Tuesday, January 19, 2016

President of Miami-Based Transportation Company Convicted at Trial of Conspiracy to Pay Health Care Kickbacks By Using His Company to Pay Recruiters for Mental Health Clinics

Marketing is the dirty secret in a lot of health care businesses. Many businesses are not compliant with the anti-kickback statutes. Some marketing arrangements are not compliant and use sham arrangements to pay referral fees. In one case, it was alleged that a transportation company was used to pay referral fees to patient recruiters who referred patients to mental health clinics (not the transport company).

Health care kickback cases are going to trial more often due to the increased enforcement and number of cases being filed. In one case, after three co-defendants plead guilty, the last remaining codefendant went to trial and was convicted by a jury. 

One of the issues with the kickback laws is that payment of a unlawful referral fee make the entire claim false and criminal. This prosecution shows how one charged with kickback can be alleged to be responsible for any and all billing by the companies who paid referral fees for patients and then provided treatment (allegedly unnecessary) to those patients.

On January 8, 2016, Damian Mayol (president of a Miami-based transportation company Transportation Services Providers Inc.) was convicted after trial of one count of conspiracy to pay health care kickbacks. He was acquitted of two counts of payment of kickbacks. However, the conspiracy count has an enormous loss amount alleged ($28 million paid and $70 million of intended loss billed). Sentencing is set for March 11, 2016.

According to evidence presented at trial, Mr. Mayol and others used the transportation company to coordinate the payment of illegal health care kickbacks to recruiters, who in return referred patients to three now-defunct clinics in the Miami area:  R and S Community Mental Health Inc., St. Theresa Community Mental Health Center Inc. (St. Theresa) and New Day Community Mental Health Center LLC (New Day). The defense claimed that there was a contract with R and S and that the government did not meet its burden on proving that payments were for kickbacks. 

In October 2015, co-defendants Santiago Borges, Erik Alonso and Cristina Alonso pleaded guilty to related charges and were sentenced in December 2015 to prison terms ranging from 28 months to 120 months.

The evidence introduced at trial focused on the fraud by the entities not named in this case and claimed that R and S, St. Theresa and New Day were community mental health centers that purported to provide intensive mental health services to Medicare beneficiaries.  On behalf of the recruited beneficiaries, the centers billed Medicare for costly partial hospitalization program (PHP) services that were not medically necessary or not provided to patients.  Patient records, including group therapy session notes, were falsified to support claims for reimbursement from Medicare.  

The government introduced evidence that between January 2008 and December 2010, the centers (not Mr. Mayol or his company) submitted approximately $70 million in false and fraudulent claims to Medicare.  Medicare paid approximately $28 million on those claims, the evidence showed. By being alleged to be part of this conspiracy, the government alleged that Mr. Mayol is responsible for the entire loss.

Attorney Commentary: Compliance is key. Marketing has become so commonplace in the business that when these cases are prosecuted, individuals cannot believe how strong the laws are and how management agreements, lease agreements, marketing agreements and other arrangements often do not meet the rules. Medicare prosecutes more cases on kickbacks but we are seeing increased cases in workers' compensation and private insurance patients. With smaller businesses, the reliance on third party marketing is the problem. 

We counsel businesses to look beyond how things are done in the industry and to seek compliance due to the increased prosecution of these cases and the filing of civil qui tam cases by former employees. Audits are often triggered by suspected illegal marketing arrangements when then raises issues of suspected medical necessity. Caifornia's state anti-kickback statute are strong and are being prosecuted more frequently. In addition, federal authorities are prosecuting private and workers' compensation kickback cases under the Honest Services fraud theories. Compliance is key in these cases -- ahead of time if possible.

Posted by Tracy Green, Esq.
Work: 213-233-2260


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