Friday, January 20, 2017

Korean-American Owner of California Management Company for Physical Therapy and Occupational Therapy Clinics Sentenced to 121 Months

A recent health care fraud case shows what happens when business people get in a highly regulated business and do not follow the rules or have any compliance program. It also shows what happens when business people decide to enter a healthcare business and cater to an ethnic community which wants services others than those paid for by Medicare.

In this case, it involves the Korean American community in Los Angeles and Orange Counties which is hardworking and entreprenurial but where some do not necessarily understand the full consequences when regulations are not followed. Those consequences? Audits, fines, civil lawsuits and, in this case, criminal cases with lengthy prison sentences.

On January 10, 2017, a California man Simon Hong (also known as Seong Wook Hong) who ran management companies which allegedly operated rehabilitation clinics in Walnut, Torrance and Los Angeles was sentenced to 121 months in federal prison by United States District Judge David O. Carter. At the conclusion of the sentencing hearing, Judge Carter ordered Mr. Hong remanded into custody.

This is not just a straight forward fraud case. One of the issues is providers giving patients in an ethnic community services other than physical therapy but billing and documenting for physical therapy. In addition, it is a businessman operating clinics and then getting a percentge of income for referring the business. There were traditional health care fraud issues present but it shows what happens when business people decide to operate or manage a clinic.  

Mr. Hong owned or operated physical therapy clinics operated by companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. As part of his business, Mr. Hong recruited Medicare providers and beneficiaries and provided uncovered services like massage and acupuncture for the beneficiaries. Even though many of the beneficiaries did not receive actual physical therapy, those who worked with Mr. Hong billed Medicare for physical therapy, and then paid a large percentage (allegedly 56 percent) of the reimbursement funds back to Mr. Hong's management companies.

In October 2016, Mr. Hong was found guilty in October of eight counts of healthcare fraud, nine counts of illegal kickbacks related to healthcare referrals and two counts of aggravated identity theft. The loss amount to Medicare was approximately $3 million by billing for unneeded or unnecessary services.
The government alleged that Mr. Hong and the companies or providers he managed billed Medicare from the spring of 2009 until November 2013 and received approximately $2,929,775 in reimbursements, of which Mr. Hong or his companies received approximately $1,640,674. During the sentencing hearing, Judge Carter ordered Mr.Hong to pay $2,929,775 in restitution.

Mr. Hong is one of 10 defendants who were charged in 2015 and early 2016 for healthcare fraud related to physical therapy. Eight others have pled guilty, and one remains a fugitive. Those previously convicted in the investigation are:

Joseff Sales, a co-owner and operator of Rehab Dynamics, who pleaded guilty to one count of healthcare fraud and one count of illegal kickbacks, and was sentenced last year to 51 months in prison;

Danniel Goyena, a co-owner and operator of Rehab Dynamics, who pleaded guilty to two counts of healthcare fraud and was sentenced last year to 51 months in prison;

Marlon Sonco who pleaded guilty in June 2015 to conspiracy and is scheduled to be sentenced on January 23;

Eddieson Legaspi, an employee of Rehab Dynamics, pleaded guilty to conspiracy to commit healthcare fraud and also was sentenced yesterday to 15 months;

Ohun Kwon, the owner/operator of E.K. Medical Management, which referred patients to Rehab Dynamics, pleaded guilty to conspiracy to commit healthcare fraud and was sentenced last year to 27 months in federal prison;

Leovigildo Sayat, an employee of RSG Rehab, pleaded guilty to conspiracy to commit health care fraud and was sentenced last year to two years in prison. 

In a separate case, Mr. Hong pleaded guilty last month to conspiracy to commit health care fraud in another case involving occupational and physical therapy services that were allegedly never provided to Medicare beneficiaries with a loss of approximately $2.4 million. Mr. Hong is scheduled to be sentenced in this case in Los Angeles federal court by United States District Judge George Wu on March 6.

The government contended at sentencing that Mr. Hong was the lead in the Medicare fraud case and claimed he directed numerous others from patient enrollment to billing to record keeping. This case shows that management companies will be charged along with the providers and owners and there is no insulation for management where there is control and direction. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260


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