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.  

Two Los Angeles Executives of Provider of Substance Abuse Treatments Billed to Drug Medi-Cal Indicted by Grand Jury

The Drug Medi-Cal program has been under a lot of scrutiny since 2013 when it was the subject of investigative reporting. In 2014, significant changes and audits were made.  Many facilities were closed. However, it seems that there are still criminal filings coming out of those past audits.

On March 29, 2018, two executives at a South Los Angeles company that offered alcohol and drug abuse treatment services were indicted on federal charges that allege they defrauded the Medi-Cal program from 2009 to 2015 by submitting bills seeking more than $2 million for services that did not qualify for reimbursement or simply were never provided. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court. 

Los Angeles Dentist Charged in Federal Health Care Fraud Case

On March 12, 2018, a Los Angeles dentist was charged in federal court with six counts of health care fraud and two counts of aggravated identity theft. The identity theft counts are usually added in these cases since they add additional and potentially mandatory prison time which increases the pressure on those charged to plea. An Indictment is not evidence and the dentist is presumed innocent. Here is the link to the U.S. Attorney's Office Press Release.

Owner Of Pennsylvania Medical Staffing Company Sentenced For Billing Medicaid for Services Not Provided, Provided by Others or Not Qualified to Provide Services

Medical staffing companies need to be careful when billing for services and for providers. One issue that arises is when a licensed provider is not available and the services are provided by a different person or someone who is not licensed yet. 

We have seen this with home health agencies as well. Companies must be very careful about controls on who performs services in staffing agencies. A recent staffing company case shows what can happen when there are shortcuts and false documentation. The case can go criminal.

On December 21, 2016, Rose Umana, owner and operator of Vision Healthcare Services, Inc. (Vision) of Pennsylvania, was sentenced by United States District Court Judge Sylvia H. Rambo to 36 months in prison. Vision is a medical staffing company and home care services provider servicing several Pennsylvania counties and has been enrolled under Medicaid since 2006. This sentence was for making false statements relating to health care matters, engaging in monetary transactions involving criminally-derived property, and identity theft.  

According to the United States Attorney's Office, between January 2012 and January 2014, Ms. Umana, in her position as owner of Vision, created false identification documents and fictitious occupational licenses for workers. It is also alleged that Ms. Umana and Vision: 
(1) submitted bills to Medicaid for medical services not provided by the workers, 
(2) billed Medicaid for services provided by someone other than the person claimed to be the provider, and 
(3) billed Medicaid for services not provided or provided by someone not qualified to provide the service.

California Owner and CFO of Chain of Outpatient Drug Rehab and Sober Living Facilities Charged With Insurance Fraud and Identity Theft In State Case in LA County Superior Court

There have been investigations into the drug rehabilitation business the past two years with insurance investigators leading the way. The investigations have covered the marketing to patients, payment of patients' insurance policies, use of drug toxicology laboratories, excessive billing allegations and other insurance issues.

In the largest Los Angeles case to date, on November 10, 2016, Community Recovery of Los Angeles (CRLA)'s CEO Chris Bathum and CFO Kirsten Wallace were charged in a state case in Los Angeles County Superior Court with multiple felony counts of grand theft and identity theft for allegedly conspiring to defraud patients and insurers out of more than $176 million through an elaborate conspiracy. Simultaneously, search warrants were also executed at 15 locations throughout Los Angeles and Orange County. Mr. Bathum and Ms. Wallace are presumed innocent and a criminal complaint is not evidence. 

The felony complaint alleges that Mr. Bathum and Mr. Wallace conspired to steal patient identities and buy health insurance policies for patients without their knowledge. After completing treatment, it is alleged that Mr. Bathum continued to have CRLA bill insurance companies for treatment services. It is alleged that CRLA billed health insurance companies more than $176 million in fraudulent claims. The insurers, including Anthem Blue Cross, Blue Shield, Cigna, Health Net and Humana paid approximately $44 million in total before stopping claim payments to CRLA.

Owner of Portable Diagnostic Provider Convicted of Health Care Fraud Where X-Ray, MRI and Ultrasound Interpretations Not Performed By Physicians. Finding That Two Patients' Deaths Caused By X-Rays Not Being Reviewed By Radiologist

One of the issues with diagnostic providers is that with electronic reports there are times when radiologists become concerned that the IDTF is using technicians to do draft reports and have someone sign their signatures to radiology reports without having a radiologist read the reports. Recently such a case was prosecuted and went to trial in Maryland.

On February 17, 2016, a federal jury convicted the owner of Alpha Diagnostics, Rafael Chikvashvili of multiple felonies: health care fraud and wire fraud conspiracy, healthcare fraud (including two counts of health care fraud resulting in death); wire fraud, false statements and aggravated identity theft. The total billings to Medicare and Medicaid were more than $7.5 million.  

Judge Bredar ordered that Mr. Chikvashvili be immediately taken into custody with a detention hearing to be held to determine whether he will remain in custody pending his sentencing.

According to the evidence presented at the two-and-a-half week trial, Mr.Chikvashvili formed Alpha Diagnostics Services, Inc., which later became Alpha Diagnostics, LLC, in 1993, and was the Managing Member, Authorized Official, Managing Employee, President and Chief Executive Officer for Alpha Diagnostics. Mr. Chikvashvili holds a PhD in mathematics, but was never a medical doctor or licensed physician. 

Timothy Emeigh was the Vice President in charge of Operations at Alpha Diagnostics and was a licensed radiologic technologist. Timothy Emeigh previously pleaded guilty to health care fraud and is awaiting sentencing.

Alpha Diagnostics was a portable diagnostic services provider, principally of X-rays, but also provided ultrasound tests, and cardiologic examinations.  Alpha Diagnostics’ clients included nursing homes whose patients were covered by Medicare and Medicaid. Alpha Diagnostics operated in Maryland, Delaware, Pennsylvania, Virginia and the District of Columbia, but was headquartered in Owings Mills, Maryland, where Mr. Chikvashvili worked full time.

Based on the evidence, the jury found that from 1997 through October 2013, Mr. Chikvashvili conspired with others to defraud Medicare and Medicaid by: 

- creating false radiology, ultrasound and cardiologic interpretation reports; 

Riverside Woman Convicted in Federal Court of Stealing Identities of Residents of Medical Facility in Long Beach. Reason Facilities Need Strong HIPAA and Privacy Procedures.

One of the reasons medical facilities should have strong HIPAA policies and procedures, as well as enforcement and training, is to prevent employees or third parties from taking medical information for other improper or illegal purposes.

Last week, Bridgette Jackson of Riverside, California was convicted in federal court after a jury trial on federal identity theft charges for possessing the identities of more than 50 patients of a residential medical facility in Long Beach formerly known as the Hillcrest Care Center. She was convicted of conspiring to possess more than 15 identities, possessing more than 15 identities, and aggravated identity theft.

Ms. Jackson’s aunt, who testified against her at the trial, was an employee at the Hillcrest Care Center and had access to all of the patient files. According to the testimony at trial, Ms. Jackson approached her aunt and asked for personal identifying information of patients. Ms. Jackson’s aunt copied or wrote down personal identifying information and provided it to Ms. Jackson on three separate occasions. 

Ms. Jackson then used that information to help others file false tax returns in the names of the patients and keep the refunds for themselves. When law enforcement executed a search warrant on Ms. Jackson’s residence, officers seized approximately 56 Hillcrest medical records, along with almost 70 other identity profiles, which included names, social security numbers, and dates of birth of individuals other than Ms. Jackson. Law enforcement also seized over 50 prepaid debit cards in names of people other than Jackson.

After the jury verdict was reached, United States District Judge Manuel L. Real scheduled a sentencing hearing for March 7. At that time, Jackson will face a mandatory minimum sentence of two years in federal prison and a statutory maximum sentence of 17 years.   In an unrelated case, Ms. Jackson pled guilty last year to conspiring to commit credit card fraud in the United States District Court in Riverside and faces up to five years when she is sentenced in that case on March 28.

Attorney Commentary:  The black market for patient identity exists. Low paid clerical or medical workers can be susceptible to third parties (here a family member) seeking information. In addition, health care facilities' computer systems are now being targeted. Having a HIPAA audit and compliance is key so the facility does not face civil liability by the patients or OIG fines for the HIPAA violations.

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

Los Angeles Chiropractor Charged With Medicare Fraud, Aggravated Identity Theft And Forfeiture Allegations

Medicare fraud cases involving chiropractors are not very common. The reason for this is that Medicare severely limits coverage for chiropractic services to manual manipulation of the spine to correct a condition known as “subluxation.” The diagnosis of subluxation must be diagnosed and documented either by X-ray or a physical examination that is detailed and documented before Medicare will reimburse. Medicare does not pay for maintenance therapy or for chiropractic treatments that are for maintenance or to promote health.

In Los Angeles, a chiropractor, Danny Paveh (also known as Houshang Pavehzadeh) of the Sylmar Physician Medical Group, was charged in May 2013 with federal health care fraud (18 USC 1347), aggravated identity theft (18 USC 1028(A)(1), and forfeiture allegations. Dr. Paveh is presumed innocent and the fact that an Indictment has been filed is not evidence. This case is pending in the U.S. District Court for the Central District before Judge Manuel L. Real. Mr. Paveh was released on $100,000 bond and a trial date is not yet set.

The allegations in this case are that from 2005 to 2012 – a very long billing period – Chiropractor Paveh billed Medicare more than $1.7 million for chiropractic treatments for subluxation that were never properly performed.  The government alleges that the patients only received massages and other non-reimbursable treatments from Dr. Paveh and massage therapists who worked at his group. Essentially, the government alleges that these were “false claims” submitted to Medicare. It is also alleged that Dr. Paveh committed “aggravated identity theft” by taking the patients information and billing Medicare.

Attorney Commentary Regarding This Chiropractor Medicare Fraud Case

First, it appears that Dr. Paveh may have come to the government’s attention via an audit to be performed by OIG. According to the government, Dr. Paveh was the second-largest Medicare biller in California for chiropractic services – even though he was the only chiropractor in his group. The government also alleged that he was not in the United States when some of the  services were performed.

Second, although clients can panic when faced with an audit, the government alleges that when OIG investigators tried to conduct an audit of Pavehzadeh’s claims, he falsely reported to the Los Angeles Police Department that he had been carjacked and that patient files requested by the auditors had been stolen from his car. This could be used as a sentencing enhancement and to show false statements to government officials in conducting an audit.

Third, I often see clients who assume because they have billed certain procedures for years that it means that Medicare must not have an issue with the billing or documentation. Unfortunately, Medicare is known as “good faith” billing and it reserves the right to go back and audit and seek an overpayment in an administrative context or to seek criminal charges as was done here. Thus, years of billing does not guarantee that the government will not take action. Health care has changed over the years and Medicare has become much more aggressive in health care fraud cases.

Fourth, this case was being investigated for some years. This means that there was significant time to meet with the federal prosecutors and see if the case could be settled pre-indictment. In some cases, we are able to have the prosecutors offer a “reverse proffer” so the client and Medicare fraud attorney can see what evidence the government has so the case can be realistically assessed. 

Finally, forfeiture allegations were filed in this case which can often tie up a defendant's assets and make it more difficult to defend oneself or to support oneself pending a trial. In evaluating anyone's potential exposure, it should be assumed that forfeiture allegations will be filed in any federal health care fraud case. 

In cases like this, obtaining representation long before Indictment – and ideally at the audit stage – make the most sense so the case does not grow and if there are adverse facts, they can be handled at the earliest stage. If there is exculpatory evidence and facts that show innocence and good faith billing, then those facts can be presented as well.

Posted by Tracy Green, Esq.

Ms. Green is a very experienced health care fraud attorney who has handled hundreds of audits and investigations for Medicare, Medi-Cal and private insurance. In addition, she has defended health care professionals and companies in Medicare fraud, Medi-Cal fraud, mail fraud arising from false billing claims, aggravated identity theft and health care forfeiture claims. Feel free to contact her at 213-233-2260 or via email at tgreen@greenassoc.com to discuss your unique situation.

Washington Man Charged With Federal Crimes in San Jose, California For Unauthorized Access Of Private Email Account

A recent case regarding unauthorized access of a Yahoo email account shows how accessing someone's email account can be a federal crime. Think of someone you know in a troubled relationship who finds out their partner's password and authorizes their email without authorization. Even if not done for financial gain, it is a crime. In professional and personal relationships, email is a tempting means of accessing private information about someone.

On July 15, 2009, a federal grand jury in San Jose, California indicted Gregory Alexander, of Everett, Washington, for unauthorized access of the private email account of a member of a not-for-profit organization’s board of directors. Mr. Alexander was charged with computer fraud and aggravated identity theft. He is currently out of custody on a $100,000 personal recognizance bond. The case is being prosecuted in San Jose since that is where Yahoo is located.

According to the indictment, Mr. Alexander used a username and password belonging to Randall Hough, a member of the United States Chess Federation’s (UCSF) Board of Directors, to access Hough’s private email account on 34 separate occasions spanning from November 2007 to June 2008. Mr. Alexander was the webmaster for a chess site known as chessdiscussion.com. Additionally, the indictment notes that Mr. Alexander obtained information from Hough’s account on an unspecified number of those occasions.

The maximum statutory penalty for each count of computer fraud in violation of 18 U.S.C. § 1030(a)(2) is 10 years and a fine of $250,000. The maximum statutory penalty for the count of aggravated identity theft in violation of 18 U.S.C. § 1028A(a)(1) is two years. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Alexander must be presumed innocent unless and until proven guilty.

For a copy of the indictment, go to:
http://www.usdoj.gov/usao/can/press/press_documents/AlexanderIndictment.pdf

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260. The firm website is: http://www.greenassoc.com/

Physician Assistant Convicted By Jury For Medicare Fraud And Stealing Physician's Identity In Los Angeles Federal Trial

One recent criminal Medicare fraud case shows the links between identity theft, patient recruiting and illegal kickbacks. These issues do not affect most health care providers but it is important to understand what is happening in the criminal fraud cases to see why the government is pursuing all "fraud" cases with a vengeance. There is outright fraud like this case here. There are also "fraud" cases where there are simply violations of rules and regulations but where services are provided and medically necessary.

On Jule 30, 2009, after a 7-day trial , a federal jury in Los Angeles found physician assistant, Ronald Luis Bradshaw, guilty on all charged counts, including conspiracy to commit health care fraud, multiple counts of health fraud and aggravated identity theft for prescribing medically unnecessary durable medical equipment to hundreds of Medicare beneficiaries under the stolen identity of a doctor. The loss alleged was $7.7 million. There were two related guilty pleas in this case by a patient recruiter/capper and an owner of a medical equipment company.

According to the evidence presented at trial, Mr. Bradshaw worked as a licensed physician assistant at a Los Angeles clinic, Glenmountain Medical Group (Glenmountain). Under physician assistant rules, Mr. Bradshaw was supposed to be working under the supervision of a doctor. It was alleged in the trial that the doctor supervision was a sham.

The doctor, whose unique physician identification number (called a UPIN) had been used by Mr. Bradshaw to forge medically unnecessary prescriptions, testified that he never worked at Glenmountain and that he never authorized Mr. Bradshaw to use his number. The total amount billed under this doctor’s name for medical equipment and tests prescribed by Mr. Bradshaw was $7,708,069.

Evidence at trial established that from approximately April 2005 to April 2008, Mr. Bradshaw prescribed hundreds of motorized wheelchairs and custom-fitted orthotics to Medicare beneficiaries under the apparent authority and supervision of this same doctor. Mr. Bradshaw also ordered diagnostic tests for these beneficiaries under the same doctor’s apparent authority.

Several beneficiaries (patients) testified at trial that they were recruited by patient recruiters to be examined at Glenmountain. Some beneficiaries testified that they were enticed by the promise of a free exam, while others were promised free, expensive medical equipment.

Juana Aranda, a professional patient recruiter/capper who previously pleaded guilty in connection with this case, testified that she was paid cash for bringing Medicare beneficiaries to Glenmountain and that she was paid more if the beneficiary was prescribed a motorized wheelchair.

Each of the beneficiaries who testified at trial stated that they had no difficulties walking and that they did not complain about any difficulties during their respective examinations. After their examinations, however, each received a motorized wheelchair delivered to them by Star Medical Supply Inc., a durable medical equipment company owned and operated by Karen Arakelyan, who previously pleaded guilty in connection with the facts in this case.

Mr. Arakelyan testified that he paid a Glenmountain representative $1,200 per prescription. Mr. Arakelyan admitted he then delivered a motorized wheelchair to the beneficiary and filed a fraudulent claim with Medicare based on the bogus prescription that he purchased from Glenmountain.

At sentencing, scheduled for November 12, 2009, Mr. Bradshaw faces a maximum penalty of 10 years in prison on each of the four health care fraud counts as well as the conspiracy to commit health care fraud count for which he was convicted. In addition, he faces a mandatory two-year prison sentence on the aggravated identity theft count, which must be served consecutive to the sentence on the fraud counts. In determining the actual sentence, the federal judge will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located in Los Angeles, California. 

Any questions or comments  should be directed to Tracy Green, a very experienced California health care fraud attorney, Los Angeles physician assistant attorney, and Los Angeles health care attorney at tgreen@greenassoc.com. 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 including physician assistants. Their website is: http://www.greenassoc.com/