The Department of Health and Human Services
The Department of Justice
Health Care Fraud and Abuse Control Program
Annual Report for Fiscal Year 2015
TABLE OF CONTENTS
Program Results and Accomplishments
Health Care Fraud Prevention and Enforcement Action Team
Health Care Fraud Prevention Partnership
Medicare Fraud Strike Force
Highlights of Successful Criminal and Civil Investigations
Department of Health and Human Services
Office of Inspector General
Centers for Medicare & Medicaid Services
Administration on Community Living
Office of the General Counsel
Food and Drug Administration Pharmaceutical Fraud Program
Department of Justice
United States Attorneys
Civil Rights Division
Federal Bureau of Investigation
Return on Investment Calculation
Total HCFAC Resources
Glossary of Terms
All years are fiscal years unless otherwise
noted in the text.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national
Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint
direction of the Attorney General and the Secretary of the Department of Health and Human
Services (HHS)1, acting through the Inspector General, designed to coordinate federal, state and
local law enforcement activities with respect to health care fraud and abuse. In its nineteenth
year of operation, the Program’s continued success confirms the soundness of a collaborative
approach to identify and prosecute the most egregious instances of health care fraud, to prevent
future fraud and abuse, and to protect program beneficiaries.
During Fiscal Year (FY) 2015, the Federal Government won or negotiated over $1.9 billion in
health care fraud judgments and settlements2, and it attained additional administrative
impositions in health care fraud cases and proceedings. As a result of these efforts, as well as
those of preceding years, in FY 2015, approximately $2.4 billion was returned to the Federal
Government or paid to private persons. Of this $2.4 billion, the Medicare Trust Funds3 received
transfers of approximately $1.6 billion during this period, and $135.9 million in Federal
Medicaid money was similarly transferred separately to the Treasury as a result of these
efforts. Of the approximately $29.4 billion returned by the HCFAC account to the Medicare
Trust Funds since the inception of the Program in 1997, over $16.2 billion has been returned
between 2009 and 2015.
In FY 2015, the Department of Justice (DOJ) opened 983 new criminal health care fraud
investigations. Federal prosecutors filed criminal charges in 463 cases involving 888 defendants.
A total of 613 defendants were convicted of health care fraud-related crimes during the year.
Also in FY 2015, DOJ opened 808 new civil health care fraud investigations and had 1,048 civil
health care fraud matters pending at the end of the fiscal year. In FY 2015, the FBI investigative
efforts resulted in over 625 operational disruptions of criminal fraud organizations and the
dismantlement of the criminal hierarchy of more than 144 health care fraud criminal enterprises.
In FY 2015, HHS’ Office of Inspector General (HHS-OIG) investigations resulted in 800
criminal actions against individuals or entities that engaged in crimes related to Medicare and
Medicaid, and 667 civil actions, which include false claims and unjust-enrichment lawsuits filed
in federal district court, civil monetary penalties (CMP) settlements, and administrative
recoveries related to provider self-disclosure matters. HHS-OIG also excluded 4,112 individuals
Hereafter, referred to as the Secretary.
The amount reported as won or negotiated only reflects the federal recoveries and therefore does not reflect state
Medicaid monies recovered as part of any global federal-state settlements.
Also known as the Medicare Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part
B) Trust Fund.
and entities from participation in Medicare, Medicaid, and other federal health care programs.
Among these were exclusions based on criminal convictions for crimes related to Medicare and
Medicaid (1,329) or to other health care programs (424), for patient abuse or neglect (302), and
as a result of licensure revocations (1,743). HHS-OIG also issued numerous audits and
evaluations with recommendations that, when implemented, would correct program
vulnerabilities and save program funds.
Due to sequestration of mandatory funding in 2015, there were fewer resources for DOJ, FBI,
HHS, and HHS-OIG to fight fraud and abuses against Medicare, Medicaid, and other health care
programs. A total of $22.0 million was sequestered from the HCFAC program in FY 2015, for a
combined total of $74.2 million in the past three years. Including funds sequestered from the
FBI, the total equals $101.2 million in the past three years.
The Annual Report of the Attorney General and the Secretary detailing expenditures and
revenues under the Health Care Fraud and Abuse Control Program for Fiscal Year 2015 is
provided as required by Section 1817(k)(5) of the Social Security Act.
The Social Security Act Section 1128C(a), as established by the Health Insurance Portability and
Accountability Act of 1996 (P.L. 104-191, HIPAA or the Act), created the Health Care Fraud
and Abuse Control Program, a far-reaching program to combat fraud and abuse in health care,
including both public and private health plans.
As was the case before HIPAA, amounts paid to Medicare in restitution or for compensatory
damages must be deposited in the Medicare Trust Funds. The Act requires that an amount
equaling recoveries from health care investigations—including criminal fines, forfeitures, civil
settlements and judgments, and administrative penalties—also be deposited in the Trust Funds.
The Act appropriates monies from the Medicare Hospital Insurance Trust Fund to an expenditure
account, called the Health Care Fraud and Abuse Control Account (the Account), in amounts that
the Secretary and Attorney General jointly certify as necessary to finance anti-fraud activities.
The maximum amounts available for certification are specified in the Act. Certain of these sums
are to be used only for activities of the HHS-OIG, with respect to the Medicare and Medicaid
programs. In FY 2006, the Tax Relief and Health Care Act (TRHCA) (P.L 109-432, §303)
amended the Act so that funds allotted from the Account are “available until expended.”
TRHCA also allowed for yearly increases to the Account based on the change in the consumer
price index for all urban consumers (all items, United States city average) (CPI-U) over the
previous fiscal year for fiscal years for 2007 through 2010.4 In FY 2010, the Patient Protection
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act,
collectively referred to as the Affordable Care Act (P.L. 111-148, ACA) extended permanently
the yearly increases to the Account based upon the change in the consumer price index for all
urban consumers, or CPI-U.
In FY 2015, the Secretary and the Attorney General certified $279.7 million in mandatory
funding to the Account after accounting for sequester reductions of $22.0 million to the total
appropriation. Additionally, Congress appropriated $672.0 million in discretionary funding. A
detailed breakdown of the allocation of these funds is set forth later in this report. HCFAC
appropriations generally supplement the direct appropriations of HHS that are devoted to health
care fraud enforcement and supported over two-thirds of DOJ’s health care fraud funding and
over three-fourths of HHS-OIG’s appropriated budget in FY 2015. (Separately, the FBI, which
is discussed in the appendix, received $129.2 million from HIPAA, after accounting for $10.2
million in mandatory sequester reductions.) Under the joint direction of the Attorney General
and the Secretary, the Program’s goals are:
The CPI-U adjustment in TRHCA did not apply to the Medicare Integrity Program (MIP). Section 6402 of the
ACA indexed Medicare Integrity Program funding to inflation starting in FY 2010.
to coordinate federal, state and local law enforcement efforts relating to health care fraud
and abuse with respect to health plans;
to conduct investigations, audits, inspections, and evaluations relating to the delivery of
and payment for health care in the United States;
to facilitate enforcement of all applicable remedies for such fraud; and
to provide education and guidance regarding complying with current health care law.
The Act requires the Attorney General and the Secretary to submit a joint annual report to the
Congress that identifies both:
the amounts appropriated to the Trust Funds for the previous fiscal year under various
categories and the source of such amounts; and
the amounts appropriated from the Trust Funds for such year for use by the Attorney
General and the Secretary and the justification for the expenditure of such amounts.
This annual report fulfills the above statutory requirements.
Additionally, this report fulfills the requirement in the annual discretionary HCFAC
appropriation (Public Law 113-235 “Consolidated and Further Continuing Appropriations Act,
2015”) that this report “include measures of the operational efficiency and impact on fraud,
waste, and abuse in the Medicare, Medicaid, and CHIP programs for the funds provided by this
PROGRAM RESULTS AND ACCOMPLISHMENTS
As required by the Act, HHS and DOJ must detail in this Annual Report the amounts deposited
to the Medicare Trust Funds and the source of such deposits. In FY 2015, approximately
$2.4 billion was deposited with the Department of the Treasury and CMS, transferred to other
federal agencies administering health care programs, or paid to private persons during the fiscal
year. Monetary results from these transfers and deposits are provided in the table below:
Monetary Results: Total Transfers/Deposits by Recipient FY 2015
Department of the Treasury
Deposits to the Medicare Trust Funds, as required by HIPAA
Gifts and Bequests
Amount Equal to Criminal Fines
Civil Monetary Penalties
Penalties and Multiple Damages
Centers for Medicare & Medicaid Services
HHS-OIG Audit Disallowances — Recovered - Medicare
Grand Total of Amounts Transferred to the Medicare Trust Funds
Restitution/Compensatory Damages to Federal Agencies
HHS-OIG Cost of Audits, Investigations and Compliance Monitoring
Centers for Medicare and Medicaid Services
Federal Share of Medicaid
HHS-OIG Audit Disallowances — Recovered - Medicaid
*Restitution, compensatory damages, and recovered audit disallowances include returns to both the Medicare
Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust Fund.
**These are funds awarded to private persons who file suits on behalf of the Federal Government under the qui tam
(whistleblower) provisions of the False Claims Act, 31 U.S.C. ' 3730(b).
***State funds are also collected on behalf of state Medicaid programs; only the Federal share of Medicaid funds
transferred to CMS are represented here.
The above transfers include certain collections, or amounts equal to certain collections, required
by HIPAA to be deposited directly into the Medicare Trust Funds. These amounts include:
Gifts and bequests made unconditionally to the Trust Funds, for the benefit of the
Account or any activity financed through the Account;
Criminal fines recovered in cases involving a federal health care offense, including
collections under section 24(a) of Title 18, United States Code (relating to health care
Civil monetary penalties in cases involving a federal health care offense;
Amounts resulting from the forfeiture of property by reason of a federal health care
offense, including collections under section 982(a)(7) of Title 18, United States Code;
Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the
general fund of the Treasury obtained under sections 3729 through 3733 of Title 31,
United States Code (known as the False Claims Act, or FCA), in cases involving claims
related to the provision of health care items and services (other than funds awarded to a
relator, for restitution or otherwise authorized by law).
In the nineteenth year of operation, the Secretary and the Attorney General certified
$279.7 million in mandatory funding as necessary for the Program, after accounting for
mandatory sequester reductions of $22.0 million as required by law. Additionally, Congress
appropriated $672.0 million in discretionary funding. See allocation by recipient below:
FY 2015 ALLOCATION OF HCFAC APPROPRIATION
Department of Health and Human
Office of Inspector General6
Office of the General Counsel
Administration for Community
Food and Drug Administration
Centers for Medicare & Medicaid
Department of Justice
United States Attorneys
Civil Rights Division
Justice Management Division
Department of Justice - Other
$67,200,000 ($14,652,449) $253,266,026
$672,000,000 ($22,029,803) $971,748,317
As of FY 2007, mandatory funds are available until expended. Discretionary funds are available for two years.
In addition, HHS-OIG obligated $9.8 million in funds received as “reimbursement for the costs of conducting
investigations and audits and for monitoring compliance plans” as authorized by section 1128C(b) of the Social
Security Act, 42 U.S.C. § 1320a-7c(b).
The Elder Justice Initiative, managed by the Civil Division, is included in the Civil Division figures.
Amounts only represent those that are provided by statute, and do not include other mandatory sources or
discretionary appropriated sources provided through Departments’ annual appropriations.
During this fiscal year, the Federal Government won or negotiated over $1.9 billion in judgments
and settlements, and attained additional administrative impositions in health care fraud cases and
proceedings. As a result of these efforts, as well as those of preceding years, approximately $2.4
billion was returned to the Federal Government or private persons. Of this $2.4 billion, the
Medicare Trust Funds received transfers of approximately $1.6 billion during this period; and
another $135.9 million in Federal Medicaid money was transferred to the Treasury separately as
a result of these efforts.9
In addition to these enforcement actions, numerous audits, evaluations and other coordinated
efforts yielded recoveries of overpaid funds, and prompted changes in federal health care
programs that reduce vulnerability to fraud.
The return on investment (ROI) for the HCFAC program over the last three years (2013-2015) is
$6.10 returned for every $1.00 expended. Because the annual ROI can vary from year to year
depending on the number and type of cases that are settled or adjudicated during that year, DOJ
and HHS use a three-year rolling average ROI for results contained in the report. Additional
information on how the ROI is calculated can be found in the Appendix.
Health Care Fraud Prevention and Enforcement Action Team (HEAT)
The Attorney General and the Secretary maintain regular consultation at both senior and staff
levels to accomplish the goals of the HCFAC Program. On May 20, 2009, Attorney General
Holder and Secretary Sebelius announced the Health Care Fraud Prevention & Enforcement
Action Team (HEAT), a new effort with increased tools and resources, and a sustained focus by
senior level leadership to enhance collaboration between the Departments of Health and Human
Services and Justice. With the creation of the new HEAT effort, DOJ and HHS pledged a
Cabinet-level commitment to prevent and prosecute health care fraud. HEAT, which is jointly
led by the Deputy Attorney General and HHS Deputy Secretary, is comprised of top level law
enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff from DOJ and
HHS and their operating divisions, and is dedicated to joint efforts across government to both
prevent fraud and enforce current anti-fraud laws around the country. The Medicare Fraud
Strike Force teams are a key component of HEAT.
The mission of HEAT is:
To marshal significant resources across government to prevent waste, fraud and
abuse in the Medicare and Medicaid programs and crack down on the fraud
perpetrators who are abusing the system and costing us all billions of dollars.
To reduce health care costs and improve the quality of care by ridding the system of
perpetrators who are preying on Medicare and Medicaid beneficiaries.
Note that some of the judgments, settlements, and administrative actions that occurred in FY 2015 will result in
transfers in future years, just as some of the transfers in FY 2015 are attributable to actions from prior years.
To highlight best practices by providers and public sector employees who are
dedicated to ending waste, fraud, and abuse in Medicare.
To build upon existing partnerships between DOJ and HHS, such as our Medicare
Fraud Strike Force Teams, to reduce fraud and recover taxpayer dollars.
Since its creation in May 2009, HEAT has focused on key areas for coordination and
improvement. HEAT members are working to identify new enforcement initiatives and areas for
increased oversight and prevention to increase efficiency in areas such as pharmaceutical and
device investigations. DOJ and HHS have expanded data sharing and improved information
sharing procedures in order to get critical data and information into the hands of law enforcement
to track patterns of fraud and abuse and increase efficiency in investigating and prosecuting
complex health care fraud cases. The departments established a cross-government health care
fraud data intelligence sharing workgroup to share fraud trends, new initiatives, ideas, and
success stories to improve awareness across of issues relating to health care fraud.
Both departments also have developed training programs to prevent honest mistakes and help
stop potential fraud before it happens. This includes CMS compliance training for providers, ongoing meetings at U.S. Attorneys’ Offices (USAOs) with the public and private sector, and
increased efforts by HHS to educate specific groups—including elderly and immigrant
communities—to help protect them. In addition, DOJ conducts, with the support of HHS, a
Medicare Fraud Strike Force training program designed to teach the Strike Force concept and
case model to prosecutors, law enforcement agents, and administrative support teams.
Healthcare Fraud Prevention Partnership (HFPP)
The Healthcare Fraud Prevention Partnership (HFPP) is the groundbreaking public/private
partnership between the Federal Government, State officials, law enforcement, private health
insurance plans and associations, and healthcare anti-fraud associations. The purpose of the
partnership is to exchange data and information between the partners to help improve capabilities
to fight fraud, waste and abuse in the health care industry. Since its inception in 2012, the
number of participants has increased to 45 public, private and state partner organizations. The
Partnership has completed several studies associated with fraud, waste or abuse that have yielded
successful results for participating partners. Studies have examined such subjects as “false store
fronts” or “phantom providers” and top billing pharmacies. Additional studies are underway and
the Partnership has established a Trusted Third Party (TTP) which conducts HFPP data
exchanges, research, data consolidation and aggregation, reporting, and analysis. The TTP will
not share the source of the data (i.e., which partner submitted what data) during an exchange in
order to keep the identity of the data source confidential. HFPP is continuing to expand with
The Partnership is a demonstrated example of effective departmental collaboration between HHS
and DOJ, working together to create a strong partnership with the states and private payers to
detect fraud, waste, and abuse. In FY 2015, the Partnership hosted its fifth Executive Board
meeting. The meeting focused on developing a strategy to ensure the productivity of the
Partnership and highlighted achievements and progress since the last meeting including data
exchanges, information sharing, and partnership growth.
Medicare Fraud Strike Force
The first Medicare Fraud Strike Force (Strike Force) was launched in March 2007 as part of the
South Florida Initiative, a joint investigative and prosecutorial effort against Medicare fraud and
abuse in South Florida. The Strike Force is comprised of interagency teams made up of
investigators and prosecutors that focus on the worst offenders in regions with the highest known
concentration of fraudulent activities. The Strike Force uses advanced data analysis techniques
to identify aberrant billing levels in health care fraud “hot spots”—cities with high levels of
billing fraud—and target suspicious billing patterns, as well as emerging schemes and schemes
that migrate from one community to another. Based on the success of these efforts and increased
appropriated funding for the HCFAC program from Congress and the Administration, DOJ and
HHS expanded Strike Force operations to a total of nine areas in the United States—Miami,
Florida; Los Angeles, California; Detroit, Michigan; Southern Texas; Brooklyn, New York;
Southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas.
Each Medicare Fraud Strike Force team brings the investigative and analytical resources of the
FBI and HHS-OIG and the prosecutorial resources of the Criminal Division’s Fraud Section and
the USAOs to analyze data obtained from CMS and bring cases in federal district court. Strike
Force accomplishments in the areas noted above and USAO accomplishments in their districts
during FY 2015 include10:
200 indictments, informations and complaints involving charges filed against
391 defendants who allegedly collectively billed the Medicare program approximately
314 guilty pleas negotiated and 28 jury trials litigated, with guilty verdicts against
48 defendants; and
Imprisonment for 263 defendants sentenced during the fiscal year, averaging more than
56 months of incarceration.
In the eight and a half years since its inception, Strike Force prosecutors filed more than
1,164 cases charging more than 2,536 defendants who collectively billed the Medicare program
more than $8 billion; 1,781 defendants pleaded guilty and 243 others were convicted in jury
trials; and 1,477 defendants were sentenced to imprisonment for an average term of
approximately 49 months.11
Medicare payment trends demonstrate the positive impact of Strike Force enforcement and
prevention efforts. For example, Medicare payments for home health care increased from 2006
until 2010. In 2009, CMS changed Medicare’s Home Health Agency (HHA) outlier coverage
policy, following federal enforcement actions initiated by the HEAT Strike Force case U.S. v.
Zambrana in Miami and HHS-OIG reports regarding home health outlier payments. As reflected
The accomplishments figures presented in the bullets include all reported Strike Force cases handled by DOJ
Criminal Division attorneys and AUSAs in the respective USAOs during FY 2015.
These statistics are for the period of May 7, 2007 through September 30, 2015.
on the chart below, since 2010, payments for HHAs in Miami decreased by $100 million per
quarter since the peak in 2009, and continue to decline. In Dallas and Detroit, payments for
HHAs are down by over $40 million and $25 million per quarter, respectively, since 2010. This
may suggest that the home health fraud convictions not only eliminated some of the bad actors
but also deterred other fraudsters from exploiting the outlier coverage policy. We have seen
similar patterns of decreased Medicare payments for Durable Medical Equipment (DME) and
community mental health services (CMHC) following concentrated law enforcement initiatives
and administrative fraud prevention efforts.
Medicare Payments for CMHC, DME, and HHA Services,
Calendar Years 2006-2015
HHA Dallas area
For examples of successful Strike Force cases initiated or concluded during FY 2015, please see
“Highlights of Successful Criminal and Civil Investigations” beginning on p. 12.
Highlights of Successful Criminal and Civil Investigations
Our respective Departments successfully pursued Medicare Fraud Strike Force matters, as well
as other criminal and civil investigations in a wide range of areas. Cases are organized by type
and presented in chronological order. Strike Force cases are denoted by (SF) in the lead
Ambulance and Transportation Services
In November 2014, the co-owner of Brotherly Love, a Philadelphia, Pennsylvania ambulance
company, was sentenced to 5 years and 4 months of incarceration and was ordered to pay more
than $2 million in restitution after pleading guilty to health care fraud and the anti-kickback
statute (AKS) charges. The investigation revealed that the co-owner and her co-conspirators
transported by ambulance patients who could walk; transported patients in personally owned
vehicles, but billed as if the patients were transported by ambulance; used patient information to
bill as if the patients had been transported by ambulance when, in fact, the patients actually
transported themselves; and paid patients to be transported by Brotherly Love.
In May 2015, five Orange County California ambulance companies in San Diego, California
agreed to pay a total of more than $11.5 million to settle civil False Claims Act (FCA)
allegations that they engaged in so-called “swapping” kickback schemes by providing deeply
discounted—and often below cost—ambulance services to hospitals and/or skilled nursing
facilities (SNFs) in exchange for exclusive rights to the facilities’ more lucrative Medicare
patient referrals in violation of the AKS. The government alleged that the arrangements resulted
in false claims for Medicare Part B transports, which in essence subsidized the discounted trips.
The settling defendants were Pacific Ambulance, Inc., Bowers Companies, Inc., Care
Ambulance Service, Inc., Balboa Ambulance Service, Inc., and E.R. Ambulance, Inc.
(SF) In August 2015, the owner, operators, and managers of ProMed Medical Transportation, an
ambulance transportation company in the greater Los Angeles area, were convicted after trial for
their roles in a $2.4 million Medicare fraud scheme. The evidence at trial demonstrated that the
defendants conspired to bill Medicare for ambulance transportation services for individuals
whom the defendants knew did not need such services. The defendants also instructed
emergency medical technicians who worked at ProMed to conceal the true medical conditions of
patients they were transporting by altering requisite paperwork and creating fraudulent
documents to justify the transportation services.
(SF) In June 2015, a general manager and a dispatch supervisor of Mauran Ambulance Inc., an
ambulance company in San Fernando, California, were indicted for their roles in a $28 million
Medicare fraud scheme. The defendants allegedly billed Medicare for medically unnecessary
ambulance transportation services, which primarily were to and from dialysis treatments. In
their respective roles at Mauran, the defendants instructed emergency medical technicians who
worked at Mauran to conceal the true medical condition of patients they were transporting by
altering paperwork and creating false reasons to justify Mauran’s ambulance transportation
services. A former administrator of a dialysis clinic was also indicted for receiving cash
kickbacks from Mauran’s general manager in exchange for patient referrals.
In FY 2015, DaVita Healthcare Partners, Inc., the nation’s largest provider of dialysis services,
agreed to pay a total of $800 million to settle allegations made in two civil FCA actions. In
October 2014, DaVita agreed to pay $350 million to settle civil FCA allegations that it paid
kickbacks to induce the referral of patients to its dialysis clinics. The government alleged that
DaVita offered physicians lucrative opportunities to acquire and/or sell an interest in DaVita
dialysis clinics to which their patients would be referred for treatment and then prevented the
physicians from referring their patients to other dialysis providers through a series of noncompete and non-disparagement agreements with the physicians. In June 2015, DaVita paid an
additional $450 million to settle civil FCA allegations pursued by two whistleblowers that it
created unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients,
and then billed federal health care programs for such avoidable waste.
(SF) In October 2014, two owners of several Brooklyn, NY medical clinics pled guilty to health
care fraud conspiracy and falsification of records in the Eastern District of New York. The
medical director of one clinic pled guilty to health care fraud conspiracy in March 2015. The
defendants owned and operated a series of medical clinics that were used to submit more than
$14.3 million in Medicare claims, of which $5.3 million was paid. The indictment alleged that
the majority of the claims were fraudulent because they were for services such as vitamin
infusions, physical and occupational therapy, and diagnostic tests that were medically
unnecessary, not provided, or otherwise not reimbursable. The defendants also allegedly
laundered the proceeds of the fraudulent scheme and falsified documents, which they then
provided to Medicare auditors and the FBI in order to conceal the fraudulent scheme.
(SF) In October 2014, an occupational therapist pled guilty in the Eastern District of New York
to health care fraud conspiracy for his role in a scheme that involved the payment of cash
kickbacks to elderly beneficiaries who received massages and light group exercises that were
billed to Medicare and Medicaid as individual one-on-one occupational therapy and other
occupational therapy services. As part of the scheme, the defendant, who was a full-time
therapist for the New York Board of Education, signed false and fabricated patient charts and
billing records for therapy that was not actually provided. As part of the plea, the defendant
agreed to restitution and forfeiture of $1.6 million. Between February 2008 and February 2011,
the defendant was the seventh-highest biller of occupational therapy in the country.
(SF) In January 2015, two physician owners of Spectrum Care P.A., a Houston community
mental health clinic, were sentenced to 148 months and 120 months, respectively, for their roles
in a $97 million Medicare fraud scheme. The physician defendants were convicted, along with
three co-defendants—a group home owner, a physician assistant, and an office manager—of
health care fraud conspiracy and substantive counts of health care fraud following a five-week
jury trial. The evidence at trial showed that the physician defendants signed admission
documents and progress notes certifying that Medicare beneficiaries qualified for partial
hospitalization services, when they did not. The evidence also showed that the physician
defendants paid kickbacks to group home operators and patient recruiters, including their codefendants, in exchange for the referral of beneficiaries. The group home owner was sentenced
to 54 months’ imprisonment, the office manager was sentenced to 60 months’ imprisonment, and
the physician assistant was sentenced to 68 months’ imprisonment.
In January 2015, six co-conspirators in Arlington, Texas were sentenced for submitting over $5
million in false health insurance claims to Blue Cross Blue Shield of Texas (BCBS), the Federal
Employees Health Benefits Program, and other insurers for services not rendered at a
chiropractic clinic. The co-conspirators included a licensed chiropractor and occupational
therapist who allowed the use of their provider numbers to fraudulently bill insurers for services
not provided. To further the scheme, a union representative for a Texas automotive parts
manufacturer actively recruited employees to go to the co-conspirators’ chiropractic clinic. The
union representative and recruited employees received illegal kickback for these referrals. The
sentences imposed in this case ranged from 6 months imprisonment to 156 months
imprisonment, and restitution from $1.3 to $2.4 million.
(SF) In February 2015, the co-owners of BONB LLC, aka Bioscan, were sentenced to 57 and 37
months’ imprisonment in the Middle District of Florida for their roles in a health care fraud and
money laundering scheme. Bioscan was a shell company the defendants used to facilitate a
multi-million dollar fraud scheme executed through several purported medical clinics. As part of
their guilty pleas, the defendants admitted that their co-conspirators submitted $12 million in
fraudulent claims to Medicare, including claims resulting from illegal kickback arrangements
and claims for radiology, audiology, neurology, and cardiology services that were never
rendered. The defendants admitted to attempting to conceal the proceeds of the fraudulent
claims by transferring funds through bank accounts for Bioscan and other entities. In addition to
the prison sentences, one defendant agreed to forfeit a $60,000 platinum and diamond ring he
purchased with health care fraud proceeds.
In July 2015, the operator of a sham clinic in the Central District of California was sentenced
after being convicted at trial to 15 years in federal prison for his role in a $20 million scheme to
defraud Medicare and Medicaid by fraudulently prescribing expensive anti-psychotic
medications, selling these drugs on the black market, and then redistributing them to pharmacies,
where the drugs would be subject to new claims made to Medicare and Medicaid as though they
were new bottles of drugs. Employees of sham clinic generated thousands of prescriptions for
identity theft victims—such as elderly Vietnamese beneficiaries of Medicare and Medicaid,
military veterans who were recruited from drug rehab programs, and denizens of Skid Row.
This case was the first in the nation involving an organized scheme to defraud government health
care programs through fraudulent claims for expensive anti-psychotic medications.
Community Mental Health Centers
(SF) In December 2014, a certified nursing assistant in Miami, Florida was sentenced to 12 years
and six months in prison and ordered to pay $18.2 million in joint and several restitution after
being convicted by a jury on charges of relating to health care fraud. American Therapeutic
Corporation (ATC) operated several purported partial hospitalization programs (PHP)
throughout Florida. Evidence at trial demonstrated that the defendant received thousands of
dollars a month in cash kickbacks in exchange for referring Medicare patients to ATC. The
evidence also demonstrated that the beneficiaries he sent to ATC did not need, qualify for, or
receive PHP treatment. Nevertheless, ATC submitted false claims to Medicare for PHP services
purportedly provided to each of these patients. To date, 30 defendants, including the owners of
ATC, have previously pleaded guilty or been convicted at trial on charges related to the ATC
scheme, which resulted in more than $200 million in fraudulent Medicare billings.
(SF) In January 2015, two physicians in Houston, Texas were sentenced to a combined 22 years
and 4 months in prison and ordered to pay a combined $8 million in restitution after being
convicted by a jury on charges relating to health care fraud. The two physicians owned a
community mental health center (CMHC) that purportedly provided PHP services to Medicare
beneficiaries. Evidence at trial showed that the two physicians paid kickbacks to group care
home operators and patient recruiters in exchange for bringing ineligible Medicare beneficiaries
to their CMHC. They then signed admission documents and progress notes certifying that the
beneficiaries qualified for PHP services when, in fact, they did not qualify for or need these
services and/or the actual services were not performed. The CMHC billed Medicare
approximately $97 million for these fraudulent services. One of the group home owners was
sentenced to 4-and-a-half years in prison and ordered to pay $1.8 million in restitution.
(SF) In April 2015, a licensed mental health counselor in Miami, Florida was sentenced to 4
years in prison and ordered to pay $13.6 million in joint and several restitution after pleading
guilty to conspiracy to commit health care fraud. The defendant worked as a therapist for Health
Care Solutions Network, Inc., in Florida (HCSN-FL). He admitted that he provided intensive
therapy to mental health patients who were ineligible to receive the therapy or could not benefit
from partial hospitalization program (PHP) services, including patients suffering from dementia,
mental retardation, and Alzheimer’s disease. He signed fabricated PHP therapy notes and other
medical records, which were used to support the false claims to Medicare and Medicaid. During
his employment, the defendant and his co-conspirators submitted approximately $31 million in
false claims to Medicare and Florida Medicaid programs.
In December 2014, OtisMed Corp. of Newark, New Jersey was ordered to pay $34.4 million in
fines and $5.1 million in forfeiture after pleading guilty to distributing, with the intent to defraud
and mislead, adulterated medical devices into interstate commerce in violation of the Food,
Drug, and Cosmetic Act. OtisMed submitted a pre-market notification to the Food and Drug
Administration (FDA) seeking clearance to market the OtisKnee in October 2008. In September
2009, the FDA sent OtisMed a notice that its submission was denied, stating that the company
failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed
devices. Despite his awareness of the letter and advice from legal counsel that it would be
unlawful to continue distributing the OtisKnee, the Chief Executive Officer ordered employees
at OtisMed to distribute more than 200 OtisKnee devices to surgeons throughout the United
States. The CEO and others also concealed the shipments from the FDA, and did not disclose
that distributing OtisKnee was prohibited. The CEO pleaded guilty to introducing adulterated
medical devices in interstate commerce and was sentenced on June 29, 2015 to 24 months in
prison. Apart from the criminal plea, OtisMed agreed to pay a $41.2 million settlement to
resolve its civil FCA liability arising from the marketing and distribution of the OtisKnee, and to
be excluded from participation in federal health care programs for 20 years.
In February 2015, medical device manufacturer ev3 Inc., formerly known as Fox Hollow
Technologies Inc., agreed to pay $1.3 million to resolve civil FCA allegations that it caused
certain hospitals to submit false claims to Medicare for unnecessary inpatient admissions for
procedures involving its atherectory device. Atherectomy is a minimally-invasive surgical
procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries,
from large blood vessels within the body. The government alleged that to increase hospital
purchases of its atherectomy devices, Fox Hollow advised hospitals that they should bill
atherectomy procedures as more expensive inpatient claims, as opposed to less costly outpatient
claims. As a result, certain hospitals allegedly claimed greater reimbursement than they were
entitled to receive for procedures involving Fox Hollow’s devices.
In April 2015, Medtronic plc and certain affiliated Medtronic companies agreed to pay
$4.4 million to settle civil FCA allegations that they made false statements to the U.S.
Department of Veterans Affairs and the U.S. Department of Defense regarding the country of
origin of certain Medtronic products sold to the United States. The Trade Agreements Act of
1979 (TAA) generally requires companies selling products to the United States to manufacture
them in the United States or in another designated country. The settlement resolved allegations
that Medtronic sold to the United States products manufactured in China and Malaysia; under the
TAA, the Government is precluded from acquiring the products at issue from those countries.
The specific Medtronic products included anchoring sleeves sold with cardiac leads and used to
secure the leads to patients, certain instruments and devices used in spine surgeries, and a
handheld patient assistant used with a wireless cardiac device.
In July 2015, NuVasive Inc. of San Diego, California, agreed to pay $13.5 million to resolve
allegations that the company promoted its CoRoent System for surgical uses that were not
approved or cleared by the FDA and paid kickbacks to induce physicians to use its CoRoent
System. The government alleged that, between 2008 and 2013, NuVasive promoted its CoRoent
System for certain surgical uses, including for use in treating two complex spine deformities:
severe scoliosis and severe spondylolisthesis. Because these specific uses were not approved or
cleared by the FDA, the claims submitted to Medicare and Medicaid from physicians and
hospitals for these spine surgeries were not eligible for reimbursement. The government also
alleged that NuVasive knowingly offered and paid illegal remuneration to certain physicians to
induce them to use the CoRoent System in spine fusion surgeries, in violation of the Federal antikickback statute. The alleged illegal remuneration consisted of promotional speaker fees,
honoraria, and expenses relating to physicians’ attendance at events sponsored by a group that
was allegedly created, funded, and operated by NuVasive.
In January 2015, Daiichi Sankyo Inc., a global pharmaceutical company, agreed to pay
$39 million to resolve civil FCA allegations that it paid kickbacks to induce physicians to
prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. The alleged kickbacks
took the form of honoraria payments, lavish meals, and other remuneration to physicians who
participated, or supposedly participated, in speaker programs. Daiichi allegedly made payments
to physicians even when physicians took turns “speaking” on duplicative topics over Daiichipaid dinners, the recipient spoke only to members of his or her own staff in his or her own office,
or the associated dinner was so lavish that its cost exceeded Daiichi’s own internal cost
limitation of $140 per person.
In February and May 2015, Medco Health Solutions, Inc., a wholly-owned subsidiary of the
pharmacy benefit manager Express Scripts Holding Company, and AstraZeneca, a
pharmaceutical manufacturer, agreed to pay a total of $15.8 million to settle civil FCA
allegations of a kick-back scheme involving marketing and selling pharmaceutical products. The
government alleged that AstraZeneca paid kickbacks to Medco in exchange for identifying
Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s prescription
drug lists known as formularies. The alleged remuneration from AstraZeneca took the form of
price concessions on certain AstraZeneca drugs other than Nexium, namely on Prilosec, Toprol
XL, and Plendil.
In July 2015, drug manufacturers AstraZeneca LP and Cephalon, Inc. agreed to pay a total of
$54 million to settle civil FCA allegations that they knowingly underpaid rebates owed under the
Medicaid Drug Rebate Program (MDRP). Pursuant to the MDRP, drug manufacturers must pay
quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the
manufacturers’ drugs. The rebates are based, in part, on the Average Manufacturer Prices
(AMPs) that the manufacturers report to the government for each of their covered drugs. The
settlements with AstraZeneca and Cephalon resolved allegations that they underreported AMPs
for a number of their drugs by improperly reducing the reported AMPs for service fees they paid
to wholesalers. As a result, the government contended that AstraZeneca and Cephalon underpaid
quarterly rebates owed to the states and caused the United States to be overcharged for its
payments to the states for the Medicaid program.
Durable Medical Equipment (DME)
In December 2014, a medical supplies company owner was sentenced in Baton Rouge, Louisiana
to 156 months imprisonment for submitting hundreds of false and fraudulent claims to Medicare
for medical devices over a two year period. For instance, he submitted claims for “brace kits,”
regardless of whether any of the Medicare beneficiaries named in the claims needed or had
prescriptions for the items, submitted claims for custom-fabricated devices which were never
provided, and submitted numerous claims for expensive replacement power wheelchairs that he
falsely claimed had been damaged or destroyed by a hurricane. The owner was ordered to make
restitution to the Medicare program in the amount of $1.2 million, to forfeit the proceeds of his
criminal activity up to an additional $1.2 million, and to serve a two-year term of supervised
(SF) In February 2015 and May 2015, two individuals pled guilty to health care fraud conspiracy
for their roles in a $13 million long-running scheme to submit false claims for durable medical
equipment to a government-sponsored organization for managed care in New York. The scheme
involved the defendants using information for approved, in-network equipment providers to
obtain approvals that were then used to secure payments on behalf of sham companies that the
defendants set up. Companies believed to have been involved in the scheme submitted
fraudulent claims to the managed care organization in amounts over $13 million since 2008. In
September 2015, one of the defendants was sentenced to 21 months in jail and ordered to pay
over $337,000 in forfeiture and the same amount in restitution.
(SF) In March 2015, an owner of Colonial Medical Supply, a durable medical equipment
company in Los Angeles, was convicted after a jury trial for his role in a $3.3 million Medicare
fraud scheme. The evidence at trial established that the defendant paid cash kickbacks to
medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive
power wheel chairs, which the patients did not need. The defendant then used these
prescriptions to bill Medicare for the medically unnecessary equipment. In May 2015, the
defendant was sentenced to 84 months’ imprisonment.
(SF) In March 2015, an owner of Ezcor-9000, Inc., a durable medical equipment company in
Valencia, California, was convicted after an eight-day jury trial for her role in a $3.5 million
Medicare fraud scheme. The evidence at trial established that the defendant paid illegal
kickbacks to patient recruiters in exchange for patient referrals. The evidence also showed that
the defendant paid kickbacks to physicians for fraudulent prescriptions—primarily for medically
unnecessary, but expensive, power wheelchairs—that she then used to support her fraudulent
bills to Medicare. In June 2015, the defendant was sentenced to 97 months in prison.
In May 2015, DME suppliers Orbit Medical Inc. and its partial successor, Rehab Medical Inc.,
agreed to pay $7.5 million to settle civil FCA allegations that Orbit submitted false claims to
federal health care programs for power wheelchairs and accessories. The settlement resolved
allegations that Orbit sales representatives knowingly altered physician prescriptions and
supporting documentation to get Orbit’s power wheelchair and accessory claims paid by
Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency. In
particular, the government alleged that Orbit sales representatives changed or added dates to
physician prescriptions and chart notes to falsely document that the prescription was sent to the
supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription,
chart notes, and other documentation to falsely establish medical necessity for the power
wheelchair or accessory; and added facsimile stamps to supporting documentation to make it
appear as though the physician’s office had sent the documents to Orbit.
In May 2015, a DME supplier in Austin, Texas was sentenced to 36 months imprisonment and 3
years supervised release, and ordered to pay $846,171 in restitution for submitting fraudulent
bills through the Department of Labor for items never sent to patients. The supplier was billing
primarily for electrode pads. The false claims were for DME supplies for U.S. Postal employees.
The scheme ran for at least three years and involved billings to the Government of over $1
million. The supplier paid the restitution/forfeiture up-front, and the forfeiture included cash and
a 2014 BMW.
(SF) In May 2015, a registered nurse and owner of a DME company in Los Angeles, California
was sentenced to 4 years in prison and ordered to pay $4.3 million in joint and several restitution
after being convicted of health care fraud and laundering of monetary instruments. According to
the investigation, the nurse/owner and her co-conspirators used cash and checks to pay illegal
kickbacks to recruit Medicare beneficiaries for power wheelchairs and other DME, to which the
beneficiaries did not have a legitimate medical need. She and her co-conspirators also paid
illegal kickbacks to a physician in exchange for writing false prescriptions and documents for the
DME, which was then used to fraudulently bill Medicare.
Electronic Health Records
In June 2015, the Chief Financial Officer (CFO) of Shelby Regional Medical Center of Center,
Texas, was sentenced to 1 year and 11 months in jail and ordered to pay $4.4 million in
restitution after pleading guilty to making a false statement. As CFO he oversaw the
implementation of electronic health records (EHR) for the hospital and was responsible for
attesting that the hospital’s EHR platform met meaningful use requirements in order to qualify
for incentive payments under Medicare’s EHR Incentive Program. During FY 2012, Shelby
Regional did not meaningfully use the EHR platform, despite an attestation from the CFO that it
did. He falsely certified to CMS that Shelby Regional met the meaningful use requirements,
even though he was fully aware that Shelby Regional used the EHR system sparingly and did not
meet the criteria for incentives. As a result of his conduct, Shelby Regional received a $785,655
EHR incentive payment from CMS in FY 2012.
Health Maintenance Organization
In May 2015, an employee of several organizations in Miami, Florida, including Florida
Healthcare Plus, Inc. (FHCP), was sentenced to 2 years in prison and ordered to pay $16 million
in joint and several restitution after pleading guilty to conspiracy to commit health care fraud and
wire fraud. FHCP was a health maintenance organization in Florida. According to the
investigation, the defendant submitted fraudulent Medicare and Medicaid enrollment
applications for beneficiaries, which claimed that the beneficiaries resided in Florida, when they
actually resided in Nicaragua and the Dominican Republic. In addition to the defendant, five
other individuals connected to this health care fraud scheme were sentenced in June 2015 to a
combined 10 years and 3 months in prison and ordered to pay $16 million in joint and several
Home Health Providers
(SF) In October 2014, the director of two Miami-based businesses that purportedly provided
home health services to Medicare beneficiaries was sentenced to 10 years and 1 month in prison
and ordered to pay $18.6 million in restitution after pleading guilty to conspiracy to commit
health care fraud and payment of kickbacks in connection with a federal healthcare program.
The investigation related that the director paid co-conspirators thousands of dollars in kickbacks
in exchange for referring Medicare beneficiaries and also paid kickbacks to the owner of a
medical clinic in exchange for home health service prescriptions.
In November 2014, CareAll Management LLC, a Nashville, Tennessee home health provider,
agreed to pay $25 million to settle civil FCA allegations that it submitted false and upcoded
home health care billings to the Medicare and Medicaid programs. The settlement resolves
allegations that CareAll overstated the severity of patients’ conditions to increase billings and
billed for services that were not medically necessary and rendered to patients who were not
(SF) In November 2014, an administrator and owner at two Miami-based Florida businesses
which purportedly provided home health care and physical therapy services to Medicare
beneficiaries was sentenced to 6 years and 8 months of incarceration and ordered to pay
$45 million in restitution after pleading guilty to conspiracy to commit health care fraud. The
investigation revealed that administrator/owner and her co-conspirators paid kickbacks to patient
recruiters for the referral of patients and for the provision of medically unnecessary or sham
prescriptions, plans of care, and certifications for therapy and home health services. The
businesses submitted approximately $74 million in fraudulent claims for home health services to
Medicare and were paid approximately $45 million on those claims. Another co-conspirator was
previously sentenced to 5 years in prison and ordered to pay $27 million in restitution.
(SF) In January 2015, the owner of Nation’s Best Home Health, a Miami home health care
agency, was sentenced to 106 months’ imprisonment for his role in a $35 million Medicare fraud
scheme. According to his plea agreement, the defendant and his co-conspirators operated
Nation’s Best for the purpose of billing the Medicare program for, among other things, physical
therapy and other home health care services that were not medically necessary or not provided.
The co-conspirators paid kickbacks to patient recruiters in exchange for patient referrals to
Nation’s Best, as well as prescriptions, plans of care, and certifications for medically
unnecessary home health care services, all of which were used to fraudulently bill the Medicare
program for unnecessary home health care services.
In January 2015, an owner and operator of Norfolk, Virginia based Community Personal Care
home health care services was sentenced to 63 months in prison, followed by three years of
supervised release, and his wife who was the company’s office administrator and executive
assistant was sentenced to 25 months in prison, followed by three years of supervised release for
their operation of a massive false billing scheme. During a three week trial, the government
proved that 7,800 fraudulent claims were submitted to the Virginia Medicaid program, falsely
representing that personal care and respite care services had been provided to 78 Medicaid
recipients by Community Personal Care. To conceal the fraudulent payments, the defendants
directed employees to alter the company’s office records, including home health aide time
sheets. Both defendants were ordered together to pay $1.5 million in restitution.
(SF) Between January 2015 and May 2015, five patient recruiters pled guilty for their roles in a
$4.5 million Medicare fraud scheme involving Joystar Home Health Services, LLC, a home
health care company located in Richmond, Texas. According to court documents, each of the
defendants agreed with Joystar’s owner and director of nursing to refer Medicare beneficiaries to
Joystar in exchange for kickbacks. Joystar then billed Medicare for home health care services
that were medically unnecessary or not provided. The co-conspirators in the fraud also paid
beneficiaries to participate in the scheme and paid physicians to authorize medically unnecessary
services. Previously, the owner of Joystar was sentenced to five years’ imprisonment following
his guilty plea to structuring over $1.8 million to conceal the funds he used to pay kickbacks to
patient recruiters and physicians. Joystar’s director of nursing, who pled guilty to health care
fraud and structuring, is awaiting sentencing.
In February 2015, ResCare Iowa Inc., a home health service provider, agreed to pay $5.6 million
to settle civil FCA allegations that it submitted false home health care billings to Medicare and
Medicaid. Medicare and the state of Iowa’s Medicaid program require an independent physician
to certify that home health care services are medically necessary and to order the specific type
and amount of health care services to be provided by the home health agency (HHA). The
settlement resolves allegations that ResCare Iowa billed the government for services provided to
Medicare and Medicaid patients in Iowa without documenting compliance with these
(SF) In April 2015, the Miami, Florida owner of a business that purportedly provided home
health care and physical therapy services to Medicare beneficiaries was sentenced to 9 years and
5 months in prison and ordered to pay $21 million in restitution after pleading guilty to
conspiracy to commit health care fraud. According to the investigation, the owner and his coconspirators paid patient recruiters to place beneficiaries at the business. The recruiters then sent
the beneficiaries to doctors to obtain prescriptions for home health services that were not
medically necessary and were not provided. The man and his co-conspirators caused patient
documentation to be falsified in order to bill Medicare approximately $32 million for the
fraudulent services. He was indicted in May 2013 and was an HHS-OIG Most Wanted Fugitive
living in Cuba until he returned to the United States in September 2014 and was arrested.
(SF) Between April and July 2015, three defendants were sentenced in the Eastern District of
Michigan to a combined 20 years and 8 months in jail and ordered to pay more than $22 million
in joint and several restitution after being convicted of conspiracy to commit health care fraud
and other charges. Two of the defendants jointly operated several home health agencies in
Michigan, while the third, who was a daughter of one of the others, co-operated a home health
agency. According to the investigation, the three defendants, along with their co-conspirators,
paid kickbacks and bribes to recruiters and others for beneficiary information that would be used
to falsely bill Medicare millions for home health services that were medically unnecessary and
not performed. Another co-conspirator, who jointly operated several of the home health care
facilities, was indicted in September 2012, but investigators believe that he fled the country.
(SF) In April 2015, the owner of AA Advanced Home Health Inc., a Miami home health care
agency, was sentenced to 113 months’ imprisonment for his role in a $32 million home health
care fraud scheme. As part of his guilty plea, the defendant admitted that he and his coconspirators paid kickbacks to patient recruiters in exchange for patient referrals and billed
Medicare for physical therapy and other home health care services that were medically
unnecessary or not provided.
(SF) In April 2015, the owner of multiple home health care agencies in the Detroit area was
sentenced to 120 months’ imprisonment after being convicted in an eight-week jury trial for his
role in a $29.1 million Medicare fraud scheme. The wide-ranging scheme involved
approximately 30 purported medical clinics in the Detroit area that paid kickbacks to patient
recruiters and billed Medicare for home health services that were not provided. Eight codefendants previously pled guilty and two co-defendants were convicted at trial. One of the codefendants who owned two home health care companies involved in the scheme pled guilty and
was sentenced to 80 months’ imprisonment in July 2015. That defendant also received proceeds
of the home health care fraud through bank accounts he controlled, withdrew substantial sums
for his personal use, failed to report these proceeds on his individual federal income tax returns,
and pled guilty to filing a false tax return.
(SF) In May 2015, the owner of a Miami-based business that purportedly provided home health
and therapy services to Medicare beneficiaries was sentenced to 10 years in prison and ordered
to pay $13 million in joint and several restitution after pleading guilty to conspiracy to commit
health care fraud. The owner admitted that he and his co-conspirators billed Medicare for,
among other things, expensive physical therapy and home health care services that were not
medically necessary and/or were not provided. The owner and his co-conspirators also paid
kickbacks and bribes to other co-conspirators in doctors' offices and clinics in exchange for
providing home health and therapy prescriptions. From approximately January 2009 to
November 2014, Longcare submitted more than $13 million in claims to Medicare for home
health services that were not necessary and/or were not provided. Eight defendants who
participated in the fraud scheme were previously sentenced to a combined 53 years and 7 months
In June 2015, a group of home health care companies—Friendship Home Healthcare, Inc.,
Friendship Home Health, Inc., Angel Private Duty and Home Health, and Friendship Home
Health Agency, LLC. (collectively “Friendship”)—and their owner agreed to pay $6.5 million to
resolve civil FCA allegations that they improperly billed federal health care programs for home
health services. The settlement resolves allegations that Friendship submitted false claims for
private duty nursing services that were furnished or supervised by a woman who was excluded
from billing federal and state health care programs and that Friendship submitted required forms
containing the forged signature of Friendship’s Director of Nursing.
(SF) In July 2015, an owner and controller of multiple home health care agencies in the Detroit
area and a co-owner were convicted at trial for their roles in a $33 million home health care fraud
scheme. One co-defendant, a patient recruiter, previously pled guilty for her role in the scheme.
According to the evidence at trial, patient recruiters were paid kickbacks to bring Medicare
beneficiaries into the scheme. In exchange for cash kickbacks and prescriptions for controlled
substances, the beneficiaries signed forms and therapy visit sheets that were later falsified to
indicate they received home health services that were never provided. Physicians employed by
one of the defendants then purported to examine non-homebound Medicare beneficiaries for
home health care services, signed false paperwork so they could be billed through four home
health agencies, and provided the patients with narcotic prescriptions.
In February 2015, for-profit hospice provider Good Shepherd Hospice Inc., whose main location
is in Oklahoma City, and certain affiliated entities agreed to pay $4 million to resolve civil FCA
allegations that they submitted false claims for hospice patients who were not terminally ill. The
Medicare hospice benefit is available for patients who elect palliative treatment for a terminal
illness and have a life expectancy of six months or less if their illness runs its normal course.
The settlement resolved allegations that Good Shepherd knowingly submitted false claims for
hospice care for patients who were not terminally ill by pressuring staff to meet admissions and
census targets, paying bonuses to staff based on the number of patients enrolled, hiring medical
directors based on their ability to refer patients, and failing to properly train staff on the hospice
In June 2015, Covenant Hospice Inc., a non-profit hospice service provider, agreed to pay
$10 million to settle civil FCA allegations that it overbilled Medicare, TRICARE and Medicaid
for hospice services. Hospice benefits are generally available only for patients who have a life
expectancy of six months or less if their disease runs its normal course. Patients admitted to a
hospice stop receiving care to cure their illnesses and instead receive medical care focused on
providing them with relief from the symptoms, pain and stress of a terminal illness. The
settlement resolved allegations that Covenant improperly submitted hospice claims for higherlevel inpatient care that should have been billed at lower-level routine home care.
(SF) In June 2015, two physicians and three owners of hospice and home health care companies
in the greater Detroit area were charged for their roles in a $58.3 million scheme to defraud
Medicare by submitting claims for home health care and hospice services that were medically
unnecessary or not provided. According to court documents, the owners of the home health care
and hospice companies, two of whom are also registered physical therapists, paid physicians and
patient recruiters kickbacks for referring patients, then billed Medicare for services that were
medically unnecessary or never provided. The companies, located in Livonia, Michigan, were A
Plus Hospice and Palliative Care, At Home Hospice, and At Home Network Inc., a home health
care agency. The physicians who solicited and received kickbacks also submitted claims to
Medicare for medically unnecessary physician services. Court documents also allege that one of
those physicians used prescriptions for controlled substances to induce beneficiaries to allow At
Home Network to bill Medicare for purportedly providing services to the beneficiaries.
Hospitals and Health Systems
In October 2014, Dignity Health, the fifth largest health system in the country formerly known as
Catholic Healthcare West, agreed to pay $36.7 million to settle civil FCA allegations that 13 of
its hospitals in California, Nevada, and Arizona knowingly submitted false claims to Medicare
and TRICARE by admitting patients who could have been treated on a less costly, outpatient
basis. Specifically, the government alleged that certain Dignity hospitals billed Medicare and
TRICARE for inpatient care for certain patients who underwent elective cardiovascular
procedures and elective, minimally-invasive kyphoplasty procedures and patients with certain
common medical diagnoses where admission as an inpatient was medically unnecessary and
appropriate care could have been provided in a less costly outpatient or observation setting.
In December 2014, the owner/operator of a hospice agency in Greenwood, Mississippi was
sentenced to 5 years and 10 months in prison and ordered to pay $7.9 million in restitution after
pleading guilty to conspiracy to commit healthcare fraud. The investigation revealed that, from
around March 2010 to February 2013, the owner/operator and her co-conspirators used the
hospice to submit millions of dollars in fraudulent claims to Medicare, for which they were
reimbursed more than $12.5 million. These false billings included claims for patients who were
not eligible for hospice benefits because they were not terminally ill and claims based on medical
records containing forged signatures of the beneficiaries, the hospice Medical director, and/or the
beneficiaries’ attending physician. In addition, the defendant, through the hospice, submitted
claims to Medicare based on patient referrals from physicians who, in actuality, never referred
patients. Many of the patient names were obtained from a medical records clerk, who has been
separately charged for accepting over $240,000 in kickbacks from the defendant. The defendant
used the funds obtained from Medicare to purchase more than $1.4 million in vehicles and
In December 2014, five senior hospital administrators and five hospital physicians and a
podiatrist in Illinois were charged with criminal violation of conspiracy to receive kickbacks and
receiving kickbacks. In December 2014, two administrators pled guilty and the remaining
administrators went to trial. After a seven-week trial, on March 19, 2015, the jury found each of
the defendants guilty of the charges alleged. The Court sentenced one administrator to 54
months’ imprisonment and a $770,000 fine, another administrator was sentenced to 21 months’
imprisonment, and a third was sentenced to a term of imprisonment of 12 months and 1 day and
to pay a fine of $25,000 on July 30, 2015. The Court has also entered joint and several orders of
forfeiture against the administrators in the amount of $10.5 million and $8.5 million. Three
doctors pled guilty and one has been sentenced to six months imprisonment, two went to trial
and one was acquitted, the third doctor is set to go trial in 2016.
In February 2015, Community Health Systems Professional Services Corporation (CHS), a
nationwide hospital management company, and three of its affiliated New Mexico hospitals
agreed to pay $75 million to settle civil FCA allegations that they made illegal donations to
county governments that were used to fund the state share of Medicaid payments to the hospitals.
Under a program discontinued in 2014, the federal government reimbursed New Mexico for
approximately 75 percent of supplemental Medicaid expenditures in rural hospitals, and required
that New Mexico’s 25 percent matching payments had to consist of state or county funds, and
not donations from private hospitals. The government alleged that CHS knowingly made
improper donations to Chaves, Luna, and San Miguel counties, which were then used by the
counties, and subsequently the state, to obtain federal matching payments. The government
alleged that CHS concealed the true nature of these donations, and as a result of its scheme,
received supplemental Medicaid payments which were funded by the United States in the
amount of three times CHS’ donations.
In April 2015, The Medical Center of Central Georgia, Inc. (MCCG) agreed to pay $20 million
to resolve civil FCA allegations that it submitted false claims to Medicare for medically
unnecessary inpatient admissions, including zero-day stays, one-day stays, cardiac stays with a
procedure, and cardiac stays without a procedure. Specifically, these services should have been
billed as outpatient or observation services due to the absence of medical necessity for inpatient
In April 2015, Citizens Medical Center, a county-owned hospital in Victoria, Texas, agreed to
pay $21.7 million to settle civil FCA allegations that it engaged in improper financial
relationships with referring physicians. The settlement resolved allegations that the hospital
provided compensation to several cardiologists that exceeded the fair market value of their
services and that the hospital paid bonuses to emergency room physicians that improperly took
into account the value of their cardiology referrals in violation of the Stark Law.
In June 2015, Children’s Hospital in Washington, DC, Children’s National Medical Center Inc.,
(CNMC) and its affiliated entities agreed to pay $12.9 million to resolve civil FCA allegations
that they submitted false cost reports and other applications to the components and contractors of
HHS, as well as to Virginia and District of Columbia Medicaid programs. The settlement
resolves allegations that CNMC misstated information regarding its available bed count and
overhead costs on cost reports and applications that were used by HHS and Medicaid programs
to calculate reimbursement rates to CNMC.
In June 2015, Community Health Network (CHN), an Indiana-based non-profit health system,
agreed to pay over $20 million to resolve allegations that it submitted false claims to the
Medicare and Medicaid programs. CHN contracted with free-standing ambulatory surgery
centers (ASCs) to provide outpatient surgical services to CHN patients. When billing Medicare
and Medicaid, however, CHN allegedly represented that the surgery was performed in the outpatient department of CHN’s hospitals, rather than in an ASC. Based on this prohibited practice,
CHN allegedly received a higher reimbursement from the Medicare and Medicaid programs than
it was entitled.
(SF) In July 2015, the former owner and chief executive officer, the chief operating officer, and
the chief financial officer of Sacred Heart Hospital, a now-closed acute care facility in Chicago,
were sentenced to 54 months, 21 months, and 12 months and a day in prison, respectively, for
their roles in a Medicare and Medicaid kickback scheme. Following a seven-week trial, a jury
convicted these defendants of conspiring to violate the AKS and of substantive AKS violations.
The evidence at trial revealed that the defendants were involved in a conspiracy to pay
physicians hundreds of thousands of dollars in illegal bribes and kickbacks to induce patient
referrals to the hospital and to increase the patient census, which, in turn, increased hospital
revenue. Five other defendants pled guilty in the case, including three physicians, a chief
operating officer, and the vice president of geriatric services. Another physician defendant was
found guilty of violating the AKS following a bench trial that ended in June 2015. One
remaining defendant in the case, a physician, is scheduled for trial in February 2016.
(SF) In August 2015, a jury in the Southern District of Florida returned guilty verdicts against a
former medical director and three therapists of Health Care Solutions Network Inc., a defunct
partial hospitalization program that purported to provide intensive psychiatric treatment to
Medicare and Medicaid beneficiaries. The trial evidence showed that the former medical
director routinely signed what he knew to be fabricated and altered medical records without
reviewing the substance of the records and, in most instances, without ever meeting with the
patients. The evidence at trial also demonstrated that the three therapists fabricated medical
records to support Healthcare Solution Network’s false and fraudulent claims for reimbursement
for intensive psychiatric services. In total, Healthcare Solutions Network submitted
approximately $63.7 million in fraudulent claims to Medicare and Medicaid, which paid $28
million on those claims. Two co-defendants were each sentenced to six years’ imprisonment in
February 2015, following their convictions in a separate November 2014 trial.
In September 2015, North Broward Hospital District, a special taxing district of the state of
Florida that operates hospitals and other health care facilities, agreed to pay $69.5 million to
settle civil FCA allegations that it engaged in improper financial relationships with referring
physicians. The settlement resolved allegations that the hospital district provided compensation
to nine employed physicians that exceeded the fair market value of their services in violation of
the Stark Law.
In September 2015, Columbus Regional Healthcare System (Columbus Regional) and a
physician agreed to pay more than $25 million to settle civil FCA allegations that they submitted
claims to federal health care programs that violated the Stark Law and that misrepresented the
level of services they provided. The government alleged that Columbus Regional provided
excessive salary and directorship payments to the physician that violated the Stark Law,
submitted claims for services at higher levels than supported by the documentation, and
submitted claims for radiation therapy at higher levels than the therapy that was provided.
Under the settlement agreement, Columbus Regional agreed to pay $25 million, plus additional
contingent payments not to exceed $10 million, for a maximum settlement amount of $35
million; the physician has agreed to pay $425,000.
In September 2015, Adventist Health Care System, a non-profit healthcare organization that
operates hospitals and other healthcare facilities in 10 states, agreed to pay $115 million to settle
civil FCA allegations that they submitted false claims to Medicare and Medicaid. Adventist
allegedly paid bonuses to its employed physicians based on the number of tests and procedures
they ordered and billed Medicare for its employed physicians’ professional services using
improper coding modifiers.
In June 2015, an individual in Naples, Florida was sentenced to 6 years in prison and ordered to
pay $351,358 in joint and several restitution after pleading guilty to charges relating to health
care fraud, identity theft, and distribution of controlled substances. He admitted that he and his
co-conspirators, including his brother, submitted claims for reimbursement from Medicare,
Medicaid, and TRICARE for prescriptions that were not filled or provided to beneficiaries or
recipients, including prescriptions for patients that had not been written or authorized by a
licensed physician. The brother, who was a licensed pharmacist and owner of a pharmacy used
to further the scheme, previously pleaded guilty to conspiracy to commit health care fraud and
was sentenced to 2 years in prison in March 2014.
In June 2015, a husband and wife were sentenced to a combined 30 years and 9 months of
incarceration and ordered to pay over $1.2 million in joint and several restitution and forfeiture
after being convicted of charges related to health care fraud. Evidence at trial showed that the
two operated a sham clinic in Coral Gables, Florida, and employed unlicensed medical
professionals to bill Medicare for HIV services that were never rendered. The clinic used billing
numbers of other medical professionals without their knowledge in order to submit the
fraudulent claims. The couple also paid co-conspirators to recruit Medicare beneficiaries for
their Medicare identification numbers, and they instructed the beneficiaries to enroll into a
targeted Medicare Part C & D plan.
In August 2015, in Newark, New Jersey, three physicians were sentenced after pleading guilty to
charges related to a test-referral kickback scheme. According to the investigation, Biodiagnostic
Laboratory Services LLC (BLS) solicited and paid bribes to physicians in exchange for referring
patient blood specimens to the laboratory. As part of the kickback scheme, BLS entered into
sham consulting agreements, sham rental and service agreements, and offered cash and other
inducements, such as third party businesses, credit card payments, and valuable items (cars and
electronics). BLS used the patient blood specimens to submit more than $100 million in claims
to Medicare and private insurers. In April and May of 2015, the physicians admitted to
accepting approximately $1,500 or more per month in return for referring patient blood
specimens. The three were sentenced to a combined 7 years and 2 months in jail and ordered to
pay a combined $434,300 in restitution. BLS’s owner pleaded guilty to conspiracy to commit
bribery and money laundering and is awaiting sentencing.
In April 2015, two cardiovascular testing laboratories—Health Diagnostics Laboratory Inc.
(HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California—agreed to resolve
civil FCA allegations that they paid physicians kickbacks in exchange for patient referrals and
billed federal health care programs for medically unnecessary testing. The laboratories allegedly
induced physicians to refer patients for blood tests by paying them processing and handling fees
of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.
Under the settlements, HDL will pay $47 million and Singulex will pay $1.5 million.
Nursing Homes and Facilities
In October 2014, Extendicare Health Services Inc., a nationwide skilled nursing facility, and its
subsidiary Progressive Step Corporation (ProStep), a rehabilitation services provider, agreed to
pay $38 million to settle civil FCA allegations that they billed Medicare and Medicaid for
nursing services that were so deficient that they were effectively worthless and billed Medicare
for medically unreasonable and unnecessary rehabilitation therapy services. The settlement
resolves allegations that Extendicare, among other things, failed to have a sufficient number of
skilled nurses to adequately care for its skilled nursing residents, failed to provide adequate
catheter care to some of the residents, and failed to follow the appropriate protocols to prevent
pressure ulcers or falls. As a result of the inadequate care, the government alleged that patients
suffered fractures, head injuries, malnutrition, dehydration, pressure ulcers, infections, and
amputation of limbs. In addition, the settlement resolves allegations that Extendicare provided
medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A
beneficiaries so that it could bill Medicare for those patients at the highest possible per diem rate.
In March 2015, two skilled nursing facility operators—the Catholic Health Care System, a/k/a
ArchCare and Ross Manor, agreed to pay a total of $4.7 million to resolve civil FCA allegations
that they submitted false claims to Medicare for rehabilitation services delivered by their
subcontractor, RehabCare Group East, Inc. (RehabCare), a part of Kindred Healthcare, Inc.. The
government alleged that the nursing homes failed to prevent RehabCare from routinely providing
unreasonably high levels of therapy during so-called “assessment reference periods,” and then
providing less therapy to those same patients outside the assessment reference periods. As a
result of this practice by RehabCare, the nursing homes frequently billed Medicare for its
patients’ care at the highest therapy-based levels, even though the patients often were not
receiving therapy at those levels. The settlements further resolved allegations that the nursing
homes failed to prevent RehabCare from presumptively placing patients in the highest
reimbursement level and planning amounts of therapy based on thresholds for billing at higher
reimbursement levels rather than based on patients’ clinical needs.
In June, 2015, Hebrew Homes Health Network Inc., a skilled nursing service provider in MiamiDade County, Florida, and its former president and executive director, agreed to pay $17 million
to resolve civil FCA allegations of improperly paying doctors for referrals of Medicare patients
requiring skilled nursing care. The settlement resolved allegations that Hebrew Homes hired
numerous physicians ostensibly as medical directors, when in reality, most of the medical
directors were required to perform few, if any, of their contracted job duties. Instead, they were
allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased
exponentially once the medical directors were put on the payroll.
In October 2014, a Westchester County, New York cardiologist was sentenced to 3 years in
prison and ordered to pay $2 million in restitution and forfeiture after pleading guilty to a charge
of health care fraud. According to the investigation, the cardiologist lured new patients and
maintained existing patients by offering them narcotic prescriptions in exchange for those
patients undergoing unnecessary diagnostic tests and other medical procedures. He then billed
Medicare, Medicaid, and private insurance carriers millions of dollars for these fraudulent
claims. Investigators believe that he also performed cardiac procedures that served no legitimate
medical purpose, billed for office visits that did not occur, and falsified patients' symptoms to
justify costly and unnecessary diagnostic tests.
(SF) In July 2015, a Detroit area hematologist-oncologist was sentenced to 45 years’
imprisonment and ordered to forfeit $17.6 million for the health care fraud, money laundering
and kickback scheme he devised and executed. The government showed at a contested
sentencing that the defendant administered medically unnecessary infusions and injections to 553
individual patients, including medically unnecessary chemotherapy, cancer treatments,
intravenous iron, and other infusion and injection therapies. Patients receiving these treatments
suffered many serious side effects as a result. The defendant also referred patients for
unnecessary cancer tests at his diagnostic facility, United Diagnostics, PLLC, in Rochester Hills,
Michigan. The defendant billed Medicare, Blue Cross Blue Shield of Michigan, Health Alliance
Plan, and other insurers approximately $34 million in fraudulent claims through his cancer
treatment clinic, Michigan Hematology Oncology P.C., which had multiple locations in
Michigan, and through United Diagnostics. The defendant also admitted to soliciting and
receiving kickbacks from Guardian Angel Hospice and Guardian Angel Home Health Care in
exchange for referring his patients to those companies. Finally, he admitted that he laundered
the proceeds of his infusion therapy fraud to promote his diagnostic testing fraud.
In December 2014, Rite Aid Corporation, a national retail drugstore chain, agreed to pay nearly
$3 million to settle civil FCA allegations that it offered and provided improper inducements to
beneficiaries of government programs to transfer their prescriptions to Rite Aid pharmacies in
violation of the AKS. These inducements took the form of gift cards, gift checks, and similar
In May 2015, PharMerica Corporation, a national long-term care pharmacy provider, entered
into two settlements for a total of $31.5 million to resolve claims that it violated the FCA and the
Controlled Substances Act. The government alleged that PharMerica dispensed and billed
Medicare for schedule II controlled substances without a valid prescription. The prescriptions
were allegedly invalid because they did not have a prescriber's signature or, in the case of
emergency dispenses, were not based on an oral prescription from the prescriber followed by a
written prescription with the prescriber's signature within seven days.
In July 2015, Blanding Health Mart Pharmacy, a Jacksonville, Florida-based compounding
pharmacy, agreed to pay $8.4 million to resolve civil FCA allegations that it sought
reimbursement for compounding pharmaceutical prescriptions that were not medically necessary
and were written by physicians that had never actually seen the patients.
In August 2015, the Chief Executive Officer of a Kentwood, Michigan pharmacy was sentenced
to ten years in prison, agreed to a 50-year exclusion from federal health care programs, and is
likely to pay over $8 million in restitution in connection with a conspiracy to commit health care
fraud by billing Medicare Part D plans, Medicaid, and private insurers for over $79 million in
drugs that were adulterated and misbranded in violation of the Federal Food, Drug, and Cosmetic
Act. The CEO’s conviction was the eighteenth criminal conviction in a case that included the
felony convictions of six licensed pharmacists. This pharmacy serviced over 800 nursing and
adult foster care homes between 2006 and 2010. As part of its operations they retrieved unused
prescription drugs (including controlled substances) from those homes and returned those drugs
to pharmacy stock in a manner that resulted in the cross-contamination of drugs, the improper
labeling of drugs, the placement of different drug dosages into stock bottles, and the placement
of different drugs in the same stock bottle. The pharmacy then re-dispensed and billed health
care insurers for those adulterated and misbranded drugs.
In October 2014, two groups of diagnostic centers agreed to pay a total of $2.6 million to settle
civil FCA allegations. The first group, doing business as One Step Diagnostic, agreed to pay
$1.2 million to settle allegations that it violated the Stark Law and the FCA by entering into
sham consulting and medical director agreements with physicians who referred patients to its
diagnostic centers. The second group, comprised of Complete Imaging Solutions LLC doing
business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite
Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston
MRI & Diagnostics LLC, agreed to pay $1.4 million to resolve allegations that they engaged in
improper financial relationships with referring physicians and improperly billed Medicare using
the provider number of a physician who had not authorized them to do so and had not been
involved in the provision of the services being billed.
(SF) In December 2014, a physician and a registered nurse were sentenced to 120 months and 48
months in prison, respectively, for their roles in a $3 million Medicare fraud scheme following
their convictions at trial in May 2014. According to the evidence at trial, the physician defendant
falsely certified that beneficiaries needed home health care and, in exchange for kickbacks,
referred beneficiaries to PTM Healthcare Services Inc., a defunct home health care agency in
Irving, Texas, at which his co-defendant served as the director of nursing. The nurse defendant
and co-conspirators then prepared falsified medical records to make it appear that beneficiaries
needed home health care services and billed Medicare for services that were medically
unnecessary or not provided. The owner of PTM Healthcare Services previously pled guilty in
2013 to health care fraud conspiracy.
(SF) In February 2015, a jury in Detroit convicted an unlicensed physician for his participation in
a nearly $4.7 million Medicare fraud scheme. The evidence at trial revealed that the defendant
used pre-signed prescription pads from a licensed physician to prescribe drugs to Medicare
patients and also referred patients for medically unnecessary home health care services in
exchange for kickbacks. In January 2015, shortly before trial, the owner of Cherish Home
Health Services, Inc., one of the companies to which the unlicensed physician referred patients,
pled guilty and admitted to paying kickbacks to the unlicensed physician and billing Medicare
for home health care services that were not provided. Two other defendants—a patient recruiter
and a physician—previously pled guilty for their roles in the fraud.
(SF) In February 2015, an Illinois physician pled guilty to accepting illegal kickbacks and
benefits totaling nearly $600,000 from two pharmaceutical companies—Teva Pharmaceuticals
USA Inc. and IVAX LLC—in exchange for regularly prescribing the anti-psychotic drug
Clozapine to his patients. As set forth in the plea agreement, the physician agreed to switch his
patients to generic Clozapine if the manufacturer agreed to pay him $50,000 under a one-year
“consulting agreement” and to provide other benefits to the physician. The physician also agreed
to pay over $3.8 million to settle a parallel civil FCA lawsuit alleging that, by prescribing
Clozapine in exchange for kickbacks, he caused the submission of false claims to Medicare and
Medicaid for the Clozapine he prescribed for thousands of elderly and indigent patients in at
least 30 Chicago-area nursing homes and other facilities. Previously, in March 2014, Teva and
IVAX paid a total of $27.6 million to resolve allegations related to paying kickbacks to the
(SF) In March 2015, a New York doctor pled guilty to health care fraud conspiracy for his
involvement in a scheme to fraudulently bill Medicare for $14.2 million in claims for medically
unnecessary treatments. As part of the plea, the defendant agreed to pay $5.4 million in
restitution to the Medicare program, which represents the total amount of money Medicare paid
as the result of the fraudulent claims. In connection with his guilty plea, the defendant admitted
that he and other medical providers at the clinic submitted approximately $14.2 million in false
and fraudulent claims to Medicare for medically unnecessary vitamin infusions, physical
therapy, and occupational therapy that did not qualify for reimbursement by Medicare.
(SF) In April 2015, a physician who served as the medical director of Hollywood Pavilion, LLC,
a state-licensed psychiatric hospital located in Hollywood, Florida, was sentenced to 60 months’
imprisonment for his role in a $67 million Medicare fraud scheme. Evidence at trial revealed
that the defendant falsified medical records certifying that patients qualified for and received
intensive outpatient services. The evidence demonstrated that the defendant signed patient files
for over 400 patients, certifying that he had provided mental health services to each of them,
even though he never saw or provided any treatment to the patients. Hollywood Pavilion used
these falsified records to submit over 2,800 false claims to Medicare. Five other individuals
previously were convicted and sentenced in this case, including Hollywood Pavilion’s former
chief executive officer, chief operating officer, and clinical director.
In April 2015, Family Dermatology P.C., the owner and operator of dermatology practices and a
dermatopathology laboratory, agreed to pay $3.2 million to settle civil FCA allegations that its
financial relationships with certain employed physicians violated the Stark Law. Family
Dermatology employs dermatologists as independent contractors and routinely required them to
use Family Dermatology’s in-house pathology lab, Nelson Dermatopathology, for their
pathology services. The government alleged that Family Dermatology violated the Stark Law
and FCA by billing Medicare for dermatopathology analyses performed by Nelson
Dermatopathology on specimens that were sent to the laboratory by these employed physicians.
In April 2015, a medical doctor and sole physician at a pain clinic in Athens, Tennessee, was
sentenced to 28 months and was ordered to pay $7.5 million in restitution to Medicare for
misbranding drugs with the intent to defraud. The doctor purchased 254 vials of Botox from a
foreign supplier, and had used 204 vials during the course of the scheme to defraud, but had
billed Medicare for 16,119 vials. A forfeiture order was also entered against the $6.8 million
seized from the defendant’s bank accounts.
In May 2015, Garden State Cardiovascular Specialists P.C., a New Jersey cardiology practice
that owns and operates several facilities under the name NJ MedCare/NJ Heart, agreed to pay
$3.6 million to settle civil FCA allegations that its facilities and their principals submitted claims
to Medicare for various cardiology diagnostic tests and procedures, including stress tests, cardiac
catheterizations, and external counterpulsation, which were not medically necessary.
(SF) In May 2015, an administrator and a biller were convicted after trial for their roles in a
$4 million Medicare fraud scheme involving Medicall Physicians Group, a home visiting
physician practice in Schaumburg, Illinois. The evidence at trial revealed that Medicall billed
Medicare for services that were never provided to patients, including physician oversight of
patient care plans, extended patient visits, and other services purportedly provided to individuals
who had already died. A third defendant, the owner and medical director of Medicall, pled
guilty prior to trial. In September 2015, the lead administrator of a home visiting physician
practice was sentenced to 87 months in prison and the medical biller, who submitted many of the
fraudulent claims to Medicare, was sentenced to serve 45 months in prison and pay restitution of
approximately $1 million.
(SF) In August 2015, a dermatologist was sentenced to seven years’ imprisonment, following a
jury trial that resulted in six mail and wire fraud convictions. The defendant also was ordered to
pay over $3.7 million in restitution to Medicare, private insurers, and patients. According to the
evidence at trial, the defendant misdiagnosed patients’ benign skin conditions as pre-cancerous
lesions and falsely billed cosmetic treatments as the destruction of large numbers of such lesions.
In August 2015, a Brooklyn doctor was sentenced to 24 months in prison for his role as the “no
show” doctor in a $13 million health care fraud conspiracy scheme. Medical services were
provided by a physician’s assistant who was acting without supervision by a medical doctor, but
the doctor still billed Medicare and Medicaid for the services using his provider number. He also
falsely certified that patient transportation by ambulette was medically necessary and billed for
this unnecessary service. As part of the sentence, the court entered an order directing the doctor
to pay $6.4 million in restitution and to forfeit $6.6 million.
(SF) In October 2014, the operator of a Dallas family practice and weight loss management
clinic based in Dallas, Texas, was sentenced to 7 years and 3 months of incarceration and
ordered to forfeit his house, cars, boat, and funds from several bank accounts after pleading
guilty to conspiracy to unlawfully distribute controlled substances. The investigation revealed
that clinic operated as a pill mill, where “dealers” recruited and drove “patients” in groups to the
clinic to obtain prescriptions for hydrocodone and Xanax. The clinic’s office manager and three
dealers were also sentenced during this reporting period to more than 18 years in prison,
In October 2014, two individuals were sentenced to a combined 17 years and 1 month in jail and
ordered to pay $6.2 million in joint and several restitution after pleading guilty to conspiracy to
commit health care fraud. The two individuals operated a Miami-based retail pharmacy. The
investigation revealed that their co-conspirators recruited and paid Medicare beneficiaries to
obtain prescriptions, including for expensive antipsychotic and skin treatment pharmaceutical
drugs that the co-conspirators subsequently furnished back to the two men. The two then used
the fraudulent prescriptions to bill the Medicare Part D program.
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