California Oxygen Equipment Provider Pays $11.4 Million To Resolve Allegations of False Claims and Cross-Referral Kickbacks With Sleep Clinics

On April 25, 2017, Braden Partners, L.P., doing business as Pacific Pulmonary Services,  a DME based in California, has agreed to pay $11.4 million to resolve allegations against it and its general partner, Teijin Pharma USA LLC, to resolve a False Claims Act (qui tam) lawsuit filed in federal court in San Francisco.  

The lawsuit resolved by the settlement contains allegations only and there has been no admisison of liability. 

Pacific Pulmonary Services is a DME home medical business and provides stationary and portable oxygen tanks and related supplies, and sleep therapy equipment, such as Continuous Positive Airway Pressure, Bilevel Positive Airway Pressure masks and related supplies, to patients’ homes in California and other states.  

The qui tam lawsuit was originally filed by Manuel Alcaine, a former sales representative of Pacific Pulmonary Services. The government intervened and took over the action, as it did in this case.  In this case, Mr. Alcaine will receive a hefty $1,824,000 of the settlement funds. This is why compliance plans are needed since former employees can file a lawsuit any alleged wrongdoing and profit from it instead of having to report it to the company before they quit or are terminated.  

Durable Medical Equipment Supply Owner and Operator Plead Guilty in Case Involving False Statements to Medicare About Inhalation Drugs Being Non-Compounded Drugs

Compounded medications and drugs have been under close scrutiny the past number of years. Claiming a drug is not compounded when it is compounded can be a "false claim" subjecting a business and its owners or managers subject to criminal prosecution and civil penalties. 

A recent case involving a durable medical equipment company and compounded inhalation drugs billed to Medicare shows what can happen where the drugs are not characterized properly on claims forms in order to avoid new billing rules.  

The rule being avoided was that as of July 1, 2007, Centers for Medicare/Medicaid Services revised nationwide policy regarding compounded inhalation solutions. After July 1, 2007, all compounded inhalation solutions were denied as not medically necessary for dates of service on or after July 1, 2007. 

Former California Resident Sentenced to 30 Months in Federal Custody for Sale of Unapproved “Energy Wave” (Rife) Medical Devices

Former California resident David Perez was sentenced in federal court on April 4, 2016 to 30 months in custody for conspiracy to commit mail fraud (18 U.S.C. Section 371) selling unapproved “Energy Wave” medical devices (non FDA approved) over the Internet and mailing them to customers throughout the United States. These are known as "Rife" machines.

According to admissions in his plea agreement, Mr. Perez marketed the “Energy Wave” device using the website www.myenergywave.com[external link].

Rife machines have been around for years and some alternative practitioners use them. I had an unlicensed practice of medicine criminal case in which a Rife machine figured prominently. While I obtained not guilty verdicts on the multiple counts, my client was not the one who offered the Rife treatment. You can find many Rife machines for sale to this date. This particular "Energy Wave" device allegedly consists of a micro-current frequency generator with a digital readout, two stainless steel cylinders, two personal application plates with connectors and lead wire for the cylinders and plates.  

What caused Mr. Perez legal trouble was that allegedly when he sold them to users, his company also provided users with an operating manual and a list of Auto Codes that set forth over 450 digital settings for the device, directed to treat specific conditions from abdominal pain, AIDS and diabetes to stroke, ulcer and worms.  The Auto Codes and Manuel advised users to connect the cylinders or plates to the machine, and touch them to the body for a recommended run time to treat each condition. 

David Perez admitted selling each device for approximately $1,200-$1,500, and receiving gross proceeds of approximately $271,000.  He also acknowledged in his plea agreement that he intended to defraud and mislead the Food and Drug Administration by attempting to evade the agency’s oversight of medical claims made regarding the Energy Wave device by maintaining a separate website (rifecodes.com) to which he referred customers who needed to obtain the auto codes that allegedly were used to treat the various medical conditions.  Mr. Perez admitted that he knew or should have known a number of his customers were vulnerable because they had purchased the device in an attempt to cure cancer, and that they were marketing the device without the proper FDA approvals.

Given the loss amount and lack of prior criminal history, the 30 months is a high sentence and those selling or marketing non-FDA approved devices that are suggested to be used to cure any diseases (especially cancer) need to be mindful of the FDA's aggressive stance on such marketing and sales.

Posted by Tracy Green, Esq.

Former Owner and Operator of California Durbable Medical Equipment Supply Company Sentenced in Medicare Fraud Case

The power wheelchair Medicare fraud cases have still not run their course. The latest one involves the former owner and operator (husband and wife) of a durable medical equipment (DME) supply company based in Long Beach, California. 

On January 30, 2016 they were sentenced for their roles in a $1.5 million Medicare fraud case following their conviction at trial. At trial, on October 15, 2015, a federal jury convicted both of one count of conspiracy to commit health care fraud and five counts of health care fraud after trial. 

Amalya Cherniavsky and her husband, Vladislav Tcherniavsky, both of Long Beach were ordered to pay $614,418 in restitution.  U.S. District Judge Terry J. Hatter Jr. of the Central District of California ordered Mr. Tcherniavsky to serve 51 months in prison. His wife Mrs. Cheriavsky received a probation sentence.   

The evidence at trial demonstrated that Mrs. Cherniavsky owned JC Medical Supply, a purported durable medical equipment supply company that she co-operated with her husband Mr. Tcherniavsky.  Evidence further showed that the defendants paid illegal kickbacks to patient recruiters in exchange for patient referrals and paid kickbacks to physicians for medically unnecessary prescriptions—primarily for expensive, power wheelchairs—which the defendants then used to support bills to Medicare. 

With the referral fees to patient recruiters and lack of medical necessity, the government used that to argue that the claims were false and fraudulent. Between 2006 and 2013, the government presented evidence that the DME submitted $1,520,727 in claims to Medicare and received $783,756 in reimbursement for those claims.

Posted by Tracy Green, Esq.

  

Medical Supply Company Owner Convicted in $4 Million Medicare Power Wheelchair Fraud Case in Los Angeles

The Medicare fraud cases relating to durable medical equipment (DME) companies allegedly providing power wheelchairs to patients who did not need them are not quite over. Just last month, a federal jury in Los Angeles on November 4, 2015, convicted a Los Angeles man and owner of a medical supply company for his role in an alleged $4 million Medicare fraud scheme. A sentencing hearing is scheduled for February 29, 2016, before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial. 

According to evidence presented at trial, Valery Bogomolny, used his company, Royal Medical Supply, to bill Medicare $4 million between January 2006 and October 2009 for power wheelchairs (PWCs), back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence the government presented further showed that Mr. Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  

Evidence at trial was presented that Mr. Bogomolny personally delivered PWCs to beneficiaries who were able to walk without assistance and signed documents stating that he had delivered equipment when the equipment was not actually delivered. Mr. Bogomolny's company ultimately received $2.7 million from Medicare on these alleged false claims.

Los Angeles Doctor Charged With Medicare Fraud For Signing Home Health And Hospice Certifications That Were Not Medically Necessary - OIG Investigations Continue

We can expect to see more health care fraud cases involving home health, hospice, physical therapy and occupational therapy being filed in California. These cases also usually involve marketing of Medicare beneficiaries. The Office of Inspector General (OIG) is investigating old cases and seeking to file them even where the billing was done years ago. A recent case involved billing back from 2006.

On June 3, 2014, an Indictment was filed against Dr. Robert Glazer alleging conspiracy to commit health care fraud in violation of 18 U.S.C. §1349, health care fraud in violation of 18 U.S.C. §1347, and aiding and abetting health care fraud from January 2006 to May 2014.  Dr. Glazer is presumed innocent and these are simply allegations in the Indictment. It is alleged that all these certifications for home health, PT and OT and the DME prescriptions resulted in billings to Medicare totaling $33 million which resulted in payments of $22 million. Does this mean that Dr. Glazer received $22 million? Of course not, but in a conspiracy he is liable for the certifications he wrote them and there was not medical necessity.

The Indictment though will show what I see in many health care fraud cases in the Los Angeles area.  First, the doctor allegedly used his clinic to provide medically unnecessary certifications for (1) home health services for nursing, physical therapy and occupational therapy, (2) hospice services, and (3) durable medical equipment for power wheelchairs. 

Medicare coverage for hospice is limited to situations where it has been medically certified that beneficiaries are terminally ill, have 6 months or less to live, and the beneficiary chose hospice understanding that Medicare will not cover treatment intended to cure the beneficiaries' terminal illnesses.

Second, this case involves the marketing of Medicare beneficiaries. A marketer is alleged to be a co-conspirator who recruited Medicare patients for the home health agency and the medical clinic. Patients allegedly received free diabetic shoes and promises of free power wheelchairs. There is a lot of marketing in hospices and the fees paid to marketers are significant. With marketing, any claim will be a false claim but this case goes beyond pure marketing and kickback issues.

Third, this case involved a manager or hidden owner of the Medicare clinic. The Indictment alleges an owner of home health services (Fifth Avenue Home Health) was a manager alleges that the medical clinic provided unnecessary services. In many of these cases, managers and hidden owners are involved.

These fraud cases take years to find their way to court. For physicians who wrote certifications, they are now being held responsible for the billings of third party home health agencies, hospices and DME companies. In some of these cases, the DME companies have been prosecuted and now the government is coming back to charge the physicians, especially now that the individuals who have plead guilty or been convicted are cooperating.

OIG Investigations. If the Office of Inspector General (OIG) has come to your office and requested files by subpoena or request, there is a pending criminal investigation. I have seen many providers not take these subpoenas or investigations seriously and let themselves and their staff interviewed. After a year or two, medical providers may think that these cases have gone away but then find that the investigations are still ongoing. 

It is important to seek expert advice early on in these cases in order to evaluate the legal issues. In some cases, where there is a good defense it may be critical to hire an expert early and present this evidence to OIG or the U.S. Attorney's Office in order to prevent cases from being filed. In other cases, there may be reasons to not disclose this information or evidence and wait to see whether or not charges will be filed. There are many other ways to proceed since each case is different. It is important to have knowledge and understand the allegations, the billing issues and why there is an investigation. This also allows medical providers to plan ahead. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
800 West 6th Street, Suite 450
Los Angeles, California 90017
Tel: 213-233-2260
Email: tgreen@greenassoc.com

Co-Owner of Home Health Agency and DME Company Sentenced to 96 Months In L.A. Federal Heath Care Fraud Case

On February 13, 2012, U.S. District Judge Stephen V. Wilson sentenced Evans Oniha, the co-owner of two Los Angeles-area health care companies, to 96 months in prison following a federal jury trial in the Central District of California in which the jury found Mr. Oniha guilty of one count of conspiracy to commit health care fraud, four counts of health care fraud and one count of false statements relating to health care matters. Mr. Oniha's jury trial was in July 2011. Judge Wilson also ordered Mr. Oniha to pay $7 million in restitution and to serve three years of supervised release following his prison term.

This case arose out of an investigation into power wheelchairs being billed to Medicare by Mr. Oniha's company.  This was an illegal marketing case since the companies used marketers that did not comply with STARK or Anti-Kickback laws. Mr. Oniha and his co-defendant are both originally from Nigeria. 

According to court documents, in 2002, Mr. Oniha and his co-defendant Camillus Ehigie founded and began operating Prosperity Home Health Services Inc., a home health agency, and Caravan Medical Supplies Inc., a durable medical equipment (DME) company. According to testimony presented at trial, from October 2002 to February 2011, Mr. Oniha, Mr. Ehigie and others payed “marketers” for Medicare beneficiary information, fraudulent prescriptions and other documents for DME and home health services. 

Testimony at trial showed that the marketers were individuals who acquired patient Medicare numbers and doctors’ prescriptions and sold them to Mr. Oniha. Mr. Oniha used these documents to submit and cause the submission of claims to Medicare for DME and home health services that were not medically necessary and that often were not provided to Medicare beneficiaries. In many cases, the services were provided to beneficiaries but under the laws, if there is illegal marketing the claim becomes a false claim especially where there is no medical necessity.

Prosperity submitted approximately $8 million in claims to Medicare for home health services. The DME company Caravan submitted approximately $5.8 million in claims to Medicare.

The co-defendant Mr. Ehigie pleaded guilty during trial -- two days before the jury came back with guilty verdicts on Mr. Oniha. Mr. Ehigiie plead guilty to 11 counts of health care fraud, one count of conspiracy to commit health care fraud, one count of making false statements in a federal health care investigation, and one count of obstructing a criminal health care investigation. Mr. Ehigie is scheduled to be sentenced on July 9, 2012.

Attorney Commentary: I received a call this week from a reporter who is doing a piece on health care fraud and commented how there is more fraud than ever. I replied to him that many of these cases are old and are being prosecuted before the statute of limitations run. This case, for example, goes back to 2002 and the investigation was pending for several years before charges were filed.

I mention in the article that the individuals here were from Nigeria. One of the issues in many health care fraud cases are that the individuals are originally from other countries who open health care businesses here and have no idea of the rules and regulations that govern the industry. There is almost universally no consultation with attorneys in setting up the businesses or implementing marketing plans.

In some cases, the patients received the services or DME and the defendants naively believe that just because the services or products were provided it means that there cannot be a viable health care fraud case. They do not understand that if there is illegal marketing that alone will be enough to sustain a conviction. They also fail to appreciate that when they pay marketers, those marketers will have often done illegal tactics themselves in order to secure patients (pay patients, coach patients on what to say, etc.) It is often difficult representing these unsophisticated defendants because they cannot understand how this can be a "fraud" case.

It would be very helpful for the government to require any one receiving a Medicare or Medi-Cal / Medicaid provider number to undergo a required training in the laws and regulations. When a Medicare application is submitted a signature is required stating that the person is familiar with the laws and regulations and agrees to follow them, but that would be difficult since the laws are complex and changing and even lawyers struggle to stay up with the laws. 

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 15-minute consultation.

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 Los Angeles, California and throughout the state and country. Their website is: http://www.greenassoc.com/