Examples of Healthcare Fraud Investigations - Fiscal Year 2014
The following examples of healthcare fraud investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Georgia Doctor Sentenced for Defrauding Medicare and IRS
On Feb. 20, 2014, in Atlanta, Ga., Lawrence Eppelbaum was sentenced to 50 months in prison and fined $3.5 million after a jury found him guilty on 27 counts of healthcare fraud, tax fraud and money laundering. According information presented in court, Eppelbaum is a physician who is licensed to practice medicine in Georgia and operates the “Atlanta Institute of Medicine and Rehabilitation” (“AIMR”) and the “Pain Clinic of AIMR” in Atlanta. In 2004, Eppelbaum created the “Back Pain Fund,” a purported charitable organization that he controlled both directly and indirectly. Eppelbaum, through the Back Pain Fund, paid for Medicare patients to travel to Atlanta to receive medical treatment from his practice, then travel to Florida to visit a local hot spring for approximately four days, before returning to Atlanta to receive additional treatment. Eppelbaum was the primary donor to the Back Pain Fund and paid the vast majority of its operating expenses. Eppelbaum tried to disguise his financial control over the Back Pain Fund by entering into an arrangement with a school in Atlanta, whereby the parents of students attending the school were instructed to make their tuition checks payable to the Back Pain Fund instead of to the school, and in turn, Eppelbaum repaid the school for the amount of the tuition, plus an additional 25 percent. Eppelbaum entered into similar arrangements with other organizations, and even caused patients who were treated at his medical practice to make their checks payable to the Back Pain Fund. Between 2004 and 2009, Eppelbaum treated hundreds of Back Pain Fund patients and received approximately $16 million for their treatment from Medicare. Eppelbaum also utilized the Back Pain Fund as a vehicle for committing tax fraud. Between 2006 through 2008, Eppelbaum deducted as charitable donations all the payments he made to the Back Pain Fund, the school and other organizations with which he had a financial arrangement, even though Eppelbaum derived substantial personal income from treating Back Pain Fund patients. Eppelbaum evaded approximately $1 million in federal income taxes through his scheme.
Wyoming Man Sentenced for Role in Healthcare Fraud
On January 27, 2014, in Cheyenne, Wyo., Paul D. Cardwell, of Tipton, Ind., was sentenced to 121 months in prison, three years of supervised release and ordered to pay $1,698,644 in restitution. Cardwell pleaded guilty to conspiracy to commit mail and wire fraud and conspiracy to commit money laundering. Cardwell was arrested in Hua Hin, Thailand. According to court documents, Cardwell was the Chief Executive Officer (CEO) at Powell Valley Healthcare (PVHC), Inc. Beginning about March 2011 and continuing through September 2011, Cardwell and his co-defendant entered into a conspiracy to defraud PVHC of $847,884 through a fraudulent billing scheme.
Georgia Man Sentenced for Filing False Claims
On January 10, 2014, in Augusta, Ga., Jeffrey Sponseller was sentenced to 33 months in prison, three years of supervised release and ordered to pay $441,729 in restitution. Sponseller previously pleaded guilty to one count of false claims. According to court documents, Sponseller was an optometrist and owner of Eye Care One, a medical company which purportedly specialized in comprehensive vision care at nursing home facilities. On July 27, 2009 Sponseller visited a nursing facility and later submitted claims to Medicare for over $30,000 for 177 patients. From January 1, 2008 through February 24, 2011, Sponseller billed Medicare for more than $800,000. Many of these claims were false and fraudulent in that the specific health care services were not provided.
Defendant Sentenced for Structuring Monetary Transactions
On November 21, 2013, in Los Angeles, Calif., Theanna Khou, aka San Huy Khou, was sentenced to 12 months and one day in prison and three years of supervised release. Khou pleaded guilty in August 2013 to structuring monetary transactions to evade reporting requirements. According to court documents, Khou and a co-defendant owned and operated Huntington Pharmacy. Between approximately August 2009 and November 2009, Khou structured approximately $105,826 in cash deposits. The cash was proceeds from the sale of oxycontin that Huntington Pharmacy dispensed without medical necessity based on fraudulent prescription issued by a clinic. In addition, Khou entered into an agreement with others operating Manor Medical Imaging, Inc. to fill large volumes of prescriptions for anti-psychotic medications that were not medically needed. Khou, through Huntington Pharmacy, billed Medicare and Medi-Cal for the service of filling the prescriptions.
Owner of Home Health Companies Sentenced for Role in $20 Million Health Care Fraud Scheme
On November 21, 2013, in Miami, Fla., Roberto Marrero, of Miami, was sentenced 120 months in prison. In September 2013, Marrero pleaded guilty to conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks. Marrero was an owner and operator of Trust Care, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. According to court documents, Marrero and his co-conspirators operated Trust Care for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. Marrero was also responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims to the Medicare program. Marrero and his co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Trust Care. Marrero and his co-conspirators also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications and other documentation. Marrero and his co-conspirators used these prescriptions, medical certifications and other documentation to fraudulently bill the Medicare program. From approximately March 2007 through at least October 2010, Trust Care submitted more than $20 million in claims for home health services. Medicare paid Trust Care more than $15 million for these fraudulent claims. Marrero and his co-conspirators have also acknowledged their involvement in similar fraudulent schemes at several other Miami health care agencies with estimated total losses of approximately $50 million. Co-conspirators Sandra Fernandez Viera, Patricia Morcate, and Enrique Rodriguez, all of Miami, pleaded guilty to related charges, including conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks. On November 13, 2013, Fernandez Viera was sentenced to 120 months in prison; Morcate was sentenced to 60 months; and Rodriguez was sentenced to 57 months.
Prominent Cardiologist Sentenced for $19 Million Billing Fraud Scheme
On November 20, 2013, in Newark, N.J., Jose Katz, of Closter, N.J., was sentenced to 78 months in prison, three years of supervised release and ordered to pay $19 million in restitution. Katz, a well-known cardiologist and the founder, CEO and sole owner of two large medical services companies in New Jersey and New York, previously pleaded guilty to an information charging him with one count of conspiracy to commit health care fraud. He also pleaded guilty to one count of Social Security fraud arising from a separate scheme to give his wife a “no show” job and make her eligible for Social Security benefits. According to court documents, from 2004 through 2012, Katz conspired to bill Medicare Part B, Medicaid, Empire BCBS, Aetna and others for unnecessary tests and unnecessary procedures based on false diagnoses and for medical services rendered by unlicensed practitioners. Katz agreed that the loss amount sustained by Medicare, Medicaid and other insurers victimized by the fraudulent billings was $19 million. In addition, from 2005 through 2012, Katz kept his wife on Cardio-Med’s payroll though she performed little or no work. During the course of the scheme, Katz sent false W-2 forms for calendar years 2005 through 2011 to the Social Security Administration purportedly reflecting $1,251,604 in earnings for his wife, making her eligible for an estimated $263,000 in Social Security benefits to which she was not entitled.
Indiana Woman Sentenced for State Medicaid Fraud and Failure to File Federal Taxes
On October 25, 2013, in Hammond, Ind., Regina Cabell, of West Lafayette, Ind., was sentenced to 18 months in prison, one year of supervised release and ordered to pay $79,871 in restitution to the Indiana Medicaid Program. Cabell previously pleaded guilty to Medicaid fraud and failure to file a tax return. According to court documents, from about May 2010 through February 2012, Cabel, doing business as L&G Transportation, participated in a scheme to defraud the Indiana Medicaid Program by submitting false claims for providing transportation services to Indiana Medicaid recipients. Cabel submitted claims containing inflated mileage claims and/or transportation that did not actually occur. Further, during the calendar year 2011, Cabell, doing business as L&G Transportation, received gross income of $297,567. However, she willfully failed to file a tax return for the 2011 calendar year.