Owner Of Los Angeles Home Health Agency Sentenced To Nearly Five Years For Health Care Fraud Case Involving Kickbacks to Doctors and Medicare Patients Who Did Not Qualify for In-Home Health Services. Related Qui Tam Lawsuit Settled.

On July 29, 2014, U.S. District Judge Dean D. Pregerson sentenced a registered nurse, Hee (“Angela”) Jung Mun, who operated GreatCare Home Health, Inc., a home health agency to 57 months in federal prison. In addition to the prison term, Judge Pregerson also ordered Mun to pay $5.144 million in restitution to Medicare. As part of the investigation, authorities previously seized $1.2 million from bank accounts owned by Mun and GreatCare. Another federal judge ordered Mun to pay nearly $15 million to resolve a “whistleblower” lawsuit associated with this case. 

Ms. Mun pleaded guilty in 2012 and admitted orchestrating a three-year scheme to defraud Medicare. In her plea agreement, Ms. Mun admitted that she defrauded Medicare out of millions by:

(1) paying illegal kickbacks to doctors and individuals known as “cappers” or “marketers” for patient referrals, and to patients themselves to sign up for home health services,

(2) billing Medicare for patients who were not homebound or who otherwise did not quality for home health services, and

(3) billing Medicare for services provided by unlicensed individuals or not provided at all.

The scheme targeted elderly, primarily Korean, Medicare beneficiaries. GreatCare was shut down by federal agents after the execution of a search warrant there in March 2011.

While Ms. Mun was the alleged leader, seven other defendants have been convicted in related cases for their roles in the Greatcare fraud case - four of whom have already been sentenced:

(1) Sang Whan Ahn, 60, who recruited many of GreatCare’s Medicare beneficiaries in exchange for illegal kickbacks, was sentenced to four months in prison;

(2) Doctor Whan Sil Kim, also known as “Victoria,” 71, was sentenced to a year and a day in prison for receiving illegal kickbacks for health care referrals;

(3) One of GreatCare’s nurses, Hwa Ja Kim, also known as “Helen,” 70, was sentenced to 18 months in prison for signing off on patient evaluations and visits she did not do;

(4) Yeong Ja Lee, 52, one of the unlicensed individuals Greatcare used to see patients and create fake paperwork, was sentenced to 15 months in prison just last week;

(5) Physical therapist Seonweon Kim, 48, is scheduled to be sentenced on October 6; 

(6) GreatCare employee Jung Sook Lee, 53, is scheduled to be sentenced on October 20; and

(7) Registered nurse Ji Hae Kim, 43, is a fugitive.

Attorney Commentary:

In a related “whistleblower” qui tam lawsuit brought in March 2010 by one of GreatCare’s former receptionists, two other GreatCare referring doctors, Dr. Dong Shin and Dr. Bo W. Paik, agreed to pay $217,810 and $530,000, respectively, to resolve allegations that they received cash payments and patient referrals in exchange for referring Medicare beneficiaries to GreatCare and signing false certificates of medical necessity. The government did not intervene in this case but participated in the settlement negotiations. Dr. Shin has paid $150,000 and is to make monthly payments.  

Defendant Dr. Kim has agreed to pay $1.088 million as a part of a consent judgment for her conduct, while Defendant Seonweon Kim has agreed to pay $205,000 to resolve his civil liability related to GreatCare. Defendant Mun defaulted in the case and has over a $14 million default judgment entered against her. 

The sentences in these cases are lengthy in large part because of the large amount of Medicare billings (in excess of $5 million) and the defendants are charged in conspiracy counts where they are held responsible for the entire billings even where they did not collect the amounts billed or were paid salaries. In this case, the search warrant was executed in March 2011 and there 

Posted by Tracy Green, Esq.

Email: tgreen@greenassoc.com

Phone: 213-233-2260

Green and Associates, Attorneys at Law

Three Indicted In California Federal Insurance Fraud Case Involving Allegations That Medically Unnecessary Procedures Were Performed For Free Or Discounted Cosmetic Surgery

On July 16, 2014, a federal grand jury indicted three Southern California residents in a scheme to defraud health insurance programs by submitting bills in alleged medically unnecessary medical procedures performed on insurance beneficiaries who received free or discounted cosmetic surgery. The Indictment claims that there were more than $50 million in unnecessary medical procedures billed. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

The indictment in Case No. SACR14-00110-JLSoutlines allegations in which marketers or cappers lured patients to a surgery center in Orange County, California known at various times as Empire Surgical Center, Vista Surgical Center and Princess Cosmetic Surgery. The marketers allegedly told patients that they could use their union or PPO health insurance plans to pay for cosmetic surgeries, which are generally not covered by insurance. This involved private insurance but was investigated by Department of Labor which indicates that there may have been some government beneficiaries 

When patients came to the surgery center for a consultation, they were told that they could receive free or discounted cosmetic surgeries if they underwent multiple, medically unnecessary procedures that would be billed to their union or PPO health care benefit program, the indictment alleges. The unnecessary procedures typically performed on the “patients” were endoscopies (usually esophagogastroduodenoscopies, or EGDs), colonoscopies and cystoscopies.

Once the health care benefit program paid the claims, the patients were given free or discounted cosmetic surgeries, including “tummy tucks,” breast augmentations, rhinoplasties (“nose jobs”) and liposuction. Further, according to the indictment, tummy tucks were billed as hernia repair surgeries, and rhinoplasties were billed as deviated septum repair surgeries.

The three defendants charged in the indictment are: (1) Vi Nguyen, 31, of Placentia, who was a consultant at the surgery center and who is charged with 10 counts of mail fraud; (2) Theresa Fisher, 44, of Tustin, who was another consultant at the surgery center and who is charged with five counts of mail fraud; and (3) Lindsay Hardgraves, 30, of San Pedro, who was a marketer and charged with two counts of mail fraud.

Attorney Commentary: There were similar state and federal criminal cases some years ago in Orange County with different surgery centers that also charged the physicians with performing the medically unnecessary surgeries. At this point, no physicians are charged but that could change depending on the evidence and whether these defendants later cooperate and present evidence that the physicians who performed the unnecessary procedures knew or should have known that they were unnecessary. This is a case where the fraud was driven by illegal marketing to patients. Physicians and owners of surgery centers must be careful on how patients are recruited and what promises, if any, are made in order for them to have procedures performed at a certain facility. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Phone: 213-233-2260

  

California Man Pleads Guilty In Investment Schemes That Defrauded Physicians And Dentists Out Of More Than $2 Million

On July 21, 2014, David W. Rose, 57, of Orange County, pleaded guilty in United States District Court to one count of wire fraud and one count of mail fraud arising from defrauding dozens of doctors and others of more than $2 million in separate schemes that promised large returns on investments in the medical and dental fields.

According to court documents, over a six-year period that ran through May 2011, Mr. Rose solicited physicians to invest in an Irvine company he called M.D. Venture Partners (MDVP) and falsely promised lucrative returns on investments in emerging medical technologies. In a subsequent scheme, Mr. Rose used Technology Innovation Partners (TIP) to solicit dentists and orthodontists to invest, claiming funds would be pooled and invested in a company developing ablation technology that would be used to remove wisdom teeth in children without surgery.

Throughout both schemes, investor funds were misused, with Mr. Rose using victims’ money for personal expenses. According to a plea agreement filed in court, Mr. Rose used investor funds to pay $7,500-a-month rent for a house in Coto de Caza, college tuition, luxury vehicles, an $80,000 Sea Ray boat and shares in the Green Bay Packers.

The investigation revealed that no money was invested by either MDVP or TIP.

In the MDVP scheme, Mr. Rose caused approximately 32 victims to lose more than $900,000, according to court documents. In the TIP scheme, 45 victims lost more than $1.4 million. Mr. Rose was arrested in May 2013 and has remained in custody since that time.

Mr. Rose pleaded guilty before United States District Judge James V. Selna, who is scheduled to sentence the defendant on November 24. At sentencing, Mr. Rose has agreed there will be an enhancement since there were more than  50 victims. Under the plea agreement, Mr. Rose waives his right to appeal if the sentence is no more than the low end of level 23 on the federal sentencing guidelines (level 23 is 46 to 57 months).  

Thus, his likely sentence is around 4 to 5 years even thought Judge Selna is free to depart from the plea agreement as it is not binding upon him. The statutory maximum sentence of 40 years in federal prison and this shows that the sentencing maximum is not reflective of the actual sentence to be imposed. The government agreed to a one level departure due to Mr. Rose's efforts in helping secure restitution which is estimated over $2.3 million.

Posted by Tracy Green, Esq.

Greenand Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Phone: 213-233-2260

Diagnostic Company’s Unlicensed Vice President Pleads Guilty To Health Care Fraud After Performing and Interpreting X-rays and Other Tests in Lieu of Qualified Physicians and Radiologists

On July 17, 2014, a licensed x-ray technician Timothy Emeigh who was a vice-president of a diagnostic company pleaded guilty to health care fraud in the District of Maryland arising from a scheme in which insurance providers and Medicare were fraudulently billed for tests interpreted by unlicensed personnel, and for tests and services which in fact had not been provided.

According to his plea agreement, Mr. Emeigh was a licensed x-ray technologist in Maryland but was not a licensed physician. Mr. Emeigh worked at Alpha Diagnostics Services beginning in 1993 as an x-ray technologist and by 1997, he was named vice president of the company’s operations.

Alpha Diagnostics was principally a portable x-ray supplier in Maryland, Delaware, Pennsylvania and Virginia. However, Alpha Diagnostics also supplied or provided portable ultrasound tests, electrocardiograms (“EKGs”), echocardiograms and Holter monitors. The majority of its clients were nursing homes, whose patients Alpha Diagnostics tested. Alpha Diagnostics was enrolled in the Medicare program. Medicare required that a licensed physician order and interpret the x-ray or other test, and render a formal report.

Nonetheless, in 1997, Mr. Emeigh began performing x-ray interpretations in lieu of a licensed physician or radiologist, and producing fraudulent reports using the names of actual physicians who had never seen the x-rays in question. In 2003, as technology improved, Mr. Emeigh began interpreting medical tests and writing reports in the name of registered licensed physicians from his home using his home computer.

In addition to x-rays, Mr. Emeigh began interpreting and drafting fraudulent reports for ultrasounds and EKGs from his home, while traveling out of state, and at times, from overseas. Sometimes Mr. Emeigh performed medical interpretations and transmitted x-ray images using a cell phone application.

By 2010, Emeigh performed more than 70% of the x-ray interpretations, masquerading as a licensed radiologist or physician. On an average month, more than 1,000 x-ray interpretations were conducted by Alpha Diagnostics in Maryland alone. Mr. Emeigh suggested to Alpha Diagnostics that he transmit particularly difficult medical interpretations to actual licensed physicians. If a patient caregiver contacted Alpha Diagnostics to question any of the medical interpretation reports generated by Mr. Emeigh or other unlicensed Alpha Diagnostics personnel, the diagnostic interpretation was reassigned to an actual licensed physician for a second interpretation, who would not be apprised of the first interpretation and conclusion.

There were other fraud allegations including one that Alpha Diagnostics would bill insurance providers for 2-view chest x-rays even where single-view x-rays had been ordered or performed. Another fraud allegation was that Alpha Diagnostics routinely submitted insurance payment claims which exaggerated the number of anatomical views performed by its x-ray and ultrasound technologists; and for multiple transportation charges on occasions when multiple patients had been examined at the same facility. Alpha Diagnostics would routinely bill Medicare for “global” x-ray procedures (i.e., both professional and technical components), along with transportation and setup charges, for studies interpreted "in-house" by Mr. Emeigh or other unlicensed Alpha Diagnostics personnel.

From January 2007 through October 2012, the financial loss to Medicare for the alleged misconduct was more than $2.5 million but this did not occur any losses to private insurance.  The statutory maximum on Mr. Emeigh’s sentence is 10 years in prison and a $250,000 fine. U.S. District Judge James K. Bredar scheduled sentencing for October 29, 2014.

Attorney Commentary: Diagnostic companies who perform tests and reports have been under scrutiny by OIG for the past eight years since diagnostic testing was targeted to the high reimbursements paid.  Audits were conducted of many diagnostic companies and once those audits were completed, some cases were referred to Office of Inspector General for criminal investigation.

There have been many cases where radiologists who had a high number of reports were suspected of having technicians write the reports but this case was extreme in that the technician used radiologists' names where the radiologist did not interpret the test. We have represented radiologists where this was done to them in part because the diagnostic company wanted to avoid paying the interpreting fee. In this case, the radiologists were not charged -- only the diagnostic company. However, the supervising physicians could have had some exposure if they knew or should have known of the misconduct. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Phone: 213-233-2260

Email: tgreen@greenassoc.com

How Do You Appeal A Medi-Cal Temporary Suspension?

The Department of Health Care Services (DHCS) has the authority under the Welfare and Institutions Code to impose administrative sanctions on Medi-Cal providers. Some of the most common sanctions are withhold and temporary suspension.

The primary basis for "Temporary Suspension" is Welfare and Institutions Code, Section 14043.36 which provides as follows:

“If it is discovered that a provider is under investigation by the Department or any state, local, or federal government law enforcement agency for fraud and abuse, that provider shall be subject to temporary suspension from the Medi-Cal program, which shall include temporary deactivation of all provider numbers used by the provider to obtain reimbursement from the Medi-Cal program.”

The Medi-Cal application has providers agree to temporary suspension if they are under investigation for fraud or abuse; fail to disclose all information in their application or provide false information; or fail to remediate discrepancies found after an unannounced visit; submit claims for payment for any provider who is excluded on on the Ineligible list; or “when necessary to protect the interests of the Medi-Cal program.”

How can I appeal from a Medi-Cal temporary suspension? You do not have the rights to a full appeal with a hearing and the right to bring witnesses. Instead, you only have the right to what is known as an “administrative” or paper appeal under Welfare and Institutions Code, Section 14043.65. 

For this reason, the most important thing to do from the beginning is to begin the meet and confer process with DHCS to seek to resolve the issues. The appeal can be filed at the same time. We have had many cases where we were able to satisfy DHCS that there was no viable fraud or violation of program rules or where we reached agreements that allowed the provider to maintain their Medi-Cal provider number under certain written settlement agreements.

Before these meetings, it is critical to meet with an attorney and evaluate the evidence and to determine whether there is any exposure for fraud. If there are concerns, it may be important not to have meetings where the provider’s Fifth Amendment rights are waived since anything that is said at a meeting in Sacramento is evidence.

While the meet and confer process is ongoing, the appeal is filed and it must be supported by substantial evidence under oath in order to have any chance of winning this “paper” appeal. A judge does not rule on the appeal. It is a “hearing officer” from DHCS and there is no hearing or opportunity to cross-examine witnesses. Thus, any appeal submissions must be thorough.

Seeking input from DHCS in Sacramento is critical since “temporary” can last as long as 3 years while the Department claims that an investigation is ongoing. The meet and confer process with an in-person meeting in Sacramento is very helpful in helping prove to the Department the issues in the claimed “fraud” are non-existent (we have seen cases where the evidence was flawed and the statements were false) or that the errors were minimal and not grounds for a true temporary suspension.

One of the recurring issues is that often DCHS will refer the case to the State Attorney General’s Office – Bureau of Medi-Cal Fraud – and it is often required that the case be closed by their office in order to reinstate the provider number and lift the temporary suspension. 

Every one of these cases is different and it is critical to evaluate them at the earliest time possible. Usually these cases commence when there are on-site inspections and it may be necessary to obtain an attorney’s input at that time to ensure that all is handled professionally and that a referral for fraud and abuse will not be made. Often, providers do not take the on-site inspections as seriously as they should and do not sufficiently address the auditor or investigator’s concerns at the earliest level. If you need assistance with your audit, on-site inspection or temporary suspension, feel free to contact our office for a complimenary 15 minute consultation.  

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Phone: 213-233-2260

Email: tgreen@greenassoc.com

Criminal Charges Are Brought Against Five For Allegedly Falsifying Life Insurance Applications To Collect More Than $600,000 In Commissions

In a coordinated case between San Diego County and Orange County, California Department of Insurance detectives arrested five people including a former life insurance agent Ian Frisch on multiple felony charges of grand theft. There was also a count of great taking allegation due to the loss amount.  The five suspects are accused of falsifying life insurance applications to collect more than $600,000 in commissions. The other alleged suspects charged are Tyler Wilkinson, and three life insurance applicants: Ruben Banuelos, Edward Putnam and Maxine Putnam.  

It was alleged that Mr. Wilkinson would use cappers (people paid to recruit policy applicants) and finders to locate potential policyholders and create false applications for life insurance. Mr. Wilkinson would then allegedly submit the fraudulent application to insurers through Mr. Frisch, a former life insurance agent. It was alleged that they profited by allowing the life and whole life policies to lapse after a year while retaining the commissions paid by the insurer for the initial policy application. Several insurers allegedly paid commissions totaling more than $600,000.

The life insurance applicants allegedly worked with Mr. Frisch and Mr. Wilkinson and are alleged to be complicit with them. The Putnams and Banuelos allegedly knowingly made false statements on life insurance applications. The policies were then allowed to lapse after just one year while the individuals involved profited from commissions. 

This case was investigated by the California Department of Insurance under its Life and Annuity Consumer Protection Program (LACPP). LACPP provides grant funds to counties for the prosecution of financial abuse in life insurance and annuity product transactions.

Mr. Wilkinson and Mr. Frisch were booked in the San Diego County Jail with bail set at $600,000 for both (the amount of the loss). Mr. Wilkinson and Mr. Frisch are being charged with four counts of Penal Code Section 487(a) PC felony Grand Theft charges, along with the Aggravated White Collar Crime Enhancement under Penal Code Section 186.11 PC, and the Great Taking Allegation under Penal Code Section 12022.6.

Mr. Banuelos and Mr. and Mrs. Putnam were booked at the Orange County Central jail -with bail set for Banuelos at $180,000 and $200,000 and $170,000 for Mr. and Mrs. Putnam, respectively. Mr. Banuelos and Mr. and Mrs. Putnam were charged June 23, 2014, by the Orange County District Attorney's office with one felony count each of Felony Grand Theft and one count each of the Great Taking Allegation.

This case is related to another case involving an elderly Morgan Laws, 84, who was arrested in January 2014, for investment fraud and grand theft related to this case. Mr. Laws pled guilty to Grand Theft and unlicensed sales.  

Commentary:  The prosecution of insurance fraud is on the rise. Companies and carriers are being more aggressive about investigating and turning these cases over to local county district attorney offices. Signing applications that are knowingly false is a crime and applicants cannot assume that insurance companies will not target them. If you are the subject of an investigation, it is important to seek legal advice at the earliest opportunity. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Phone: 213-233-2260

Email: tgreen@greenassoc.com

California Business Owner Arrested And Charged For Deliberately Failing To Get Workers' Compensation Insurance

There is more pressure on businesses to get employees covered for workers' compensation insurance, and in some cases are being charged with workers' compensation insurance fraud for deliberately failing to get the insurance or for asking employees or workers to state that the injury did not occur at work.

On June 24, 2014, a plumbing contractor, Tim Shelley, was arrested on felony charges of workers' compensation insurance fraud and grand theft filed by the Humboldt County District Attorney's Office.  The California Department of Insurance investigated and alleged that Mr. Shelley's business Tim's Plumbing deliberately failed to obtain workers' compensation insurance for his employees. It was also alleged that there were instances in which employees were injured and were discouraged from claiming workers'compensation benefits. As a result, it was alleged that severely injured workers were unable to afford their medical costs for treatment and suffered significant financial hardships.

Under Insurance Code Section 1871.4 it is illegal for an employer or his agents, such as supervisors or foremen, to make misrepresentations to deny or discourage an injured worker from receiving workers' compensation benefits.  It is considered a violation of this statute if an employer:

• asks or tells an employee or worker that an injury did not happen at work,
• asks or tells an employee or worker to use health care insurance to cover the work related injury, or
• asks or tells an employee or worker to tell the hospital or doctor that the employer is self-insured and that the employer will pay directly pays all hospital or doctor bills directly

Compliance.  We have been brought in cases where employers have not been compliant with the laws and there is an interim period of handling uninsured workers or independent contractors who are not properly classified or have been injured. In these cases, we assist the employer in handling the outstanding claims while workers' compensation insurance is obtained.  In these cases, we handle any requests for interviews or statements since we do not want anyone at the company to incriminate themselves or build a case against themselves.

Investigations by Department of Insurance and Carriers.  One reason the counties are prosecuting these cases is that there are special units, funded by the insurance companies and policy fees, that are given grants to file these cases.  Even small cases are being filed. It is important not to take these investigations lightly and to understand the investigations are criminal and civil. If there is a request for an interview or records, do not handle this yourself and seek experienced counsel to represent you. Anything anyone states is evidence and can be used as an admission. The point is to handle the investigation without creating evidence that will be used to charge anyone.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Phone: 213-233-2260

Email: tgreen@greenassoc.com

Telemedicine - Medical Providers Need To Be Licensed In State Where Patient Is Located But New Proposed MultiState Compact May Ease Licensing Restrictions

Telemedicine or telehealth by medical providers who do not understand its limits is creating more disciplinary investigations and some criminal cases where physicians treat patients who are located in states that the physicians are not licensed. This is different than consultations or educational demonstrations. 

Under current and even proposed law, the practice of medicine occurs where the patient is located at the time of the physician-patient encounter regardless of where the doctor may be. Thus, if the patient is in Texas and the doctor is in California, the doctor must be licensed in California. For example, in one case we handled, even a pathologist in California reading slides and writing reports for Texas patients must be licensed in Texas according to the Texas Medical Board.

Licensing laws regarding telemedicine may be changing. Officials representing state medical boards across the country have drafted a model law that would make it much easier for doctors licensed in one state to treat patients in other states, whether in person, by video conference or online. This is a big change in medical licensing and is designed to allow greater use of telemedicine and alleviate the issues of doctor shortage. A New York Times article goes into this proposed compact in detail.

The draft legislation — in the form of an interstate compact, a legally binding agreement among states — would provide that doctors who meet certain standards could sidestep a longstanding requirement that they apply for licenses state by state. But it would preserve the authority of each state to regulate the practice of medicine within its borders.

Working through the commission, a doctor licensed in one state could seek an “expedited license” from one or more additional states. To be eligible, a doctor would have to be certified in a medical specialty and have no history of being disciplined, penalized or punished by a court, a medical licensing agency or the Drug Enforcement Administration. Under this compact, a doctor could not obtain an expedited license if the doctor was “under active investigation by a licensing agency or law enforcement authority in any state, federal or foreign jurisdiction.”

As part of the compact, states would agree to share information on doctors who had been disciplined or were under investigation. The commission would serve as a clearinghouse. If a license is revoked or suspended in a doctor’s home state, then all licenses issued to the doctor by other states participating in the compact could be automatically revoked or suspended.

This has not been adopted yet and any doctors, therapist or medical providers who are engaging in telemedicine through Skype or videoconferencing or by phone calls must ensure that they are complying with their own state laws. 

California has rules regarding telemedicine and informed consent forms that the patients must complete. Failure to obtain the informed consent forms for telemedicine is considered unprofessional conduct. Medical providers are held to the same standard of care with telemedicine with respect to face-to-face visits. This is a changing area of law but medical providers need to familiarize themselves with the rules and regulations and not simply assume that telemedicine is now "legal."  California laws allow California licensed doctors to treat California patients  but only if certain procedures are followed and informed consents obtained.

Posted by Tracy Green, Esq.

Phone: 213-233-2260

Email: tgreen@greenassoc.com

Ex-Marine Officer Sentenced For VA Disability Fraud And Submitting False Expenses For Active Duty

In a disability and travel payment expense fraud case, a former Marine Captain Shawn A. Joyce was sentenced to four months in federal prison, to pay restitution of $90,602, and three years of supervised release by U.S. District Court Judge John Houston on June 30, 2014. This case was charged as two counts of wire fraud in violation of 18 U.S.C. Section 1343 based on the fact that the Veterans Affairs Administration (VA) and Department of Defense directly deposited funds into Mr. Joyce's bank account.

The facts that Mr. Joyce admitted in his plea agreement regarding expense fraud are as follows.  On November 1, 2008, Mr. Joyce was discharged with the rank of Captain and entered the Marine Corps Reserve. Under certain circumstances, reservists who are called to active duty become eligible for an allowance for lodging, transportation, meals and incidental expenses (travel payments). From 2009 to 2010, Mr. Joyce admitted in his plea agreement that he falsely claimed to be paying $4,030 per month for rent in Solano Beach and in 2011, falsely claimed to be paying $3,700 month per rent in Fountain Valley. The Prosecution intended to prove intent to defraud by the fact that Mr. Joyce created documents that were not real or bona fide rental receipts and created an email in the name of a former roommate and landlord which was used to forward information to the Department of Defense.

The disability fraud was based on knowingly receiving VA benefits while on active duty. Before his initial discharge in November 2008, Capt. Joyce applied to the VA for disability benefits and received a disability rating. Under federal law, a service member receiving VA disability benefits is not entitled to simultaneously receive active duty pay. In November 2008, before his initial discharge Mr. Joyce applied to the VA for disability benefits. In 2010, as a reservist Mr. Joyce was back on active duty which was scheduled to end on June 22, 2010. On June 17, 2010, Mr. Joyce applied for an increase in his VA disability rating. Mr. Joyce began receiving disability benefits effective June 22, 2010 but then received a new set of active duty orders that same date.

The Prosecution intended to show intent to defraud on the disability payments since there was evidence that after Mr. Joyce received a new set of active duty orders effective June 22, 2010, he contacted the VA afterwards in September 2010 and January 2011 and asked for increased amounts in his disability rating without telling the VA he was on active duty.

There appear to be mitigating circumstances in this case that relate to Mr. Joyce's disability and psychological conditions. However, that did not prevent the Court from sentencing Mr. Joyce to federal prison for a short term which should make him eligible for house arrest.

There is an increase in the prosecution of disability insurance fraud cases especially where the individuals are government employees such as former military and law enforcement and professionals. One common factor that I see in these cases is that individuals receiving the benefits fear stopping the benefits or misrepresentations for fear of being discovered even though these are facts that will assist them greatly in the event charges are ever filed. In addition, there are ways to repay the amounts to mitigate the damages before charges are filed. Voluntary disclosure works in many cases although each case is different. Often the individuals in the midst of these issues cannot evaluate them objectively.

Posted by Tracy Green, Esq.
Phone; 213-233-2260
Email: tgreen@greenassoc.com