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Examples of Healthcare Fraud Investigations - Fiscal Year 2013

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.

Louisiana Woman Sentenced for Health Care Fraud
On September 5, 2013, in Baton Rouge, La., Sonya Lewis Williams was sentenced to 37 months in prison for health care fraud and money laundering. Williams was also ordered to pay $1,223,471 in restitution to the Department of Health and Human Services/Centers for Medicare and Medicaid Services. According to court documents, Williams operated two companies known as Fusion Services, LLC (Fusion) and Grace Social Services, LLC (Grace). Williams established the two companies for the purpose of using unlicensed social workers to visit Medicare beneficiaries in their homes several times a week to perform case management, counseling, and social interaction services. Williams submitted false claims for reimbursement from Medicare indicating that the beneficiaries had received individual, face-to-face psychotherapy from a licensed clinical social worker when no such services had been provided. Medicare paid Fusion and Grace approximately $349,715 as a result of the billings. Much of the profits were transferred from company bank accounts into Williams’ personal accounts.

West Virginia Chiropractor Sentenced on Health Care Fraud and Tax Evasion Charges
On September 5, 2013, in Wheeling, W.Va., Joseph J. Yurigan, of New Alexandria, Pa., was sentenced to 18 months in prison and two years of supervised release. Yurigan pleaded guilty on October 9, 2012, to one count of health care fraud by submitting a fraudulent claim to a health care benefit program and one count of income tax evasion for the calendar year 2008. Yurigan, a doctor of chiropractic medicine and licensed to practice in the State of West Virginia, operated two chiropractic clinics in West Virginia. As part of his plea agreement, Yurigan will make restitution of $513,373 for the health care violation and $322,692 for the tax evasion violation.

California Man Who Recruited ‘Patients’ Sentenced in Health Care Scam
On August 26, 2013, in Los Angeles, Calif., Estill Mitts was sentenced to 18 months in prison and ordered to pay more than $9.8 million in restitution. Mitts pleaded guilty in 2008 to conspiracy to commit health care fraud, money laundering and tax evasion. According to court documents, from 2004 until October 2007, Mitts operated the Assessment Center, a facility on East Seventh Street in downtown Los Angeles that was also known as 7th Street Christian Day Center. The Assessment Center was not a medical clinic, but a site Mitts used for the purpose of recruiting homeless Medicare and Medi-Cal beneficiaries for referral to three hospitals. Mitts and others working for him would recruit homeless beneficiaries for in-patient hospital admissions whether or not such hospitalizations were medically necessary. In addition, Mitts failed to report more than $479,000 in income in 2005 and more than $620,000 in income in 2006, resulting in a tax loss of $349,857.

Florida Chiropractor Sentenced for Fraudulent Insurance Scheme
On August 14, 2013, in Fort Myers, Fla., Dr. Stephen M. Lovell, of Windermere, was sentenced to 60 months in prison and ordered to pay $1.695 million money judgment. Lovell was convicted on February 28, 2013 on charges of conspiracy to commit health care fraud. According to trial evidence, Lovell was a licensed chiropractor and the purported co-owner of Xtreme Care Rehabilitation Center Inc. (Xtreme Care) in Cape Coral, Fla. Lovell and his co-conspirators recruited people to be involved in staged accidents and received injuries. These people would then go to Xtreme Care in exchange for payment. Xtreme Care then billed insurance companies by submitting false claims for alleged medically necessary treatments that these patients received. Treatment was either never provided to these patients or was not medically necessary. Upon payment by the insurance company, the funds were transferred to corporations created by the conspirators to launder the proceeds. Ultimately, Lovell and his co-conspirators received the benefits of the fraudulent activity through payments or expenditures for themselves from the corporate bank accounts.

Mental Health Counselor Sentenced for Defrauding Medicaid   
On August 8, 2013, in Charlotte, N.C., Linda Smoot Radeker, of Shelby, N.C., was sentenced to 72 months in prison, two years of supervised release and ordered to pay $6,156,674 in restitution to Medicaid. In September 2012, Radeker pleaded guilty to one count of health care fraud conspiracy and two counts of money laundering. According to court documents, from 2008 to 2011 Radeker obtained at least $6.1 million in fraudulent reimbursement payments from false claims submitted to Medicaid. Radeker, a licensed professional counselor enrolled with North Carolina Medicaid, falsely claimed in billings submitted to Medicaid that she was the attending clinician for services provided to Medicaid recipients, when no such services were provided. In addition, Radeker “rented out” her Medicaid provider number to a network of co-conspirators and, in return, kept a percentage of the fraudulent Medicaid reimbursements, sometimes as much as 50%. On the fraudulent claims, the co-conspirators primarily used the Medicaid numbers of children whose parents thought were being enrolled in after school programs. These after school programs were, in fact, owned and operated by Radeker’s co-conspirators.

Two Women Sentenced for Medicaid Fraud
On July 24, 2013, in Reno, Nev., Cassandra Little, of Reno, was sentenced to 33 months in prison, three years of supervised release and ordered to pay $81,400 in restitution. Little pleaded guilty in March 2013 to 28 counts of health care fraud and 10 counts of money laundering. Susan Hill, of Las Vegas, was sentenced to 18 months in prison, three years of supervised release and ordered to pay $81,400 in restitution.  Hill pleaded guilty in March 2013 to one count of health care fraud and one count of money laundering. According to the court records, from about January 2007 to January 2011, Hill and Little defrauded the Nevada Medicaid program of approximately $1 million by fraudulently billing for expensive therapy-related services which were never provided. To execute their scheme, Hill and Little formed a company, the Hill/Little LLC, and entered into a contract with Nevada Medicaid to provide health care services to children who were eligible for Medicaid. Little, a PhD and licensed social worker, was to provide the clinical services to the children. Hill and Little then created a program to obtain aid for the parents of the children who were eligible to receive the Medicaid funding; however, the program was not authorized or allowed under their Medicaid contract with the state. Hill recruited parents and guardians to provide services to their own children following minimal training provided by Hill/Little LLC. The services were nothing more than what parents normally do without reimbursement. Hill/Little LLC then billed Medicaid approximately $8,000 per month for each child, using a billing code which was only authorized for services that could have been provided by Little, the licensed social worker. Hill/Little kept $5,000 per month for each child and paid each parent/guardian approximately $3,000. The parents/guardians reported that their children received little or no services from Hill or Little, and none of the services billed by Hill/Little from January 2007 to January 2011 were ever properly provided or authorized under Medicaid rules.  Using this scheme, Hill and Little unlawfully received approximately $1 million from Medicaid for services they did not provide.

Doctor Sentenced for Health Care Fraud, Pension Fraud and Tax Evasion
On July 17, 2013, in Central Islip, N.Y., Frank Lobacz, a doctor, was sentenced to 65 months in prison and ordered to pay $727,480 in restitution to two private insurance plans and to pay $2,886,454 in federal income tax. On November 13, 2010, Lobacz was convicted of health care fraud, the filing of false pension fund reports with the U.S. Department of Labor and tax evasion during the years 2001 to 2003. According to court documents, Lobacz was a licensed doctor of Osteopathic Medicine with offices in Nassau and Suffolk counties. In the 1970’s, he created a retirement pension plan for himself and his staff, and named himself as the plan administrator in filings with the United States Department of Labor. As the administrator, Lobacz was responsible for filing annual reports on the financial health of the plan and was required to notify the IRS if he or anyone else borrowed or withdrew money from the plan. At trial, witnesses testified that Lobacz engaged in highly complex and risky stock options trading. Between 2000 and 2002, he transferred over $3.5 million in money and stocks to and from the pension plan and his personal brokerage account to pay for personal expenses. Lobacz never reported this misuse of employee pension funds, and between 2000 and 2003, he failed to report over $1 million in options trading income to the IRS. Starting in 2005, to compensate for trading losses, he filed some 1,500 false insurance claims for medical services and procedures purportedly rendered to a retired couple, as well as to Lobacz’s younger children, his wife, and himself. The couple testified at trial that although they received routine acupuncture treatments from the defendant, which would not have been covered under their insurance plans, the bulk of the bills submitted in their names were for services that they either did not receive, or for visits on dates when the couple was traveling outside of New York State. Other fraudulent bills claimed that Lobacz, his wife, and two children received near daily treatments normally provided to those suffering severe respiratory conditions, among other ailments. However, no such treatments or visits actually occurred. In all, Lobacz billed $727,480 in false health care claims to two private health insurance plans.

Texas Ambulance Company Owner and Operator Sentenced for Tax Evasion and Money Laundering
On June 18, 2013, in Houston, Texas, Julian Kimble, of Missouri City, Texas, was sentenced to 72 months in prison, three years of supervised release and ordered to pay $3,676,587 in restitution to the Medicare Program. Kimble pleaded guilty on November 29, 2011 to money laundering and tax evasion. According to court documents, from March 2008 through December 2010, Kimble owned and operated four ambulance companies. Through these companies, Kimble routinely billed Medicare for basic life support ambulance transports that were not provided, not needed or not ordered by the treating physicians. None of these companies operated by Kimble owned licensed ambulance vehicles necessary to provide such transports. Kimble used third-parties and straw owners to register the ambulance companies with the Texas Department of Health. He and others often transported multiple beneficiaries at the same time in vans or sedans and fraudulently billed Medicare for allegedly providing individual transports in ambulances under the attention of qualified emergency medical personnel. Under Kimble’s direction, Medicare beneficiaries received payments in exchange for agreeing to be transported to different facilities around the Houston area. From 2008 through December 2010, Kimble’s companies fraudulently billed Medicare for approximately $8.7 million and received payment for approximately $3.6 million. To conceal proceeds from the health care fraud, Kimble withdrew funds from the business accounts of the ambulance companies, kept part of the funds and used the remainder to pay kickbacks to patients. From August to December 2010, conspirators received checks from Kimble totaling more than $1 million, none of which was reported as taxable income.  In addition, Kimble overstated the business expenses for Pearl Ambulance Service on his tax returns for 2003 through 2007.  Kimble also failed to file corporate tax returns for Pearl during this time until his assets were about to be seized. When he did file, the delinquent returns were discovered to be materially false.

California Man and His Company Sentenced for Structuring and Money Laundering
On May 24, 2013, in New Orleans, La., Jerayr Rostamian, of Northridge, Calif., was sentenced to 40 months in prison, three years of supervised release and fined $250,000. Rostamian pleaded guilty to structuring monetary transactions to avoid reporting requirements. Med-Tech Technologies, Inc., a company owned by Rostamian, was sentenced to five years of probation and ordered to pay $3,722,480 in restitution to Medicare and Medicaid. In addition, Med-Tech was ordered to forfeit its assets. Med-Tech pleaded guilty to a conspiracy to commit money laundering. According to court documents, Med-Tech participated in a criminal organization for the purpose of fraudulently billing Medicare and Medicaid. Recruiters found patients to bring to medical clinics located in the greater New Orleans area for medical tests that were not performed and not medically necessary. The patients were moved between various clinics and repeatedly had the same unnecessary tests. The patients received prescriptions for drugs, usually narcotics, for their cooperation, and the recruiters were provided cash and prescription drugs for their services. Once Medicare and Medicaid paid the clinics, Med-Tech engaged in a series of financial transactions designed to disguise the fact that the money had been obtained unlawfully and to hide the funds from Medicare and Medicaid. After the fraudulent funds from the clinics were deposited into bank accounts, Rostamian withdrew much of the funds in cash, in amounts just below the threshold so as not to trigger the bank to file a report with the government.

Former Nigerian Fugitive Sentenced for Health Care Fraud and Money Laundering
On May 10, 2013, in Houston, Texas, Godwin Chiedo Nzeocha, a naturalized United States citizen originally from the Federal Republic of Nigeria, was sentenced to 109 months in prison and ordered to pay more than $26 million in restitution to Medicare and Medicaid, jointly with his co-conspirators. In addition, Nzeocha agreed to forfeit $1,098,320 to the United States. Nzeocha pleaded guilty on October 19, 2012 to one count of conspiracy to commit health care fraud and one count of money laundering. According to court documents, Nzeocha left the United States in 2009 to avoid arrest after receiving a telephone call from a City Nursing co-conspirator the day Umawa Imo, owner of City Nursing Services of Texas Inc., was arrested. Nzeocha had an agreement with Imo to sign his name on City Nursing patient documents as the provider of physical therapy services that he knew he was not qualified to authorize. The documents included blank treatment data forms, progress notes and daily physical therapy records. Nzeocha further admitted to knowing Imo was buying Medicare beneficiary information from recruiters and paying Medicare beneficiaries cash in order to bill for physical therapy services that were not provided. Nzeocha received approximately $1,098,320 from City Nursing. Between December 3, 2007 and June 26, 2009, when Nzeocha worked at City Nursing, the company billed Medicare and Medicaid for approximately $35,819,508 worth of physical therapy services that were not provided and received approximately $26,233,122 as payment for those services from Medicare and Medicaid. Imo was sentenced in October 2011 to 327 months in prison.

Leader of Medicaid Fraud Conspiracy Sentenced for Fraud and Money Laundering
On May 6, 2013, in Statesville, N.C., Betty Ann Cook, of Sparta, N.C., was sentenced to 40 months in prison, two years of supervised release and ordered to pay $325,820 in restitution. On April 25, 2012, Cook pleaded guilty to one count of health care fraud conspiracy and one count of money laundering conspiracy. According to court documents, Cook was the owner of Families First Home Health Care, a home health care company located in Alleghany Co., N.C. Cook’s company was enrolled with Medicaid to provide personal care services to Medicaid recipients. These services are provided by a home health aide in the recipient’s home. From December 2006 to about October 2010, Cook participated in a scheme to defraud Medicaid by submitting false and fraudulent claims to Medicaid seeking reimbursement for patient care services that were either not provided, not authorized by a physician, or were not based upon a valid in-home eligibility assessment performed by a qualified registered nurse, as required by Medicaid policy.

Ohio Doctor Sentenced on Health Care Fraud and Tax Charges
On March 25, 2013, in Toledo, Ohio, Darrell A. Hall, a medical doctor, was sentenced to 60 months in prison. Hall pleaded guilty to conspiracy to distribute a controlled substance, health care fraud and a tax count. According to court documents, Hall was licensed to practice medicine and operated a practice under the name “EDM Health Services, LLC.” He was also a registered provider to Ohio Medicaid, which provides free health benefits to qualified low-income Ohio residents. Between August 2008 through May 2009, Hall conspired with others to distribute 1,300 pills of oxycodone for no legitimate medical purpose. In addition, between January 2007 and December 2009, he fraudulently billed Ohio Medicaid in the amount of $78,113. Hall also failed to pay $97,384 in taxes that he owed to the IRS on behalf of EDM Health Services, LLC, between 2007 and 2010.

Doctor Sentenced for Health Care Fraud and Tax Evasion
On March 1, 2013, in Wheeling, W.Va., Barton Joseph Adams, of Parkersburg, W.Va., was sentenced to 50 months in prison for health care fraud and tax evasion.  Adams was also ordered to forfeit $3,724,721 to the federal government and to pay $3,136,293 in restitution to various healthcare providers, including Medicare and Medicaid. According to court documents, Adams, a doctor of osteopathic medicine, owned and operated “Interventional Pain Management” in Vienna, W.Va. Adams previously admitted to making fraudulent claims for health care proceeds and to willfully attempting to evade taxes. Josephine Adams, the wife of Dr. Adams, was convicted of assisting her husband in the laundering of nearly $4 million dollars of health care fraud proceeds. The evidence presented showed that the fraud proceeds were first deposited into accounts in West Virginia and then were moved into accounts around the United States before being placed into accounts in Canada, China and the Philippines.

Texas Podiatrist Sentenced for Health Care and Tax Fraud
On January 31, 2013, in Sherman, Texas, Shannon Gallentine, of Maypearl, Texas, was sentenced to 24 months in prison and ordered to pay restitution in the following amounts: $407,942 to the IRS, $254,377 to Medicare, $110,622 to Medicaid, and $26,628 to Blue Cross Blue Shield. Gallentine pleaded guilty on May 10, 2012, to one count of health care fraud and one count of failing to file an income tax return. According to court documents, from January 2004 through May 2007, Gallentine, a podiatrist, owned and operated Ambulatory Foot Care in Lancaster, Texas. During this time, Gallentine submitted false and fraudulent claims to Medicare seeking reimbursement for procedures he did not perform. As a result of these false claims, Gallentine received in excess of $365,000 to which he was not entitled. Additionally, Gallentine willfully failed to file federal income tax returns for calendar years 2004 and 2005.

Florida Chiropractor Sentenced for Conspiracy to Commit Mail Fraud in Connection with Staged Accident Scheme
On January 31, 2013, in Miami, Fla., Jennifer Adams, of Boca Raton, was sentenced to 54 months in prison, three years of supervised release and ordered to pay $1,920,424 in restitution. Adams, a chiropractic doctor, pleaded guilty to a one-count Information charging her with conspiring with others to commit mail fraud for her role in a staged accident fraud scheme. According to court documents, to execute the fraud scheme, recruiters sought out drivers and their friends and family members to participate in staged accidents.  Accident participants were directed by the recruiters to chiropractic clinics that were controlled by co-defendants.  Adams agreed to place her name on the corporate paperwork for two clinics, thus utilizing her status as a licensed chiropractic physician, to allow the clinics to bill insurance companies directly for claims without obtaining additional licensure from the State of Florida. Adams initially believed the clinics to be operating legitimately. Sometime thereafter, Adams became aware that her license and status as a chiropractor was being used to fraudulently submit claims to insurance companies. Adams realized these patients did not require the medical treatment they sought. Adams continued to work at both clinics signing prescriptions for plans of treatment that she knew were not medically necessary and that she knew were being submitted for reimbursement to numerous insurance companies.  From the time that Adams was told about the fraud until the clinics were closed by law enforcement, the clinics submitted fraudulent claims that resulted in more than ten insurance companies making total payments of $1,920,424.

California Doctor Sentenced for Role in Medicare Scam
On December 17, 2012, in Los Angeles, Calif., Dr. Kenneth Thaler, of Westminster, was sentenced to 12 months in prison and ordered to pay approximately $11 million in restitution to the Medicare program. According to court documents, Thaler admitted homeless patients to the Tustin Hospital and Medical Center after they had been driven from “Skid Row” in downtown Los Angeles as part of a Medicare fraud scheme. Thaler admitted approximately 60 patients per month, including some who did not require hospitalization. The patients were recruited by marketers who were being paid kickbacks by recruiters such as Estill Mitts to refer homeless Medicare and Medi-Cal beneficiaries for in-patient hospital stays. After Thaler admitted these patients, he and the hospital billed Medicare and Medi-Cal for in-patient services, even if it was not medically necessary for the patient to be hospitalized. Mitts who operated a center that recruited homeless people to receive unnecessary health services pleaded guilty in September 2008 to conspiracy to commit health care fraud, money laundering and tax evasion. He is awaiting sentencing.

Defendant Sentenced in Multi-Million Dollar Health Care Fraud Case
On November 5, 2012, in Houston, Texas, Tony Nnonso Obi, a naturalized U.S. citizen from the Federal Republic of Nigeria, was sentenced to 41 months in prison for his role in a massive health care fraud that billed the Medicare and Medicaid programs for more than $45 million. Obi pleaded guilty in August 2012 to one count of conspiracy to commit health care fraud and one count of money laundering. As part of his plea, Obi admitted entering into an agreement with Umawa Imo, the owner of City Nursing, to receive 15 percent of the money City Nursing obtained from Medicare for services billed on individuals referred by Obi. Imo paid Obi $1,051,425. Imo is currently serving more than 27 years in prison for his role in the conspiracy.

Michigan Physical Therapist Sentenced on Health Care Fraud and Money Laundering Charges
On October 29, 2012, in Grand Rapids, Mich., Chyawan Bansil, a physical therapist from Farmington Hills, Michigan, was sentenced to 13 months prison, one year of supervised release, and ordered to pay almost $250,000 in back taxes. In addition, Bansil forfeited over $500,000 in assets which had been seized by the government and paid an additional $2.25 million dollars to resolve related civil claims under the False Claims Act. Bansil will also be excluded from participating with Medicare and Medicaid for a minimum of five years. According to court documents, between February 2007 and January 2012, Bansil defrauded Medicare, Medicaid, and Blue Cross Blue Shield of Michigan of more than $1 million by causing those programs to be billed for expensive nerve conduction studies and needle electromyography tests that Bansil did not perform. Bansil was also laundering the proceeds of his fraud scheme in order to avoid taxes.

 

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Page Last Reviewed or Updated: 01-Nov-2013