Medical Fraud

Published on: February 28, 2011

Massive Los Angeles Medicare Fraud Bust – Five Suspects Accused of Cheating Medicare of $28 million

Last week, 700 FBI and Health and Human Services agents rounded up 111 suspects in nine cities – including five people suspected of Los Angeles Medicare fraud – in the “largest-ever Federal health care fraud takedown” in the United States, according to government officials. The Los Angeles Times reports that five LA defendants “cheated the government out of more than $225 million in false billing schemes that included fraudulent claims, kickback operations, money laundering and identity theft.”

A spokesperson for the Justice Department’s Criminal Division, Assistant Attorney General Lanny Breuer, said “our message is clear… we are determined to put Medicare fraudsters out of business.”

The Justice Department’s task force has really revved up, since its inception in early 2007. So far, nearly 1,000 people have been charged for false billing schemes – approximately 75% of these people have been convicted. The average prison sentence has been quite substantial – 43 months (more than 3.5 years). In 2010 alone, national, state, and local task forces raked in about $4 billion in fines and recovery payments.

Published on: February 14, 2011

Los Angeles Medical Fraud News Alert: Eight Nurses Going to Jail for Defrauding Medicare

by Michael Kraut

When you picture Southern California medical, dental, or chiropractic fraud arrests, you might envision a surly doctor conspiring with a criminal cohort to develop sophisticated white collar crime techniques.

You might not imagine that eight nurses (between the ages of 32 and 55) would be capable of pulling off a scam that bilked Medicare out of nearly $19 million.

But that’s exactly what the Department of Justice has alleged against eight RNs in Miami. The owners of two health care agencies, Florida Home Health Care Providers Inc. and ABC Home Health Inc., allegedly charged Medicare for unnecessary services (or services that never got provided) to the tune of $18.7 million. Last Tuesday, the eight nurse-owners – Diana Sanabia, Daisy Santos, Roberto Rodriguez, Marlene Magadan, Maria Perez, Alberto Alvarez, Yanisley Chao, and Leonardo Malagon — got sentenced to prison time as well as forced restitution (upwards of $700,000) for their roles in the Medicare scam.

Published on: January 31, 2011

Los Angeles Healthcare Fraud Case among 2010’s Biggest Busts, According to CNN

by Michael Kraut

Last Monday, a federal government report announced that over $2.5 billion in Southern California Medicare fraud (and fraud elsewhere) was recovered in 2010. The 84 page report from the Justice and Health & Human Services found that the government’s anti-fraud programs appear to be working well – returning $5 for every dollar spent to combat fraud. Defendants have included hospitals, physicians, manufacturers of medical devices, and pharmaceutical companies.

A CNN report singled out the fraud case of a Tustin, California CFO as “one of the most blatant cases” last year. The CFO pled guilty in April 2010 to charges of recruiting homeless people to engage in unnecessary services in exchange for kickbacks. He was one of 726 different defendants convicted for crimes like Los Angeles healthcare fraud and insurance fraud.

2011 may be an even more vigorous year for anti-fraud activists. The Justice and Health and Human Services report says that over 1,100 new fraud probes will be launched in 2011. 1,700 criminal investigations are pending. And the universe of potential defendants may expand to 2,000+ people. Since the late 1990s, the government has collected approximately $18 billion from individuals and institutions that have committed fraud against Medicare and other healthcare programs.

Published on: January 17, 2011

Southern California Medicare Fraud News Alert — Another Multimillion Dollar Bust Barely Makes a Blip on the News Radar: Why?

by Michael Kraut

Many colorful stories of Los Angeles medical, dental, and chiropractic fraud have hit the news over the past year or so. The public may simply be too exhausted to pay attention to them anymore.

This claim sounds absurd at first. After all, you’d think that stories about high crime involving multi-millions of dollars would enrage citizens or at least stir debate – especially during this prolonged economic malaise. But the shocking reality is that many fascinating stories of Southern California insurance fraud, medical fraud and credit card fraud are simply flying under most people’s radars.

To wit, consider a crazy case out of Gary, Indiana that you no doubt missed:

Published on: January 3, 2011

Los Angeles Medical Fraud News Alert: Doctor Sentenced for Having a Receptionist Pose as MD

by Michael Kraut

The annals of Southern California medical, dental and chiropractic fraud are replete with pretty crazy stories. But a breaking story out of Columbus, Ohio may have even the most tawdry recent Los Angeles white collar crime stories beat. An Ohio area doctor, Charles Njoku, has been sentenced for manipulating his receptionist into posing as a doctor to treat patients and bilk Medicare and Medicaid.

Judge Algenon L. Marbley sentenced Dr. Njoku in District Court to a year of home confinement, three-years of probation, and 416 hours of community service. He must also pay over $130,000 in restitution to Medicare and Medicaid programs. Dr. Njoku — whose medical license has not yet been suspended, according to the Columbus Dispatch — should be counting as blessings. The judge could have sentenced him to three decades behind bars and a fine of $1.5 million for his crimes.

His receptionist and co-conspirator, Veronica Scott-Guiler, was also arrested for medical fraud back in January. Scott-Guiler also pled guilty and received a similar sentence. She, too, could have been hit with much harsher penalties – including up to 15 years behind bars. Although the judge did let the Nigerian-born Njoku off relatively easily, he had harsh words for the defendant: “You should be ashamed… you don’t have the excuse [of a poor upbringing] that many of the defendants who come before me have…the good deeds [you] have done are eviscerated by the nefarious deeds committed.”

Published on: December 27, 2010

Southern California Medicare Fraud Alert: Miami-based Medicare Scam Explodes — Tens of Millions of Dollars Allegedly Stolen

by Michael Kraut

Although Southern California healthcare fraud is an enormous and perennial problem – witness the massive Armenian Mafia Medicare scam story that broke in October 2010 – the city of Miami, Florida remains the “national epicenter for Medicare fraud,” according to a story in the AP from five days ago.

The latest big breaking Medicare scam involves the drug Arformoterol, an emphysema and bronchitis drug. The Department of Health and Human Services reports that, over a year-and-a-half long period, Miami-Dade County healthcare providers paid out $34 million for drugs that should have only cost about $3.7 million. Medicare paid for 7 million units but only received 750,000 units. The fraud, which totaled more than $30 million, sounds like a big deal. But $30 million is peanuts compared with the total Medicare fraud committed annually in Miami – “roughly $3 billion,” according to the AP.

The arformoterol overbilling scheme is just one of dozens of similar scams recently perpetrated by technically savvy crooks. According to the AP, “The spike in arformoterol only came after authorities tried to crack down on another inhaler drug… as authorities have caught onto one scam, crooks have moved on to another, such as by shifting from durable medical equipment and HIV drug scams to physical therapy and home healthcare fraud.”

Published on: December 13, 2010

Massive Los Angeles Healthcare Fraud (and Elsewhere) Settlement Makes Taxpayers Livid

by Michael Kraut

The Wall Street Journal, Washington Post, Bloomberg News and other major media services are reporting on an enormous Los Angeles medical fraud (and elsewhere) settlement involving three pharmaceutical firms: Abbott Laboratories, B. Braun Medical of Bethlehem, Pennsylvania, and Roxane Laboratories of Columbus, Ohio. All told, the $420+ million settlement stemmed from a whistleblower charge pursuant to the False Claims Act.

Essentially, the drug companies overinflated their benchmark pricing to government insurers. In other words, they gave pharmacies and doctors a discounted price, and then they inflated how much the drugs cost and passed that difference onto the taxpayers. This illegal inflation became so well known that the benchmark — called the Average Wholesale Price (AWP) — soon became known among everyone in the industry as “ain’t what’s paid.” A spokesman for the Justice Department put it bluntly: “The only persons who paid the inflated, reported drug price were you, the American taxpayers.”

Cases of medical, dental, and chiropractic fraud, insurance fraud, credit card fraud, and other Southern California white collar crimes are significant and troubling. But the typical local cases pale in comparison with the national Medicare and Medicaid schemes unraveled by the Justice Department recently. Here is a quick recap of a few jaw dropping settlements:

Published on: November 30, 2010

Southern California Medicare Fraud Alert: Florida Couple Pays More Than $22 Million to Resolve Fraud Allegations

by Michael Kraut

A 70-year old cardiologist, Dr. Walter Janke, and his wife, Lalita Janke, have agreed to pay $22.6 million to resolve Medicare fraud allegations – a stunning move that has analysts who follow events in the world of Los Angeles Medicare fraud talking.

The Jankes had owned two large organizations – Medicare Advantage and America’s Health Choice Medical Plans – and allegedly overstated patient diagnoses to garner extra money from the federal government. Lawyers for the U.S. in District Court argued that Jankes’ acts violated the False Claims Act. The U.S. has frozen $20 million of the Jankes’ assets. The settlement will be paid out of those assets as well as out of their personal funds.

The Centers for Medicaid and Medicare Services (CMS) has been engaged in a long and heated battle with the Jankes, according to an article in South Florida Business Journal. The cardiologist’s attorney lamented the situation: ”there has been a long history of clear animosity directed at the Janke’s from CMS.” The attorney argued that the Medicare audit done to determine the settlement amount was unfair – essentially, by extrapolating based on a fraction of a percentage of patient cases, CMS might have erred by as much as 30%.

Published on: November 15, 2010

Kansas Doctor Sentenced to Three Years in Federal Prison for Fraud; Los Angeles Medical Fraud Analysts Examine Case

by Michael Kraut

Southern California medical care fraud analysts have been wrapped up debating the massive October bust of a Medicare fraud ring allegedly tied to the Armenian mafia. But a breaking story out of Kansas has siphoned off a lot of media attention.

Wayne W. Williamson, 67, an Olathe Kansas ex-physician, was sentenced last Monday to a three year federal jail sentence for distributing prescription drugs illegally and committing healthcare fraud. Williamson pled guilty in July to medical fraud and to harassing a Kansas medical investigator. White collar crime prosecutors said that Williamson used to go into apartment complex parking lots and sell drugs out of his car – drugs like Percocet, Xanax, and OxyContin. One “client” allegedly paid the doctor for $150 for prescriptions of Oxycodone. The client then resold those pills on the black market for $30 each to make a profit. The man testified to making several transactions with the former doctor over two years. Williamson also billed Medicare and Medicaid for non-existing services. The court ordered him to pay restitution of nearly $3,000. Williamson also surrendered his medical license and agreed to never practice medicine in the U.S. again.

Southern California healthcare fraud is an immensely complicated crime. Depending on what you allegedly did, how you did it, and various other factors, you can face charges pursuant to many different laws. For instance, Labor Code Section 3700, Penal Code Section 118, Penal Code Section 550, and Insurance Code Section 1871.4 could be applicable. If convicted, you can face jail time, loss of your license, strict probation terms, major court costs and fines, and mandatory restitution to providers like Medi-Cal, Medicare, or insurance companies.

Law enforcement agents are familiar with myriad “varieties” of Southern California insurance fraud, white collar crime, and healthcare fraud. For instance, if you made up medical records, billed providers like Medi-Cal or Medicare for services that you never rendered, prescribed medicines that were not necessary, or “double billed” or offered excessive and unnecessary procedures, prosecutors can go after you.

Given how complicated these charges can be, it’s important to have a savvy and experienced Southern California medical care fraud attorney on your side, like Los Angeles Criminal Defense Attorney Michael Kraut.

Published on: November 1, 2010

Southern California Medical Fraud Experts Examine Kansas Doctor’s Sentence

by Michael Kraut

Analysts who study health, chiropractic, and dental fraud in Los Angeles have been heatedly discussing a case out of Kansas. A former doctor, John R. Toth, pled guilty last week to a variety of federal counts, including a count of reckless and voluntary manslaughter, stemming from a bizarre scheme to treat patients for a non-existent epidemic of Lyme disease.

The Weird Back Story
In 2001, the then Dr. Toth collaborated with a variety of businesspeople associated with the firm American Biologics to market drugs and a special microscope by ginning up fears of a Lyme disease epidemic. Apparently, Toth and his associates believed that Lyme disease was a primary cause of many illnesses. In any event, Toth prescribed various medications that the Food and Drug Administration had neither reviewed nor approved. One of those patients, Beverly Wunder, suffered serious renal failure as a result of the intravenous injection of a medication, and she fell into a coma and died. Toth was arrested and charged with a variety of crimes, including misbranding drugs for interstate commerce, using adulterated medical devices, committing mail fraud, and committing reckless and voluntary manslaughter.

If convicted of all recent counts, the 61 year-old could face 5 years in federal prison and a fine of $250,000. He already served 32 months in a state jail, after he pled no contest to the reckless and voluntary manslaughter charge back in November 2007.

If you or someone you care about has been arrested for Southern California healthcare fraud, Los Angeles insurance fraud, or white collar crimes in Southern California, you could face serious penalties. Prosecutors could charge you pursuant to Insurance Penal Code Section 550, Insurance Code Section 1871.4, Penal Code Section 118, or Labor Code Section 3700. Your charges and potential penalties obviously will depend on what you did and how prosecutors want to handle your case.

So how should you respond most effectively? A connected and experienced Southern California medical fraud attorney can help you piece together a smart, proactive defense.