Government Fraud Recoveries: $4.1 Billion

The federal government announced on Tuesday that it had recovered nearly $4.1 billion through its fraud prevention and enforcement efforts. This is the largest sum ever recovered in a single year.  Following is the Press Release:

News Release

FOR IMMEDIATE RELEASE February 14, 2012

Contact:   www.justice.gov | (202) 514-2007 HHS Press Office | (202) 690-6343

Health Care Fraud Prevention and Enforcement Efforts Result in Record-Breaking Recoveries Totaling Nearly $4.1 Billion

Largest Sum Ever Recovered in Single Year

WASHINGTON –Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today released a new report showing that the government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in Fiscal Year (FY) 2011.  This is the highest annual amount ever recovered from individuals and companies who attempted to defraud seniors and taxpayers or who sought payments to which they were not entitled.

These findings, released today, in the annual Health Care Fraud and Abuse Control Program (HCFAC) report, are a result of President Obama making the elimination of fraud, waste and abuse a top priority in his administration.  The success of this joint Department of Justice and HHS effort would not have been possible without the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing American taxpayers billions of dollars.  These efforts to reduce fraud will continue to improve with the new tools and resources provided by the Affordable Care Act.

“This report reflects unprecedented successes by the Departments of Justice and Health and Human Services in aggressively preventing and combating health care fraud, safeguarding precious taxpayer dollars and ensuring the strength of our essential health care programs,” said Attorney General Holder.  “We can all be proud of what’s been achieved in the last fiscal year by the Department’s prosecutors, analysts and investigators – and by our partners at HHS.  These efforts reflect a strong, ongoing commitment to fiscal accountability and to helping the American people at a time when budgets are tight.”

“Fighting fraud is one of our top priorities and we have recovered an unprecedented number of taxpayer dollars,” said Secretary Sebelius.  “Our efforts strengthen the integrity of our health care programs, and meet the President’s call for a return to American values that ensure everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules.”

Approximately $4.1 billion stolen or otherwise improperly obtained from federal health care programs was recovered and returned to the Medicare Trust Funds, the Treasury and others in FY 2011.  This is an unprecedented achievement for HCFAC, a joint effort of the two departments to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.

The recently-enacted Affordable Care Act provides additional tools and resources to help fight fraud that will help boost these efforts, including an additional $350 million for HCFAC activities.  The administration is already using tools authorized by the Affordable Care Act, including enhanced screenings and enrollment requirements, increased data sharing across government, expanded overpayment recovery efforts and greater oversight of private insurance abuses.

Since 2009, the Departments of Justice and HHS have enhanced their coordination through HEAT and have increased the number of Medicare Fraud Strike Force teams.  During FY 2011, HEAT and the Medicare Fraud Strike Force expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud.  The departments hosted a series of regional fraud prevention summits around the country, provided free compliance training for providers and other stakeholders and sent letters to state attorneys general urging them to work with HHS and federal, state and local law enforcement officials to mount a substantial outreach campaign to educate seniors and other Medicare beneficiaries about how to prevent scams and fraud.

In FY 2011, the total number of cities with strike force prosecution teams was increased to nine, all of which have teams of investigators and prosecutors from the Justice Department, the FBI, and the HHS Office of Inspector General, dedicated to fighting fraud.  The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers.  In FY 2011, strike force operations charged a record number of 323 defendants, who allegedly collectively billed the Medicare program more than $1 billion.  Strike force teams secured 172 guilty pleas, convicted 26 defendants at trial and sentenced 175 defendants to prison.  The average prison sentence in strike force cases in FY 2011 was more than 47 months.

Including strike force matters, federal prosecutors filed criminal charges against a total of 1,430 defendants for health care fraud related crimes.  This is the highest number of health care fraud defendants charged in a single year in the department’s history.  Including strike force matters, a total of 743 defendants were convicted for health care fraud-related crimes during the year.

In criminal matters involving the pharmaceutical and device manufacturing industry, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act.  These matters included the illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration (FDA) or the distribution of products that failed to conform to the strength, purity or quality required by the FDA.

The departments also continued their successes in civil health care fraud enforcement during FY 2011.  Approximately $2.4 billion was recovered through civil health care fraud cases brought under the False Claims Act (FCA).  These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the FDA, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks.  This marked the second year in a row that more than $2 billion has been recovered in FCA health care matters and, since January 2009, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars.

The fraud prevention and enforcement report announced today coincides with the announcement of a proposed rule from the Centers for Medicare and Medicaid Services aimed at recollecting overpayments in the Medicare program. Before the Affordable Care Act, providers and suppliers did not face a deadline for returning taxpayers’ money. Thanks to the Affordable Care Act, there will be a specific timeframe by which self-identified overpayments must be returned. The Obama Administration has made prevention and recollection of overpayments a government-wide priority. These announcements today are just the latest in a series of steps that the administration is taking to protect taxpayer dollars and keep money in the pockets of Americans.

The HCFAC annual report can be found here, oig.hhs.gov/publications/hcfac.asp.  For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.

Sixth Circuit Upholds 262 Month Sentence for Physician

The Sixth Circuit Court of Appeals has upheld a 262 month sentence for a Tennessee physician for selling prescriptions for controlled substances.  Following is the courts decision:

No. 10-6034

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT UNITED STATES OF AMERICA, Plaintiff – Appellee, v. DANIEL FEARNOW, Defendant – Appellant. ______________________________ ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNITED  STATES  DISTRICT COURT  FOR  THE  WESTERN DISTRICT OF TENNESSEE OPINION Before:  MCKEAGUE and WHITE, Circuit Judges; BARRETT, District Judge. * HELENE N. WHITE, Circuit Judge.

Defendant-Appellant Dr. Daniel Fearnow appeals his 262-month sentence imposed after he pleaded guilty of intentionally distributing controlled substances  and  conspiracy to distribute  controlled substances.  21 U.S.C. §§ 841(a)(1) & 846.  We AFFIRM.

I.

In late 2008, Drug Enforcement Agency (“DEA”)investigators received information that Fearnow, a doctor working at Wickman Family Medical Care Center (“Wickman” or “the  clinic”)  in  Shelby County,  Tennessee,  was  issuing  prescriptions  to  “patients” in exchange for cash.  The DEA solicited confidential informants to engage in audio- and video-recorded transactions with Fearnow from February to October 2009, during which The Honorable Michael R. Barrett, United States District Judge for the Southern * District of Ohio, sitting by designation.Fearnow prescribed controlled substances for no apparent medical purpose. On October 28, 2009, the government charged Fearnow with one count of conspiracy to distribute controlled substances and eleven counts of intentionally distributing controlled substances.  21 U.S.C. §§ 846, 841(a)(1).  On February 12, 2010, Fearnow pleaded guilty to all counts.

According to the Pre-Sentence Report (“PSR”), a patient typically provided Fearnow a list of names of persons who were not present – sometimes with as many as thirty different names – and Fearnow would write prescriptions for the persons named.  In exchange, the patient would pay Fearnow a fee, usually between $100 to $150. The patient would then resell the drugs or prescriptions. The investigation revealed that approximately seventy-five percent of Fearnow’s “patients” purchased fraudulent prescriptions, resulting in a total of over 25,000 fraudulent prescriptions.

In the usual case, a prescription-seeking patient would enter the clinic and inform a receptionist or nurse that he or she wished to see Fearnow, and the Wickman staff would collect a co-pay for the visit. Fearnow admitted that he sometimes used nurses and student 1 interns to assist him, for example, by taking the list of names from the patient and, after Fearnow had  written  the  prescriptions,  exchanging  the  prescriptions for  cash.  One confidential source explained that on one occasion, April, a woman appearing to be a nurse, advised that Fearnow was not seeing “that type of patient face-to-face because the police had been heavy in the area.” Likewise, a medical assistant explained that he was aware Fearnow Fearnow explained that Nancy Wickman, co-owner of the clinic, or other staff, 1 collected the co-pay fees.  Fearnow did not receive any money from the co-pay fees. 2was writing illegal prescriptions and that almost everyone in the office had knowledge of or assisted Fearnow with his illegal activity.

The sentencing hearing was held on August 5, 2010. The PSR recommended a fourlevel enhancement pursuant to United States Sentencing Guidelines (“U.S.S.G”) § 3B1.1(a) based  on  Fearnow’s status  as  an  organizer  or leader  of the  criminal  conspiracy.  Over Fearnow’s objection, the district court found the enhancement applicable.  Fearnow argued for a downward departure based on alleged sentencing entrapment, which the district court rejected. The  district  court  likewise rejected several  other  arguments for  a  downward departure.  The district court then considered the § 3553(a) factors.  After application of the §3B1.1(a)  enhancement for Fearnow’s role  and a three-level  downward  adjustment for acceptance  of responsibility, the Guidelines recommended  a range of  262-327 months’ imprisonment.  The district court opted for the lowest Guidelines-range sentence – 262 months.  This appeal followed.

II.

Fearnow contends the district court erred by imposing a four-level enhancement pursuant to U.S.S.G. § 3B1.1(a).  This court has struggled over whether to review a district court’s application of §3B1.1 deferentially or de novo.  United States v. Young, 553 F.3d 1035, 1039 (6th Cir. 2009) (noting confusion).  Because the district court did not err under either standard, we join prior panels and decline to resolve this issue. See, e.g., United States v. Walls, 546 F.3d 728, 734 (6th Cir. 2008).

U.S.S.G. § 3B1.1(a) provides for a four-level enhancement “[i]f the defendant was an organizer or leader of a criminal activity that involved five or more participants or was 3otherwise extensive.” In order for this enhancement to apply, the government must prove by a preponderance of the evidence Fearnow’s role as a leader or organizer.  United States v.  Bennett,  291  F.3d  888, 897  (6th  Cir.  2002).  In  considering the  applicability of  an enhancement pursuant to § 3B1.1, courts weigh the following factors:

the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to  a larger share of the fruits of the  crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others.”

United States v. Lalonde, 509 F.3d 750, 765 (6th Cir. 2008); see also U.S.S.G. § 3B1.1, cmt., app. n. 4. This court has explained that “a defendant must have exerted control over at least one  individual  within  a  criminal  organization  for  the  enhancement  of  §3B1.1  to  be warranted.”  Lalonde, 509 F.3d at 765.  Hence, “[m]erely playing an essential role in the offense is not equivalent to exercising managerial control over other participants and/or the assets of a criminal enterprise.”  Id. (citation omitted).

Although Fearnow’s case is somewhat atypical insofar as he did not have any control over the drugs after he issued the prescriptions, United States v. Swanberg, 370 F.3d 622 (6th Cir. 2004), the district court did not err in applying the enhancement.  A defendant does not need to satisfy each factor in order for the enhancement to be appropriate.  United States v. Gates, 461 F.3d 703, 709 (6th Cir. 2006).  Fearnow does not dispute that his  criminal conduct involved at least five participants. U.S.S.G. § 3B1.1 cmt., app. n.1 (explaining that a “participant” does not need to have been convicted).  Additionally, Fearnow exercised managerial authorityover staff members at Wickman, including nursing student interns, who assisted him in accomplishing the offenses.  See United States v. Baker, 559 F.3d 443, 449 4(6th Cir. 2009) (noting “a defendant whose sentence is enhanced under § 3B1.1(a) need only supervise or manage one of the five or more other participants”) (citation omitted).  As the district court explained at the sentencing hearing:

Within this clinic where the doctor was working were various people who were employees of the clinic but who were nevertheless, accommodating the doctor by taking money, assigning patients, and so forth. . . .

Now, he doesn’t have to employ these individuals himself.  He doesn’t have to have been the manager of the clinic as such; but they were accommodating him  and  serving him  within  the  clinic  is  my reading  of  the  facts, the uncontested facts, of the presentence report. . . .

He managed to get [the staff] to do his work for him which is set out in quite a number of places in the presentence report. I’ve pointed to several of them. And one of the disturbing things is it apparently also includes some medical interns who showed up and were roped into this enterprise as well.

Tr. at 20-28. Although this is not the typical drug-distribution case, Fearnow’s argument that he exercised no managerial control is unavailing, and the enhancement nonetheless applies. Finally, contrary to his assertion, Fearnow is not equally or less culpable than the recipients of the prescriptions.

The district court did not err in applying the § 3B1.1(a) enhancement.

III.

Fearnow next  argues  that  the  district  court  erred  by not  granting a  downward departure based on alleged sentencing entrapment or sentencing manipulation.  This court generally does not review a refusal to grant a downward departure unless “the district court (1) improperly computed the guideline range; (2) was unaware of its discretion to depart downward from the guideline range; or (3) imposed the sentence in violation of law or as a result of the incorrect application of the Sentencing Guidelines.”  United States v. May, 399 5F.3d 817, 827 (6th Cir. 2005) (quotation marks and citation omitted). Fearnow contends that although the government had enough evidence to arrest and convict him early on in the investigation, the DEA continued to conduct controlled buys for the sole purpose of boosting the quantity and type of prescriptions Fearnow sold and thereby increase his sentence.

Assuming such arguments are cognizable in this circuit, see, e.g.,  United States v. Guest,  564  F.3d  777,  781  (6th  Cir.  2009)  (“The Sixth  Circuit  has  already addressed sentencing entrapment and sentence manipulation . . . and reaffirmed that the Sixth Circuit does  not recognize  either  defense.”),  the facts  of this  case do  not support  a finding of sentencing enhancement or entrapment. As the district court explained, Fearnow’s will was not overcome by outrageous government conduct:

There’s no proof of any bad faith in this record by the Government.  What you’re asking me to do is infer from the lapse of time, the eight months, that there must have been entrapment.  Well, “entrapment” is probably not the right word for it;  but there must  have been  a  piling  on  or  an  attempt to exacerbate the offense on the part of the Government by letting this crime go on.

An  equally fair or perhaps more reasonable inference was that, first, the government didn’t feel it had enough proof in this matter of this sort.  We have  hindsight  now.  We  know Dr. Fearnow immediately confessed  his crime, pretty much, and we know he pled guilty to an indictment in this case, but, you know, when you’re sitting out there in the field, you have no idea of that.

The second reasonable inference was the Government wanted to know the scope of what was going on and who was involved.  So, it carried out an extensive investigation over time . . . .

As far as entrapment was concerned, on this record there’s no proof that anybody needed  to  entrap  Dr.  Fearnow.  He  willingly,  he readily wrote prescriptions at the drop of a hat for money.  Anybody could walk in without examination, it appears to me, and get a prescription written for somebody else and extensively, for multiple other people who were never examined. 6I don’t want to beat that point to death except to say it certainly doesn’t look like entrapment to me.

The  first  response to  entrapment  is  that  it’s  not  a  factor  for  downward departure.

My second response is this isn’t a case of entrapment.

Tr. at 40-41. See generally Sosa v. Jones, 389 F.3d 644, 648-49 (6th Cir. 2004) (“Under this theory, ‘sentencing entrapment occurs where outrageous government conduct overcomes the will of a defendant predisposed to deal only in small quantities of drugs, for the purpose of increasing the amount of drugs and the resulting sentence imposed against that defendant.’”) (citation omitted).

Fearnow provides no persuasive support for the proposition that the government’s conduct here constitutes sentencing entrapment or manipulation, and his arguments are therefore unavailing.  We find no error in the district court’s refusal to depart.

IV.

Lastly, Fearnowchallenges the substantive reasonableness of the 262-month sentence the district court imposed. In reviewing for substantive reasonableness, this court considers the  totality of  the  circumstances and inquires  whether a  district  court  has  abused  its discretion.  United  States  v.  Tristan-Madrigal,  601  F.3d  629,  633 (6th Cir.  2010).  A sentence is substantively unreasonable if a district court “selects a sentence arbitrarily, bases the sentence on impermissible factors, fails to consider relevant sentencing factors, or gives an unreasonable amount of weight to any pertinent factor.” United States v. Baker, 559 F.3d 443, 448 (6th Cir. 2009).

The crux of Fearnow’s argument is that the district court did not adequately consider and explain the § 3553(a) factors in imposing the sentence.  More specifically, Fearnow contends the district court did not give due consideration to his history and characteristics, including that he was raped when he was a young child and his “unblemished employment record as a physician.”  Fearnow emphasizes – and the district court noted – he is no longer a threat to society and imprisonment will not benefit him  and, further, that Fearnow is unusually susceptible to abuse in prison.

Because Fearnow’s sentence is within the advisory range of the Guidelines, this court affords it a rebuttable presumption of reasonableness.  See United States v. Christman, 607 F.3d 1110, 1117 (6th Cir. 2010).  A review of the sentencing hearing transcript reveals that the district court considered each of Fearnow’s arguments and explained its rationale for rejecting them.  The district court also carefully considered the § 3553(a) factors, including the seriousness of the offense and the history and characteristics of the defendant.  United States v. Richardson, 437 F.3d 550, 554 (6th Cir. 2006) (internal quotation marks omitted); 18 U.S.C. § 3553(a).

The district court stated that “these are extraordinarily serious offenses for drug crimes. They are among the most serious I have seen.” Tr. at 106. The district court further emphasized the deleterious effect of Fearnow’s crimes on the public, noting the number of prescriptions Fearnow sold.  Id. at 110.  The district court also specifically discussed some of Fearnow’s positive qualities.  Although the district court acknowledged that there would be no benefit to Fearnow from imprisonment and that Fearnow posed no danger to society, the district court also recognized a “strong need for deterrence in this case, which is to say 8there is  a  need  to  prevent  others from  engaging  in  this sort of  conduct.” Id. at  117. Ultimately, the  district  court  concluded that the lowest within-Guidelines sentence was appropriate.  The district court did not abuse its discretion.

V.

For the foregoing reasons, we AFFIRM Fearnow’s sentence.

Government Official Sentenced to Four Years in Prison for Accepting Bribes

The US Attorney’s Office for the Southern District of Ohio in Cincinnati released the following press release:

U.S. Attorney’s Office January 25, 2012

Southern District of Ohio (937) 225-2910

CINCINNATI—David T. Mersch, 57, the former operations manager for the Cincinnati offices of the U.S. Centers for Disease Control and Prevention (CDC) was sentenced to 48 months’ imprisonment followed by three years of supervised release for accepting bribes from a construction company executive in exchange for awarding construction contracts to the company, California-based Entek Mechanical Corp.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Special Investigations Branch announced the sentence imposed today by Senior U.S. District Judge Herman J. Weber.

Mersch oversaw everything related to the research, maintenance operations, safety, and construction for the three CDC campuses in the Cincinnati area. As part of his duties, he made recommendations for and approved contracts for certain construction and services contracts related to the CDC facilities in Cincinnati.

According to court documents, Mersch, formerly of Florence, Kentucky, solicited and accepted cash payments, paid vacations, and payments to third parties for home improvements for his residence from CDC contractors. Mersch pleaded guilty on July 19, 2011 to one count of bribery. Mersch admitted taking the payments from 2003 until 2011. The value of the payments and benefits is at least $189,181.

“Over the course of many years, the defendant abused his official position and accepted bribes from construction contractors, typically in the form of home improvements, vacations, or cash,” Assistant U.S. Attorney Tim Mangan wrote in a sentencing memorandum filed with the court.

“David Mersch conspired to enrich himself at taxpayers’ expense,” said Elton Malone, Special Agent in Charge of the Special Investigations Branch within the Department of Health and Human Services’ Office of Inspector General. “Today’s sentence results from an intolerable, selfish scheme that tarnished the image of hard-working, dedicated federal employees.”

Judge Weber also fined Mersch $1,500, ordered him to forfeit $189,181 and barred him from holding any “office of honor, trust, or profit.”

Paul G. McDonald, 70, of Pleasant Hill, California, a corporate officer for Entek, pleaded guilty in November to one count of bribery. He is scheduled to be sentenced on April 3, 2012.

Stewart commended the cooperative investigation by FBI and HHS inspectors general as well as Assistant U.S. Attorney Mangan. Stewart also said the investigation is continuing.

Compliance Program Basics

OIG Launches “Compliance Program Basics” HEAT Provider Compliance Training Video With Accompanying Audio Podcast

Today OIG issues the 7th of 11 free videos and audio podcasts, entitled “Compliance Program Basics.”  Access the new video and audio here: http://go.usa.gov/RvQ

These 11 videos cover major health care fraud and abuse laws, the basics of health care compliance programs, and what to do when a compliance issue arises. These video installments are the latest from OIG’s award-winning Health Care Fraud Prevention and Enforcement Action Team (HEAT) Provider Compliance Training initiative.

LA Pastor Sentenced to 15 Years for Medicare Fraud

The Department of Justice released the following press release:

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, January 9, 2012

Los Angeles Church Pastor Sentenced to 180 Months in Prison for $14.2 Million Medicare Fraud Scheme

One of the Longest Health Care Fraud Sentences Imposed in the Central District of California

The pastor of a now defunct Los Angeles church who owned and operated several fraudulent durable medical equipment (DME) supply companies was sentenced today to 180 months in prison for his role in a $14.2 million Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced.

 

Christopher Iruke, 61, was also ordered to pay $6.7 million in restitution, jointly and severally with his co-conspirators, by U.S. District Judge Terry J. Hatter of the Central District of California. In addition, Judge Hatter ordered Iruke to serve three years of supervised release following his prison term.

 

In August 2011, a jury found Iruke and his wife, Connie Ikpoh, 49, and one of their employees, Aura Marroquin, guilty of conspiracy and health care fraud offenses following a two-week trial in Los Angeles.

 

According to evidence introduced at trial, Iruke and Ikpoh were pastors at Arms of Grace Christian Center, a church that operated from 5700 Crenshaw Boulevard in Los Angeles, where Iruke and Ikpoh also operated Pascon Medical Supply, a fraudulent DME supply company. Iruke and Ikpoh hired several of their parishioners at Arms of Grace to assist them in running Pascon and another fraudulent DME supply company, Horizon Medical Equipment and Supply Inc.  Horizon was owned by Ikpoh, who also worked as a nurse at two Los Angeles-area hospitals.

 

According to evidence presented at trial, Iruke, Ikpoh, Marroquin and their co-conspirators used fraudulent prescriptions and documents that Iruke purchased from a number of illicit sources to bill Medicare for expensive, high-end power wheelchairs and orthotics that were medically unnecessary or never provided. These power wheelchairs cost approximately $900 per wheelchair wholesale, but were billed to Medicare at a rate of approximately $6,000 per wheelchair.

 

Evidence introduced at trial established that when it appeared to Iruke that he would have to close Pascon due to an audit by Medicare, Iruke convinced his sister, Jummal Joy Ibrahim, and a member of Arms of Grace to allow him to use their names and identities to open two new fraudulent DME supply companies. These companies, Contempo Medical Equipment Inc. and Ladera Medical Equipment Inc., also operated from Los Angeles. After Pascon and Horizon closed, Iruke and his co-conspirators continued to operate the fraud scheme from Contempo and Ladera.

 

Witnesses who sold fraudulent prescriptions and documents to Iruke testified that they and others paid cash kickbacks to street-level marketers to offer Medicare beneficiaries free power wheelchairs and other DME in exchange for the beneficiaries’ Medicare card numbers and personal information. These witnesses testified that they and their associates used this information to create fraudulent prescriptions and medical documents which they sold to Iruke and the operators of other fraudulent DME supply companies for $1,100 to $1,500 per prescription.

 

Trial testimony established that Iruke took extensive efforts to conceal the fraud scheme and his involvement with the companies. One witness who worked at the companies testified that Iruke directed her and Marroquin to lie to state and Medicare inspectors about his involvement with Contempo and Ladera when the inspectors visited the companies.

 

Witness testimony established that shortly after agents visited Ladera, Iruke directed Marroquin and Darawn Vasquez, a member of Arms of Grace who worked at the supply companies, not to talk to law enforcement. Iruke provided Marroquin and Vasquez with cellular telephones, and directed them to use the phones in order to prevent law enforcement from intercepting their conversations. Iruke and Vasquez then met at Arms of Grace, and shredded evidence of the fraud scheme.

 

Witness testimony and evidence introduced at trial also established that within a few weeks of the agents visiting Ladera, Iruke closed Contempo and Ladera, which prompted agents to serve Iruke and his attorneys with subpoenas for the files of the companies. Instead of producing the files, Iruke directed that the files be brought to an auditorium used by Arms of Grace, where Iruke, Ikpoh, Marroquin and others altered and destroyed documents within the files to remove evidence of the fraud scheme. Law enforcement agents found Marroquin with these files when they arrested her.

 

Evidence introduced at trial showed that as a result of this fraud scheme, Iruke, Ikpoh, Marroquin and their co-conspirators submitted more than $14.2 million in fraudulent claims to Medicare, and received approximately $6.7 million in reimbursement payments from Medicare. The evidence at trial showed that Iruke and Ikpoh diverted most of this money from the bank accounts of the supply companies to pay for the fraudulent prescriptions and documents which Iruke purchased to further the scheme, and to cover the leases on their Mercedes vehicles, home remodeling expenses and other personal expenses.

 

Ikpoh is scheduled to be sentenced on Feb. 27, 2012. Vasquez and Ibrahim pleaded guilty to conspiracy and false statement charges in February 2011 and March 2011, respectively, and are awaiting sentencing. On Dec. 9, 2011, Judge Hatter sentenced Marroquin to time served and three years of supervised release.

 

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region for the HHS Office of the Inspector General (HHS-OIG); and Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office.

 

The case was prosecuted by Trial Attorney Jonathan Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Kirman of the Central District of California. The case was investigated by HHS-OIG with assistance from the California Department of Justice. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.

 

Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,160 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

 

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Physician Sentenced to 72 Months for Violating the Anti-Kickback Statute

In May 2011, the Seventh Circuit affirmed the conviction and seventy-two-month sentence of Roland Borrasi, MD (“Dr. Borrasi”), for conspiring with a psychiatric hospital to accept kickbacks in exchange for patient referrals, conduct that violates the Anti-Kickback Statute. Dr. Borrasi had an employment agreement with the hospital, and he contended that the remuneration was lawfully paid to him pursuant to Statute’ employment exception.

The Seventh Circuit did not agree and joined the Third, Fifth, Ninth, and Tenth Circuits in adopting the “one purpose” test first articulated in United States v. Greber, holding that if one purpose of the payment was to obtain money for the referral of services or to induce further referrals, the Anti-Kickback Statute has been violated.

With regard to Dr. Borrasi’s argument that the remuneration was protected by the employment exception and safe harbor, the Seventh Circuit found that the statutory employment exception and/or the regulatory safe harbor do not provide unrestricted protection under the Statute.  The court said that the statutory exception and regulatory safe harbor protect only amounts paid to a bona fide employee for services rendered. They do not protect employment compensation which is not for “bona fide” services. Therefore, criminal liability may attach if there is improper intent. The employment exception and the safe harbor were never intended to protect sham arrangements. Consequently, care must be taken that the employment arrangement is for valid services that are actually performed.

The facts of Borrasi paint a vivid picture of how not to structure an arrangement. According to the court, the psychiatric hospital paid bribes to a group of physicians to obtain their referrals to the hospital. The bribes were concealed by placing the physicians “on the [hospital] payroll, giving them false titles and false job descriptions, and asking them to submit false time sheets.” According to testimony at trial, the physicians were not expected to, and did not perform the duties listed on their job descriptions; they did, however, occasionally attend various committee meetings.

Owner of Miami-Area Mental Health Company Sentenced to 35 Years in Prison for Orchestrating $205 Million Medicare Fraud Scheme

As I have said many times, the enforcement of healthcare fraud is becoming increasingly more forceful. However, 35 years is the longest sentence that I know of to date. Click on the this link to read the press release.