Assume every patient is wearing an undercover wire and you will save yourself a great deal of expense and trouble and help protect your license.

• Second, I find some physicians reluctant to use chaperones while examining female patients. The added expense of a medical assistant is small compared to the risk to your license and liberty if someone makes a false claim. That chaperone should write their initials in the chart showing their presence. In addition, the chaperone can be used to increase your productivity. For OB-GYNs, plastic surgeons, dermatologists and other practices with a high female patient percentage -- you WILL encounter at least a small percentage of patients with mental health issues. Statistically, it can easily happen that the patient interprets your exam in a way that it was not intended or that typical patient-physician chit chat is interpreted as "flirting," etc.

• Example:  I had one physician client who was double-boarded OB-GYN and Oncologist and was very thorough. One patient complained that there was sexual touching simply because he did the breast exam with her lying on the table and sitting up (apparently no one had ever examined her breasts which were fibrous sitting up) and the other patient had elephantitis of the vagina and he performed a clitoral exam which he fully explained was needed due to high risk of tumors and she complained of a sexual touching. Both complaints were dismissed after an interview but a chaperone who signed the chart would have been important and substantive evidence if the case had gone any further.

Points of today's article: (1) Use chaperones when examing patients of the opposite sex and any patient who shows any signs of mental distress or illness, and 


(2) Assume every patient is undercover and is wearing a wire or video recording device. Do not say or do anything you would not want recorded or videotaped.


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 attorney, administrative attorney, and California Medical Board attorney.

California Reaches $49.5 Million Settlement With Labcorp (State's 2nd Largest Lab)

California recently announced a $49.5 million settlement with Laboratory Corporation of America, the state's second largest provider of medical laboratory testing, stemming from a qui tam lawsuit alleging illegal overcharges to the state's Medi-Cal program for the poor. In May, Attorney General Harris announced a settlement of $241 million with Quest Diagnostics for the same alleged practice. 


Our firm represented one of the smaller laboratories in this case which also settled for business reasons and, thus, we have followed the settlements in this case closely.  


The settlement with Labcorp is the result of a lawsuit filed under court seal in 2005 by a whistleblower and referred to the Attorney General's office. The lawsuit alleged that Labcorp and other medical laboratories systematically overcharged the state's Medi-Cal program for more than 15 years and gave illegal kickbacks in the form of discounted or free testing to doctors, hospitals and clinics that referred Medi-Cal patients and other business to the labs. 

According to the allegations in the lawsuit, Labcorp charged Medi-Cal over five times as much as it charged some other customers for certain tests. For example, Labcorp was accused of charging Medi-Cal $35.04 to test for total testosterone, while it allegedly charged another customer $7.36 for the same test. What the state did not realize was that in servicing certain low-income community clinics, the labs had to charge a lower price given that the State's reimbursement to the clinic was too low for the clinic to pay the lab the standard rate. 

This case was filed as a qui tam case. Under the state's False Claims Act, any person with previously undisclosed information about a fraud, overcharge, or other false claim can file a sealed lawsuit on behalf of California to recover the losses, and is entitled to a share of the recovery in some cases. Such individuals become plaintiffs and are known as "whistleblowers," "qui tam plaintiffs," or "relators." 


In this case, the whistleblowers were Chris Riedel and his company Hunter Laboratories. Hunter Laboratories allegedly found it could not compete in a significant segment of the marketplace where major medical laboratories such as Labcorp offered doctors, hospitals and clinics far lower rates than they were charging Medi-Cal.


Attorney Commentary: The State is making it more difficult for smaller and medium-sized laboratories to co-exist with large national laboratories. In this case, the State's real targets were the larger laboratories since they could obtain larger monetary settlements from them. Given the state of the economy and the lack of funding for Medi-Cal, we can expect more qui tam cases against larger health care providers.


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 attorney, administrative attorney, and California Medical Board attorney at tgreen@greenassoc.com.