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Examples of Healthcare Fraud Investigations - Fiscal Year 2012

The following examples of healthcare fraud investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Virginia Woman Sentenced for Health Care Fraud and Filing False Tax Return
On September 13, 2012, in Richmond, Va., Veronica Sharon Cunningham was sentenced to 135 months in prison and three years of supervised release on 26 counts of health care fraud, eight counts of making false statements on patient health care records, and a single count of filing a false tax return. Cunningham was also ordered to pay $473,000 in restitution to the IRS and $3,500 in fines. According to court records and evidence at trial, Cunningham owned and operated Community Neurological Services (CNS), a Richmond business that administered intravenous immune globulin (IVIG) to patients suffering from immune deficiency disorders. Cunningham regularly and systematically billed insurance companies and the Medicare and Medicaid programs for IVIG not actually administered and made other false entries in patient records.  She also falsely under-reported the gross income of CNS by over $1 million in her 2005 tax return.     

Indiana Man Sentenced in Health Care Fraud and Tax Evasion Case
On August 30, 2012, in Hammond, Ind., Chad Shedron, of Rossville, was sentenced to 57 months in prison and one year of supervised release. Shedron pleaded guilty in May 2012 to one count of knowingly and willfully executing a scheme to defraud the Indiana Medicaid health benefit program and one count of evading federal income tax. According to the plea agreement, Shedron agreed to a money judgment in the amount of $3,521,961 which represents the dollar amount of proceeds derived from the health care fraud. He also agreed that the tax loss for 2007 was approximately $189,009, and further agreed that he is responsible for tax losses of $164,728 for 2008, $141,623 in 2009 and $32,310 in 2010. Further, Shedron agreed to forfeit his personal residence, $65,000  in cash, a brokerage account, jewelry and a baseball card collection with an estimated value of over $200,000.

Former Nursing Home Operator Sentenced for Health Care Fraud and Tax Fraud
On August 13, 2012, in Rome, Ga., George D. Houser, of Sandy Springs, Ga., was sentenced to 240 months in prison and three years of supervised release on charges of conspiring with his wife to defraud the Medicare and Georgia Medicaid programs by billing them for “worthless services” in the operation of three nursing homes. Houser was also ordered to pay $6,742,807 in restitution to Medicaid and Medicare and $872,515 in restitution to the IRS. According to court documents, Medicare and Medicaid paid Houser more than $32.9 million between July 2004 and September 2007 for food, medical care, and other services for nursing home residents. Evidence presented at trial showed that instead of providing sufficient care for the nursing home residents, Houser diverted more than $8 million of Medicare and Medicaid funds to his personal use. In addition to the health care fraud count, Houser was convicted of eight counts of deducting $806,305 in federal payroll taxes from his employees’ paychecks, but not paying that money over to the IRS. Houser was also convicted of failing to file personal income tax returns for 2004 and 2005.

Husband and Wife Sentenced for Fraudulent Healthcare Billing Scheme
On August 8, 2012, in Denver, Colo., Leonid and Yelena Stolyar were sentenced to 35 months and 37 months in prison, respectively, for conspiracy to commit health care fraud and money laundering. In addition, they were ordered to serve three years of supervised release, to forfeit a secondary residence and to pay over $480,000 in restitution to the Colorado Medicaid program. According to the plea agreements, Leonid and Yelena Stolyar submitted false and fraudulent claims for durable medical equipment with Medicare and the Colorado Medicaid Programs to obtain money to which they were not entitled and during a time that Yelena Stolyar was excluded from participating in the Colorado Medicaid program, the Medicare program, and all federally funded health benefit programs.  In December 2005, the Department of Health and Human Services settled a dispute with Yelena about her billing of federal programs while under a previous exclusion. She agreed to a lifetime exclusion. However, she continued to participate in Orthomed Supply the same as before this second exclusion. The Stolyars fraudulent conduct continued until the execution of a federal search warrant in 2009. Colorado Medicaid paid approximately $3.8 million to Orthomed and the Stolyars between December 2001 and May 2009. Meanwhile, the Medicare program paid over $500,000 between December 2001 and August 2009. Many of the cooperating beneficiaries indicate they received items falsely billed to Medicare or Medicaid, or items never received from the Stolyars. In June 2009, a search warrant was executed at Orthomed. Many of the Orthomed beneficiary files seized falsely indicated that legitimate products and items were provided to the beneficiaries.  

Four Individuals Sentenced in Massive Health Care Fraud Scheme
On June 29, 2012, in Houston, Texas, Kenneth Anokam was sentenced to 151 months in prison and ordered to pay $16,817,015 in restitution for a massive health care fraud conspiracy that billed Medicare and Medicaid for more than $45 million. Anokam was found guilty of one count of conspiracy to commit health care fraud, 27 counts of health care fraud and four counts of structuring financial transactions to avoid reporting requirements.  According to court documents, Anokam was a manager at City Nursing. The owner of City Nursing, Umawa Oke Imo, and Dr. Christina Joy Clardy, under whose Medicare and Medicaid provider numbers City Nursing billed the fraudulent claims, were sentenced to 327 and 135 months, respectively. Joann Michelle White, an employee of City Nursing, was sentenced to 46 months in prison. Evidence presented at trial showed that Medicare and Medicaid beneficiaries were paid cash for going to City Nursing and signing undated blank treatment forms which were subsequently completed by Anokam and other City Nursing employees to reflect physical therapy treatment that was not provided. City Nursing employees who testified on behalf of the United States described how Imo and Anokam gave them cash, usually $100 - $150, to give to beneficiaries and “recruiters” for coming to the clinic. Generally, beneficiaries were paid once a month when they came to City Nursing to see the doctor; however, beneficiaries who complained about the fraudulent billing were given extra payments, sometimes $200 - $300 to “settle” matters. Despite billing more than $45 million for physical therapy services, City Nursing did not have a single licensed or otherwise qualified physical therapist on staff.

Former Executive Director of North Carolina Mental Health Agency Sentenced

On April 19, 2012, in Charlotte, N.C., Edward Gerard Payton was sentenced to 18 months in prison, two years of supervised release and ordered to pay $131,169 in restitution.  Payton was the executive director of a non-profit community mental health agency from 2006 until 2010.  In April 2011, Payton pleaded guilty to knowingly and willfully converting without authority moneys, funds, property and assets of the agency and failing to file a tax return for 2008.  During sentencing, Payton admitted to unlawfully converting at least $147,000 by taking unauthorized pay “advances” from the agency, a health care benefit program which provides mental health services and housing to mentally ill individuals in the Charlotte area.  According to court documents and court proceedings, Payton also admitted to using an agency corporate credit card and automobile for his personal use, in violation of agency policy. In his plea agreement, Payton admitted that the total loss resulting from his criminal conduct at the agency was between $70,000 and $120,000 and that, as part of his criminal conduct, he abused his position of trust. Although Payton pleaded guilty to failing to file a tax return and pay taxes for tax year 2008, at sentencing Payton was also held responsible for failing to pay taxes for tax years 2007 and 2009.

Colorado Health-Plan Founder Sentenced for Mail Fraud, Embezzling Plan Funds, and Money Laundering

On March 30, 2012, in Denver, Colo., Gerald Rising, Jr., of Centennial, Colorado, was sentenced to 66 months in prison, three years of supervised release, and ordered to pay $3,500,000 in restitution to the victims of his crimes.  Rising, the owner and operator of Rural Health Plans Initiative (RHPI) Administration Company, pleaded guilty on October 26, 2011, to charges of mail fraud, embezzling plan funds and money laundering.  According to court documents, from 2003 through November 2010, Rising defrauded individuals, companies, and entities in connection with the delivery of, or payment for, medical benefits under health benefit plans and employee welfare plans promoted, sold and administered by RHPI.  Rising promoted, sold and administered the plans to entities, including school districts, and would retain part of the plan contributions (approximately 20 percent) for administrative costs, and the remainder was to be held in a designated trust account to pay claims by covered employees and to purchase excess loss or stop-loss insurance through insurance providers to cover any claims that exceeded $25,000. Stop-loss insurance is generally a type of insurance that covers medical expenses associated with catastrophic illnesses that exceed specified amounts or limits. RHPI Captive (RHPIC) Insurance Company, LTD, an off-shore corporation incorporated in Anguilla, British West Indies by Rising, maintained the residual fund contributions after the administrative fees were deducted from the premiums paid by employers. RHPI maintained a bank account controlled by Rising that was referred to as the contribution trust account, but did not segregate funds in separate accounts for the benefit of each plan. Rising and employees of RHPI promoted the sale of the RHPI health care benefit plans to business and governmental entities falsely representing that reputable insurance companies like Lloyd’s of London and AIG would provide stop-loss coverage at $25,000, when in truth those policies did not provide coverage on claims until they reached approximately $125,000. Rising commingled trust funds from various plans to pay claims for the aggregated pool of beneficiaries; he paid claims on a particular plan using the monies deposited for the benefit of beneficiaries in other plans. In 2008 and 2009, Rising increased his salary to siphon monies held by RHPIC for the benefit of plan beneficiaries and in 2009 and 2010, he began to kite checks between various bank accounts he controlled for himself, RHPI and RHPIC to create a false impression of the financial status of the businesses.  Between July and November 2010, Rising directed employees to falsely represent to various plan beneficiaries and employers that claims for health care services were paid when they were not paid. In late 2010, Rising created bills and invoices that billed and created false indebtedness to the employers for payments RHPIC made for beneficiary and health care provider claims. Over 250 individuals, businesses and governmental agencies were victims of Rising’s crimes with an aggregated loss between $2.5 million to $7 million.

Doctor and Mother Sentenced for Health Care Fraud, Drug Distribution, and Tax Crimes

On March 29, 2012, in Tacoma, Wash., Antoine Johnson, a former resident of Aberdeen, Washington, and his mother, Lawanda Johnson, were sentenced for more than two dozen federal felonies connected with their operation of four health care clinics in Western Washington.  Antoine Johnson was sentenced to 151 months in prison, three years of supervised release and ordered to pay $1,281,873 in restitution for 24 counts of health care fraud, four counts of filing false income tax returns and five counts of illegal drug distribution. Lawanda Johnson was sentenced to 87 months in prison, three years of supervised release and ordered to pay $1,227,746 in restitution for 24 counts of health care fraud and six counts of filing false income tax returns. According to testimony at trial and court records, Antoine Johnson was the only medical doctor employed by four clinics which churned out prescriptions for Schedule II controlled substances such as Oxycodone and Methadone. These clinics had thousands of patients and over half of those patients were prescribed controlled substances by Johnson. Often, the patients would come to the clinic, get their weight and blood pressure taken by a nursing assistant and then pick up a Schedule II prescription that had been pre-signed by Johnson. Sometimes, a patient’s family member would pick up a prescription, but was required to pay a $75 or $100 fee to the clinic for the signed prescription. The clinics, through the business manager Lawanda Johnson, consistently billed Medicaid for a higher level of service than what was actually provided.

California Man Sentenced in Health Care Fraud Scheme

On March 19, 2012, in Los Angeles, Calif., George Hakopian, aka Rafik, was sentenced to 24 months in prison, three years of supervised release, and ordered to pay more than $900,000 in restitution.  According to court documents, Hakopian and another individual were the owners of Midvalley Medical Supply, a durable medical equipment (DME) supply company in Van Nuys, California.  Hakopian obtained Medicare beneficiary names, Health Insurance Claim numbers, and other patient information and used this information to submit false and fraudulent claims to Medicare primarily for motorized wheelchairs and orthotics that were not medically necessary.  Over a one-year period, Midvalley submitted more than $4.8 million in claims for power wheelchairs and orthotics that either were not medically necessary or were never provided to Medicare beneficiaries.

Colorado Man Sentenced for Defrauding Health Care Programs and Money Laundering

On March 16, 2012, in Denver, Colo., Anthony Paul Breaux, of Palisade, Colorado, was sentenced to 48 months in prison, three years of supervised release, and ordered to pay over $3,500,000 in restitution to the victims of his crime. Breaux pleaded guilty in November 2011 to charges of health care fraud and money laundering in connection with his actions to defraud government funded health care programs meant to compensate nuclear weapons workers and certain miners.  According to court documents, in October 2009, Breaux created and acted as a registered agent for Honor-Bound Healthcare Providers (HBHP), a Colorado Corporation in the business of providing home health care services.  Part of Honor-Bound’s patients were nuclear weapons workers or miners, millers and transporters.  In order to be reimbursed for providing medical services to these individuals, Breaux billed Energy Employees Occupational Illness Compensation Program (EEOICP) pursuant to the Radiation Exposure Compensation Act (RECA).  EEOICP is a health care benefit program that provides lump-sum compensation and health benefits to eligible Department of Energy nuclear weapons workers. RECA provides coverage to eligible uranium miners, millers, and transporters. Coverage is extended under both acts to certain eligible survivors with lump-sum compensation that would have otherwise been payable to the workers. The United States Department of Labor (DOL), Office of Workers’ Compensation Programs, Division of Energy Employees Occupational Illness Compensation (DEEOIC) is responsible for administering EEOICP.  From June 2010 until June 2011, Breaux, doing business through Honor-Bound, submitted and caused to be submitted bills for payment, knowing those bills already had been paid. In other cases the defendant submitted invoices for services never provided.  He obtained payments on the claims in part by submitting false supporting documentation.  In total, the fraud the defendant perpetrated is over $3.5 million.  Breaux recruited individuals to provide care to the DEEOIC claimants he recruited who lived on the Indian Reservation in Arizona.  The individuals were not Registered Nurses, but Breaux billed DEEOIC at the Registered Nurse rate, $90 to $100 per hour.

North Carolina Woman Sentenced for Role in $1.5 Million Health Care Fraud

On March 2, 2012, in Charlotte, N.C., Erika Holland, of Mt. Holly, was sentenced to 54 months in prison, three years of supervised release and ordered to pay $1,585,093 in restitution.  Holland pleaded guilty in September 2011 to conspiracy to commit health care fraud and money laundering charges. In April 2011, a federal grand jury in Charlotte indicted Holland on charges of defrauding Medicaid of over $1.5 million, and laundering the proceeds of her fraud by purchasing vehicles, a residence and a time share. According to the indictment, plea documents and court hearings: From 2009 to September 2010, Holland, along with her co-conspirators, filed false and fraudulent claims with Medicaid seeking reimbursement for mental and behavioral health services allegedly provided by Holland and/or her companies. Holland and her companies were not authorized by Medicaid to provide mental and behavioral health services and did not employ any therapists licensed to provide the claimed services.

Nationwide Supplier of Medical Equipment Sentenced for Health Care Fraud

On February 10, 2012, in Providence, R.I., Gary Winner, of Northbrook, Ill., owner of Planned Eldercare, a nationwide supplier of durable medical equipment located in Buffalo Grove, Ill., was sentenced to 37 months in prison, three years of supervised release and ordered to pay $2,210,152 to the Medicare Program and a $12,500 fine.  Winner pleaded guilty on November 17, 2011, to two counts of health care fraud and one count each of money laundering and the introduction of an adulterated and misbranded medical device into interstate commerce.  From 2005 through early 2009, Winner instructed Planned Eldercare employees through unsolicited telemarketing calls, to inquire if customers suffered from diabetes or arthritis. Once call recipients identified themselves as suffering from either ailment, as an inducement for recipients to provide their Medicare and physician information, employees were instructed to inform recipients that Planned Eldercare could provide them with products to help with their ailments “at no cost to you.” Once employees obtained Medicare beneficiaries’ agreement to receive certain products, Winner instructed employees to order as many products as possible whether or not the beneficiaries requested them or had a medical need for the equipment.  Winner also admitted that Medicare was billed for thousands of products that beneficiaries did not order.  Winner admitted to waiving copayments for all Medicare patients, a practice which is prohibited by Medicare. By waiving copayments they otherwise would be responsible for, Winner induced beneficiaries to accept products they had not ordered and not report the alleged fraudulent billing to Medicare.

Texasan Gets Prison for Defrauding Medicare

On January 30, 2012, in Houston, Texas, Aghaegbuna “Ike” Odelugo was sentenced to 72 months in prison, ordered to pay $9.9 million in restitution to Medicare and ordered to forfeit $7.45 million in illegal proceeds for healthcare fraud and money laundering.  According to court documents, Odelugo admitted that from July 2005 through March 2008, he entered into illegal agreements with 14 durable medical equipment (DME) company owners to fraudulently bill Medicare for millions of dollars and split the proceeds. Odelugo was responsible for having marketers recruit the patients, for preparing the paperwork, for billing Medicare and for delivering some of the equipment. The DME company owner’s role solely was to accept delivery of the patient files from Odelugo and to send him his percentage of the proceeds. In every instance, Odelugo was given control of the DME's Medicare provider number. Odelugo bought Medicare beneficiary information from recruiters and created paperwork and patient files to give the appearance of a valid claim. He then filed the claim electronically with Medicare and sent the patient files to the DME company owners. The proceeds from the false claims were deposited into the DME company's bank account and approximately 75% of the fraud proceeds then were transferred to Odelugo.  Odelugo had the DME owners provide him with blank signed checks and used his medical billing persons to monitor when the Medicare payments were deposited.  Once deposited; he used those blank signed checks to move his share of the illegal proceeds to his own bank account.  The DME items billed to Medicare either were not delivered, not medically necessary, not prescribed by a doctor or up-coded from what was actually delivered.

Former Texas Pain Management Physician and Psychiatrist Sentenced on Healthcare Fraud Charges

On January 6, 2012, in El Paso, Texas, Anthony Valdez was sentenced to 300 months in prison, three years of supervised release, and ordered to pay $13,356,645 in restitution and to forfeit more than $1.7 million for healthcare fraud and money laundering.  The judge also handed down a monetary judgment against Valdez of $9,741,649. According to court documents, Valdez, a former physician, was the owner of the Institute of Pain Management with clinics in El Paso and San Antonio. On July 1, 2011, Valdez was convicted by a jury of one count conspiracy to commit healthcare fraud, six counts of healthcare fraud, six counts of false statements related to healthcare matters and three counts of money laundering. Evidence during trial revealed that beginning in January 2005 and continuing through December 2009, Valdez caused fraudulent claims to be submitted to Medicare, Medicaid, and TRICARE for procedures which he did not perform or were non-reimbursable

Medical Equipment Company Owner and Marketers Sentenced for Massive $17.6 Million Medicare Fraud Scheme

On November 1, 2011, in Houston, Texas, six people were sentenced for their roles in a health care fraud scheme.  James Reese was sentenced to 180 months in prison and ordered to pay $9 million in restitution; Lia St. Junius was sentenced to 135 months and ordered to pay $8.6 million in restitution; Brenda Lopez received 43 months, ordered to pay $8.6 million and faces deportation for being an illegal alien; Devon Spicer was sentenced to 60 months and ordered to pay $821,000; Martha Ramos received 60 months and ordered to pay $57,000; and Zathel Johnson received 33 months and ordered to pay $4 million in restitution.  The defendants were charged in a 47-count indictment with conspiracy to commit health care fraud, health care fraud, paying or receiving kickbacks, money laundering and tax evasion.  Reese was the owner of the durable medical equipment company named The Mobility Store. Reese, along with his daughter, St. Junius, falsely represented to Medicare and Medicaid that St. Junius was the sole owner of the business because Reese was a convicted felon and could not participate as a provider in the Medicare and Medicaid programs.  The defendants conspired to defraud Medicare and Medicaid by billing for orthotic braces and devices, referred to as “The Artho Kit,” that were different than equipment that was provided to Medicare beneficiaries.  Between 2005 and 2008, St. Junius submitted fraudulent documents to Medicare indicating that marketers were not soliciting Medicare beneficiaries.  The Mobility Store was in fact paying marketers 10 percent of the amount received from Medicare for each orthotic brace or device billed.  In 2008, Medicare revoked The Mobility Store’s provider number because of its failure to provide accurate information about its operation procedures. As a result of the fraudulent scheme, The Mobility Store billed Medicare and Medicaid more than $17.6 million.

Owner of City Nursing Sentenced for Role in Healthcare Fraud Scheme 

On October 21, 2011, in Houston Texas, Umawa Imo, a citizen of the Federal Republic of Nigeria, was sentenced to 327 months in prison and ordered to pay $3,216,592 in restitution for his role in a massive heath care fraud conspiracy.  According to court documents, Imo, the sole owner of City Nursing Services of Texas Inc., billed federal Medicare and Texas Medicare programs for more than $45 million over a two and a half year period.  Testimony from numerous Medicare and Medicaid beneficiaries detailed how they were paid cash for going to City Nursing and signing undated blank treatment forms. One beneficiary testified that when she asked for physical therapy she was told the clinic did not provide that type of services and to go to her primary care provider and ask for a referral to another clinic.  Despite billing more than $45 million for physical therapy services, Imo never hired a single physical therapist to work at City Nursing and “treatments” were predominantly limited to short massages and hot packs.  Former employees of City Nursing described how they handed out cash given to them by Imo to beneficiaries and to “recruiters” or “marketers” who bought beneficiaries to the clinic. Beneficiaries were paid once a month when they came to see the doctor; however, those beneficiaries who took Medicare Explanation of Benefit statements into the office to complain about the fraudulent billing were given extra payments, sometimes $200 - $300 to “settle” matters. The employees also testified about how City Nursing billed Medicare for treatment that was not provided, including treatment for numerous individuals who were deceased.  According to the employees, Imo enlisted their help to create false and fraudulent patient file documents to reflect physical services that had not been provided.

North Carolina Woman Sentenced for Medicaid Fraud

On October 17, 2011, in Charlotte, N.C., Sarah Lavonne Willis was sentenced to 92 months in prison and three years of supervised release for committing healthcare fraud, money laundering, failure to file tax returns, and possession of a firearm by a convicted felon.  Willis was also ordered to pay $1,085,041 in restitution to the North Carolina Medicaid Program and $145,197 to the Internal Revenue Service.  According to filed court documents and court proceedings, from 2007 to 2010, Willis falsely billed the North Carolina Medical Assistance Program (Medicaid), for behavioral therapy services which she did not provide and which were not eligible for reimbursement.  Specifically, Willis submitted false and fraudulent claims for juvenile and adult Medicaid beneficiaries who either never received any services or previously had received services but then terminated their relationships with Willis.  Willis also submitted false and fraudulent claims stating that she had provided behavioral health services when, in fact, Willis had been incarcerated.  Willis received a total of $1,085,041 from Medicaid as reimbursement based upon her false and fraudulent claims.  Willis then used these fraudulent proceeds to purchase several luxury items, including a $40,000 Hummer H2, a $100,000 2006 Bentley Continental Flying Spur, a $14,000 Dodge Charger and three separate visits to an area hotel and resort, each of which exceeded $10,000.  Willis also used proceeds of her fraud to bail herself out of jail in December 2009. Willis also failed to file tax returns for the year 2008.

Fiscal Year 2013 - Healthcare Fraud Investigations

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Page Last Reviewed or Updated: 01-Nov-2013