Sacramento Man Sentenced to 3 Years in Prison for Causing Misbranded Drugs to Be Sold Online As Weight Loss and Fat Burner Pills

The U.S. Food and Drug Administration (FDA) has stepped up criminal enforcement where misbranded drugs are being sold online to consumers. On May 29, 2019, Scott Edward Cavell of Sacramento was sentenced by U.S. District Judge John A. Mendez to three years in prison for causing misbranded drugs to be introduced into interstate commerce for weight loss. 

According to plea agreement and court documents, between 2015 and 2017, Mr. Cavell, with others, developed a plan to market and sell a drug, 2,4-Dinitrophenol (also known as DNP), as a weight loss drug and “fat burner” despite knowing that DNP is not approved by the FDA as a substance for human consumption. Mr. Cavell sold DNP in pill form and called it a fertilizer — a term under which is it legally sold in other circumstances.

Lengthy Sentence Imposed Upon Patient Recruiter for Home Health Services Where Illegal Kickbacks Were Paid to Doctors and Patients

A Houston, Texas patient recruiter and home health agency owner was sentenced to 188 months in prison today for her role in a $20 million scheme to pay illegal health care kickbacks to physicians and Medicare beneficiaries in order to fraudulently bill for medically unnecessary home health services, and to launder the proceeds. Health care fraud sentences continue to get longer. One recent case involved a lengthy sentence even though it was part of a guilty plea. 

On May 29, 2019, a Houston, Texas patient recruiter Egondu "Kate" Koko was sentenced to 188 months (over 15 years) in federal prison for her role in a federal health care fraud case where she admitted she paid illegal kickbacks to physicians and Medicare beneficiaries in order to fraudulently bill for medically unnecessary home health services for four other home health agencies and her own. 

The sentence came after Ms. Koko pleaded guilty in October 2018 to one count of conspiracy to pay and receive health care kickbacks and one count of conspiracy to launder monetary instruments. This sentence was lengthier than the norm since there was a money laundering count as in her plea she admitted she laundered the proceeds through another person's bank account. 

Podiatrist Sentenced in Upcoding Medicare Fraud Case for Patients Seen at Assisted Living Facilities

Years ago, health care fraud cases would generally only be brought for outright fraud where there was ghost billing for patients not seen or other type of fraud. However, upcoded billing is now being charged more often when there is a significant pattern. A recent case involving a podiatrist illustrates this.

On May 17, 2019, podiatrist Loren Wessel of Tucson, Arizona was sentenced by U.S. District Judge James Soto for his role in a Medicare fraud scheme to serving a 24-month term of imprisonment. Mr. Wessel had previously pleaded guilty to Health Care Fraud. The Court also ordered Wessel to pay $965,985 in restitution to the Centers for Medicare and Medicaid Services.

In the plea agreement, Mr. Wessel admitted that from 2008 through June 2016 that he as a licensed podiatrist defrauded Medicare out of hundreds of thousands of dollars. In his plea agreement, Mr. Wessel admitted he submitted false claims to Medicare. As part of his practice, Mr. Wessel conceded that he regularly provided routine podiatry care for patients at assisted living facilities in and around Tucson, but fraudulently billed Medicare for more complex and significantly more expensive services that he had not performed. To further this upcoding, Mr. Wessel admitted that he falsely documented patients’ medical records with alleged ailments they did not have and with care Mr. Wessel did not provide.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Ten Individuals Affiliated With Compounding Pharmacy, Including Owners, Pharmacist, Billing Manager, Sales Reps and Nurse Practitioner, Charged in Compounding Prescription Drug Case

In compounding cases, it is usually some very high billed creams that get attention. In a recent case, the government alleges that the defendants’ fraudulent conduct caused a prescription plan administrator to pay over $29,000 for one tube of a cream advertised as treating “general wounds.”
Another red flag in compounding cases are call centers with marketers. A recent case in Alabama has both. This case is also significant since it targeted many people who worked at the compounding pharmacy including sales representatives, billers, managers in addition to the owners and pharmacist.

On May 6, 2019, ten defendants were charged in a 103-count indictment, including a nurse practitioner, owners, a pharmacist, managers, sales representatives and billers, of an Alabama based pharmacy, Northside Pharmacy doing business as Global Compounding Pharmacy. 

The indictment charges them with fraudulently billing health care insurers and prescription drug administrators for over $200 million in prescription drugs.  An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.  The charges stem from a larger investigation that has to date resulted in 18 additional individuals being charged and signing plea agreements. 

According to the indictment, Global which allegedly described itself as “one of the top three largest compounding pharmacies in the United States,” primarily shipped compounded and other drugs from its Alabama facility, but did most of its prescription processing, billing and customer service at its “call center” in Clearwater, Florida. The company hired sales representatives who were located in various states and were responsible for generating prescriptions from physicians and other prescribers.  The company also worked with affiliated pharmacies.

The indictment describes a multi-faceted operation in which the defendants billed for medically unnecessary drugs.  The indictment alleges that the wrongdoing included:  

• paying prescribers to issue prescriptions; 
• directing employees to get medically unnecessary drugs for themselves, family members, and friends, to be filled and billed by Global and other related pharmacies; 
• altering prescriptions to add non-prescribed drugs including controlled substances such as Tramadol and Ketamine; 
• automatically refilling prescriptions—often as many as 12 times—regardless of patient need; 
• routinely waiving and discounting co-pays to induce patients to obtain and retain medically unnecessary drugs; and 
• billing for drugs without patients’ knowledge and hiding that conduct from patients by mailing the drugs to the home of Global's owner and president.  

According to the indictment, the defendants evaded and obstructed audits and questions about billings through various efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies.  The defendants allegedly billed health insurance plans and their prescription plan administrators over $200 million and were paid over $50 million.

Owners of Arizona Home Health Care Business Sentenced to Prison for Medicare Health Care Fraud and Misprision of a Felony

A husband and wife owner of a home health business in Tucson, Arizona have been sentenced after guilty pleas in federal court. The case involved upcoding of services, billing for services of physicians or nurse practitioners when those professionals did not perform the services and for the forging of some names of the Medicare providers. Husband owner Stephen Allen Lamont pled guilty to federal health care fraud. 

The wife Elvia Lorena Lamont plead guilty to "misprision of a felony" which is a felony that does not have fraud as an element and we attorneys like to use it where possible as an alternative plea. Misprision of a felony is used where someone knows of a felony but conceals it and does not make it known to others. Usually, with misprision of a felony one would expect probation, but in this case both owners received a federal prison sentence.

In his plea agreement, Mr. Lamont admitted that he knowingly submitted false claims for services to Medicare. Mr. Lamont admitted that he fraudulently billed for services that were provided by nurses, medical assistants and a phlebotomist as if they had been performed by a medical doctor or nurse practitioner. Mr. Lamont also admitted that he upcoded or billed at the highest complexity level in order to increase the billings. 

On some occasions, Mr. Lamont admitted that he forged the signature of a medical doctor or other Medicare-approved provider before the claims were submitted for reimbursement. Elvia Lamont admitted that she knowingly shared in the proceeds from the Medicare fraud and concealed it from authorities.  

Kentucky Cardiologist Sentenced to 60 Months for Health Care Fraud and False Statements Relating to Implanting Medically Unnecessary Stents and Falsifying Degree of Stenosis in Medical Records

Credit: The Daily Independent

On May 2, 2019, well-known Kentucky cardiologist Dr. Richard E. Paulus was sentenced, by U.S. District Court Judge David L. Bunning, to serve 60 months in federal prison for health care fraud and false statements almost three years after his trial and an acquittal by the court that got reversed on appeal. 

In October 2016, a federal jury convicted Dr. Paulus of one count of health care fraud and ten counts of making false statements relating to health care matters, after hearing evidence that he exaggerated what he saw on patients' angiograms and then defrauded Medicare, Medicaid, and private insurers, by implanting medically unnecessary stents in his patients and falsifying the degree of stenosis in their medical records. The case was started by a complaint to the Board about the number of stent surgeries performed and their medical necessity.

After the trial, the district court granted Dr. Paulus’s motion for an acquittal.  The Sixth Circuit Court of Appeals later reversed that decision, on June 25, 2018, and reinstated Dr. Paulus’s conviction, resulting in his formal sentencing. This is very unusual that a district court grants the motion for acquittal and also unusual that the conviction was reversed on appeal.

After 6 Week Trial, New York Doctor And Physical Therapist Found Guilty Of Health Care Fraud, Conspiracy to Make False Statements Relating to Health Care Programs Medicare And Medicaid and Other Counts With Allegations of Sham Owner, Falsified Medical Records, Kickbacks.

A recent health care fraud case involved the alleged unlicensed practice of medicine and a  physician allegedly posing as the owner of medical clinics in order to satisfy New York  law that medical clinics be owned and operated by a medical professional. When that occurs the loss amounts can be large since the entire clinic can be viewed as a fraud with all billings suspect. 

On May 9, 2019, after a six-week federal jury trial, doctor Paul J. Mathieu and physical therapist Hatem Behiry were each convicted of one count each of conspiracy to commit health care fraud, mail fraud, and wire fraud; and conspiracy to make false statements relating to a health care program; as well as the substantive offenses of health care fraud, mail fraud, and wire fraud.  This trial was held in the Southern District of New York. 

Between 2007 and 2013, the government alleged that Dr. Mathieu fraudulently posed as the owner of three of six medical clinics in Brooklyn (the “Clinics”), which were all in fact owned by a non-physician and alleged co-conspirator Alexksandr Burman. Mr. Burman has already been sentenced in a related case to 120 months in prison. 

The government alleged that from 2009 to 2013, Dr. Mathieu also directly participated in the fraudulent billing practices of the clinics, by visiting several of the clinics on a weekly basis, where he would sign stacks of false and fraudulent medical charts, and issue referrals for expensive additional testing, occupational therapy, and physical therapy, including for physical therapy purportedly provided by Mr. Behiry. It was alleged at trial that during this time period, Dr. Mathieu did not see any patients and simply fabricated medical records falsely stating that he had seen and treated such patients. 

California Psychologist and Doctor Charged with Fraudulent Workers’ Compensation Evaluations Where Psychologist Was Not Certified as a Qualified Medical Examiner and Doctor's Certification Had Lapsed

In billing for evaluations of workers' compensation patients, health care providers should be very careful to ensure that they do not misrepresent themselves as a certified  Qualified Medical Examiner (QME) on a medical legal evaluation or billing statement. 

In addition, it is important to ensure that the bills for medical legal expenses have been reviewed so that the criteria for medical-legal billing has been met. A recent case shows how a report by two provider who were not properly certified QMEs led to criminal insurance fraud charges. 

On May 7, 2019, psychologist Danita Stewart and Dr. Catalino Dureza were charged for allegedly submitting fraudulent insurance claims for Medical Legal Evaluations. They are presumed innocent and charges are not evidence.

Dr. Stewart, a licensed psychologist, allegedly submitted 36 fraudulent insurance claims between April 2015 and June 2015 to five different insurers for Medical Legal Evaluations for a total of $90,714. A Medical Legal Evaluation is conducted to evaluate an employee’s work-related injury and is governed by the California Labor Code. 

Even though Dr. Stewart was a licensed psychologist she was not certified as a Qualified Medical Examiner as required to conduct and bill for Medical Legal Evaluations. Dr. Stewart allegedly conducted these fraudulent evaluations at clinics in Fresno, Tulare, and Kern Counties. Dr. Stewart was charged with 36 felony counts of Penal Code Section 550(a)(1) [one for each report], and 1 felony count of Penal Code Section 550(a)(7).

Dr. Dureza, a licensed medical doctor, had obtained the proper certification to conduct and bill for Medical Legal Evaluations, but his certification lapsed. Dr. Dureza allegedly continued to conduct and bill for Medical Legal Evaluations, and once he was recertified he conducted and billed for unauthorized Medical Legal Evaluations. Between January 2014 and May 2015, Dr. Dureza allegedly submitted 17 fraudulent insurance claims for Medical Legal Evaluations conducted in Fresno County to five different insurers for a total of $16,292. This is not a large loss amount but shows that they will prosecute for amounts under $25,000. Dr. Dureza was charged with 17 felony counts of Insurance Code 1871.4(a)(1).

Whether or not someone is a QME is a public record so it appears the insurance carriers must claim that they paid these bills understanding that the providers were CMEs. I have seen cases where a biller has placed a QME, IME and AME near the providers' name, not realizing that there could be confusion on what type of report is being billed. The carriers have been aggressive about billings for these reports even though the providers could have billed for treatment without a QME certification.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

California Pharmacist Pleads Guilty in Federal Court in Los Angeles to Illegal Distribution of Prescription Opioids and Laundering the Proceeds of the Illicit Sales

The government likes giving catchy names to certain  investigations. A recent federal and state investigation into corrupt pharmacies, for example, was called dubbed “Operation Faux Pharmacy.” 

One of the cases from this investigation has resulted in a pharmacist and pharmacy each pleading guilty in federal court to one federal count of distributing oxycodone and one count of money laundering relating to the revenue generated by the sales. 

On April 29, 2019, California pharmacist Pauline Tilton and her pharmacy Oasis Pharmacy pleaded guilty to a federal charge of illegally distributing the opioid oxycodone, admitting in the plea agreement that she filled hundreds of counterfeit prescriptions. The red flag in this case was that the DEA number of the prescribing physician on the prescriptions was of a retired doctor.

Fifteen California Chiropractors Charged in State Case Filed by L.A. District Attorney's Office Alleging Unlawful Referral Fees and Insurance Fraud

One issue that arises is when are referral fees illegal and when are they legal marketing, promotion or management fees? A recent case shows how important it is for medical professionals to obtain legal opinions before they enter into such agreements. 

Chiropractors in Southern California were stunned when fifteen chiropractors were charged by the Los Angeles County District Attorney's Office for alleged illegal referral fees from January 31, 2015 to June 30, 2018. A copy of the Felony Complaint can be downloaded here. 

The defendant chiropractors are presumed innocent and a felony complaint is not evidence. The charges include: 

🔺 insurance fraud in violation of Penal Code Section 550(a)(1) involving four carriers (Alliance United, Nations Insurance, Farmers Insurance and Geico Insurance); 

🔺 conspiracy to commit insurance fraud in violation of Penal Code Section 550(b)(3);

🔺  participating in patient referral rebates as licensed chiropractors.

In addition, the chiropractor who is alleged to have been the organizer of the referral business was charged with additional counts of money laundering (Penal Code Section 186.10) and failure to file tax returns for certain years. 

Given the provisions of the California Insurance Code, Business and Profession Code and Penal Code when it comes to accepting compensation for the referral of a patient, it is key to ensure that any referral arrangements are compliant with the law. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Pennsylvania Operating Officer Charged Along With Her Husband With Mail Fraud, Embezzlement from Healthcare Benefit Program for Alleged False Reimbursement Expenses

Given that hospital employees are paid essentially out of government healthcare and insurance funds, cases involving hospital officers and key employees are often prosecuted in a higher profile and federal manner than other types of businesses. In addition, government employees - especially those in law enforcement - can also be charged more harshly due to their position of authority and special skills. 

A recent Indictment shows how this played out for one couple where the wife worked as an executive at a hospital and the husband worked as a detective with the local district attorney's office. 

On April 19, 2019, Stephanie J. Roskovski and her husband, Scott A. Roskovski, were indicted by a federal grand jury in Pittsburgh on charges of mail fraud, conspiracy to commit mail fraud, embezzlement from a healthcare benefit program, conspiracy to commit money laundering, money laundering and false statement in a loan application. An Indictment is an accusation and is not evidence. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

The Indictment alleges that the Roskovskis, during the years 2011 through December 2017, perpetrated a fraud totaling more than $1.3 million on Butler Healthcare Providers, d/b/a Butler Memorial Hospital, where Stephanie Roskovski was employed and, for much of that time, served as the hospital’s Chief Operating Officer. 

During the time, Scott Roskovski was employed as a detective with the Butler County District Attorney’s Office where he conducted investigations involving fraud and other financial crimes. Counts One through 23 of the Indictment allege that the defendants conspired to and did defraud Butler Healthcare Providers by submitting requests to Butler Hospital for alleged business-related expenses that were used, or intended to be used, for personal expenditures.