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Examples of Healthcare Fraud Investigations - Fiscal Year 2016

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.

New York Pharmacist Sentenced for Medicare and Tax Fraud
On Sept. 9, 2016, Andrew Barrett, a New York pharmacist, was sentenced to 43 months in prison and three years of supervised release. Barrett was also ordered to forfeit $2.7 million in criminal proceeds, pay $2.7 million in restitution to Medicare and Medicaid and pay $736,000 in restitution to the IRS. From January 2011 to December 2012, Barrett fraudulently billed Medicare and Medicaid approximately $2.7 million for prescription medications that he never dispensed to patients. Barrett used some of these proceeds to buy pharmaceutical products for his pharmacies. He also falsely claimed over $2 million in personal expenses as business expenses on his tax returns. Through this scheme, he caused a tax loss of $736,192.

Owner of Home Health Care Agency Sentenced for Bilking Medicaid out of $7 Million and Tax Evasion
On July 13, 2016, in Newark, New Jersey, Paul Mil, of Springfield, was sentenced to 54 months in prison, three years of supervised release and ordered to forfeit $7 million and six homes and properties. Mil was the owner of People Choice Home Care Inc., a home health care that provided home health aides and health care services. Mil was also the registered agent for HHCH Health Care Inc., a home health care agency owned by Irina Krutoyarsky, of Springfield. Home health services were subsidized under the New Jersey Medical Assistance Program (Medicaid). Mil, Krutoyarsky and others defrauded Medicaid through a variety of ways including bogus records and hiring unqualified home health aides. Home health aides were also sent to patients who were not eligible for Medicaid. These patients wrote checks to HHCH and People Choice. Mil then cashed these checks at check cashing businesses and equally divided the cash with Krutoyarsky. Mil falsely characterized these payments as legitimate business deductions, thus reducing his business’ corporate taxes. He then filed federal individual income tax returns that concealed this income. Between 2007 and 2011, Mil cheated the IRS out of approximately $918,000 in taxes due and owing. Krutoyarsky was previously sentenced to 60 months in prison and ordered to pay restitution of $7,000,000.

Texas Chiropractor Sentenced for Receiving Millions in Kickbacks and Money Laundering
On June 10, 2016, in Austin, Texas, Garry Wayne Craighead, a chiropractor from Leander, was sentenced to 168 months in prison, three years of supervised release and ordered to pay $17,908,170 restitution to the U.S. Department of Labor (DOL); forfeit to the government property located in Williamson County as well as an aircraft. Craighead acknowledged that he operated several medical and rehabilitation clinics that treated injured workers, particularly postal employees, covered by federal worker’s compensation program (FECA). From 2008 through 2015, Craighead solicited and received millions in kickbacks from health care providers, including multiple pharmacies, hospitals, ambulatory surgical centers, and affiliated businesses, in return for referring his FECA patients to those providers for medical items and services, including prescription drugs, surgeries, and other procedures. The DOL paid millions as a result of the tainted referrals made by Craighead. In addition to the kickbacks, Craighead admitted to laundering the proceeds of his illegal conduct. Craighead was arrested on March 2, 2016 for continuing to receive approximately $600,000 in kickbacks, dissipating the funds, lying to government investigators, and testing positive for illegal drug use while on bond.

New York Doctor Sentenced for Taking Bribes in Test-Referral Scheme with New Jersey Clinical Lab  
On June 8, 2016, in Newark, New Jersey, Bret Ostrager, of Woodbury, was sentenced to 37 months in prison, one year of supervised release, fined $30,000 and ordered to pay forfeiture of $101,271. Ostrager, a doctor, previously pleaded guilty to taking bribes in connection with a long-running and elaborate test referral scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates. According to court documents, between February 2011 and April 2013, Ostrager received monthly cash bribes of approximately $3,300 from BLS employees and associates. He periodically solicited and received from the BLS employees and associates tickets and meals that cost thousands of dollars.

Healthcare Professional Sentenced for Worker Compensation Fraud
On May 16, 2016, in Dallas, Texas, Larry Washington, of Desoto, was sentenced to 78 months in prison and ordered to pay approximately $7.7 million in restitution. Washington ran businesses known as AAA Mental Health, LLC, Mind Spa, Inc., Solutions Health and Rehabilitation, and Convergence Emergence Diversion. Through his businesses, Washington provided patients with counseling, pain management, chiropractic services, physical therapy and massage services. He sought out and recruited his patients who were former postal and VA employees who had suffered on-the-job injuries that prevented them from returning to work. Washington knew that even though these individuals had once suffered a work-related injury, their injuries were not severe enough to warrant continued Department of Labor’s (DOL) Office of Worker Compensation Programs (OWCP) payments. Twenty-one claimants, four doctors or medical providers, a senior claims examiner at DOL, a claims representative, and a medical provider’s employee were charged in the scheme. Through Washington’s scheme, defendants were able to collectively fraudulently bill the federal government through the OWCP for more than $9.5 million and receive more than $8.7 million in government payments. Co-conspirator Henrietta Price, of Cedar Hill, was sentenced to six months home confinement, three years of probation and was ordered to pay $199,796 in restitution for her role in the scheme.

Doctor Sentenced for Taking Bribes in Test-Referrals Scheme with New Jersey Clinical Lab
On April 20, 2016, in Newark, New Jersey, Gary Safier, of Randolph, was sentenced to 24 months in prison, two years of supervised release and ordered to forfeit $353,152. From August 2007 through March 2013, Safier accepted bribes in return for referring patient blood specimens to Biodiagnostic Laboratory Services LLC (BLS). Initially, the bribes were paid under the guise of bogus lease and service agreements between BLS and his medical office. Later, BLS paid Safier in monthly cash payments that, at times, exceeded $10,000 per month. The total amount of bribes paid by BLS to Safier from the sham agreements and cash payments exceeded $353,000. Additionally, Safier failed to report $90,000 in bribes he received from BLS on his federal tax returns for 2010 and 2011.

Michigan Physician Sentenced for Role in $5.7 Million Medicare Fraud Scheme
On March 23, 2016, in Detroit, Michigan, Laran Lerner, of Northville, was sentenced to 45 months in prison and ordered to pay $2,789,409 in restitution. Lerner lured patients into his clinic with prescriptions for medically unnecessary controlled substances and then caused Medicare to be billed for a variety of unnecessary prescriptions, diagnostic tests and office visits. Medicare was billed $5,748,237 as a result of Lerner’s unnecessary prescriptions, office visits and diagnostic testing. Lerner also structured cash deposits he received as a result of his scheme in $5,000 increments on consecutive days at various bank locations in the Detroit area to avoid the requirement that domestic banks file a currency transaction report for all currency transactions over $10,000.    

North Carolina Behavioral Health Businessman Sentenced for Medicaid Fraud
On March 22, 2016, in Wilmington, Terry Lamont Speller, of Winterville, was sentenced to 240 months in prison, three years of supervised release and ordered to pay restitution of $5,962,189 to the victims of the offense, which included the North Carolina Medicaid program and a physician. Between 2010 and 2015, Speller used Carter Behavior Health Services, a Medicaid provider he operated, and other providers to fraudulently bill Medicaid millions of dollars in fraudulent claims. Speller and others fraudulently caused Medicare to pay out some $4.9 million in funds. Speller converted approximately $1 million of the fraud proceeds into alleged loan payments to a third party however, no documentation supported the loans. The loan proceeds were then transferred back to Speller.

Owner of Home Health Care Agency Sentenced for Role in $7 Million Scheme
On March 22, 2016, in Newark, New Jersey, Irina Krutoyarsky, of Springfield, was sentenced to 60 months in prison and three years of supervised release. Krutoyarsky was also ordered to pay $7 million in restitution and a forfeiture order was entered for $7 million. Krutoyarsky and her conspirators defrauded Medicaid by submitting fraudulent bills for services and false documentation regarding the certifications of home health aides. Krutoyarsky also directed certain home health aides to establish checking accounts at a bank near HHCH’s office and then took control of their checkbooks. After Medicaid paid the claims and transferred the funds into HHCH accounts, Krutoyarsky then transferred portions of the money into the aides’ accounts and used the money for her and her family’s use and benefit. Krutoyarsky paid two bribes totaling approximately $25,000 to an employee of the N.J. Department of Labor (NJDOL) to obstruct and unlawfully influence NJDOL investigations. Finally, between 2007 and 2011, Krutoyarsky cheated the IRS out of $907,150 in taxes.

North Carolina Man Sentenced for $2 Million Health Care Fraud Scheme
On March 15, 2016, in Charlotte, North Carolina, Eric Bernard Mitchell was sentenced to 37 months in prison, one year of supervised release and ordered to pay $2,049,932 in restitution to Medicaid. From about 2007 to about 2009, Mitchell co-owned and operated Angelic Community and Family Services, L.P. (Angelic), which provided alternative care in a non-institutional setting to Medicaid recipients with intellectual and developmental disabilities. Angelic later became defunct, and in 2009, Mitchell assisted in the creation of another company, identified in court documents as “Company #1,” which provided the same type of services as Angelic. Mitchell operated significant portions of Company #1’s business and had exclusive control of the company’s bank accounts. Both Angelic and Company #1 were approved by Medicaid to provide such services to beneficiaries and to receive reimbursement from the government program. From about October 2009 to about June 2014, Mitchell submitted fraudulent claims to Medicaid on behalf of Company #1, seeking reimbursement for services that were never provided. Mitchell used information of former clients of Angelic, who he knew were approved to receive such services. Over the course of the scheme, Mitchell submitted at least $2.5 million in fraudulent claims using the beneficiaries’ stolen information and received over $2 million in Medicaid payments. Mitchell used portions of the Medicaid funds for personal expenses.

Doctor Sentenced in $20 Million Health Care Fraud Scheme
On Jan. 6, 2016, in Los Angeles, California, Dr. Kenneth Johnson, of Ladera Heights, was sentenced to 108 months in prison. Johnson is one of three people found guilty in 2014 and one of 16 defendants who have been convicted in relation to the scheme that generated fraudulent billings of more than $20 million. Johnson fraudulently prescribed expensive anti-psychotic medications and then repeatedly re-billed the government for the drugs. Johnson pre-signed thousands of prescriptions that were later used to fill millions of dollars in fraudulent prescriptions for anti-psychotic drugs. Using prescriptions that were pre-signed by Johnson, employees of Manor Medical generated thousands of prescriptions for identify theft victims – such as elderly Vietnamese beneficiaries of Medicare and Medi-Cal, military veterans who were recruited from drug rehab programs, and others. Members of the conspiracy created or doctored patient files to make it falsely appear the drugs were necessary and the patients were legitimately treated. After the prescriptions were filled at pharmacies and paid for by Medicare and Medi-Cal, they were sold on the black market and redistributed to pharmacies, where the drugs would be subject to new claims made to Medicare and Medi-Cal as though they were new bottles of drugs.

New York Doctor Sentenced for Taking Bribes
On Nov. 18, 2015, in Newark, New Jersey, Brett Halper, of Glen Head, New York, was sentenced to 46 months in prison and two years of supervised release. Halper was also fined $100,000 and ordered to forfeit $325,000. Halper was a doctor with a practice in Rockville Centre, New York. From January 2011 through April 2013, Halper accepted bribes in return for referring patient blood specimens to Biodiagnostic Laboratory Services LLC and was often paid in excess of $5,000 per month. Halper’s referrals generated approximately $2,900,000 in lab business for BLS.  

California Man Sentenced for Medicare Fraud Scheme
On Nov. 2, 2015, in Los Angeles, California, Aram Aramyan, of Glendale, was sentenced to 51 months in prison, three years supervised release and ordered to pay $353,669 in restitution. Aramyan pleaded guilty on July 13, 2015 to conspiracy to commit money laundering and filing a false tax return. Aramyan admitted that he and co-defendant Khachatour Hakobyan deposited more than $1.1 million in proceeds derived from a health care fraud scheme into bank accounts in the names of bogus corporations they established “primarily to launder money.” Once the proceeds were deposited, Aramyan and Hakobyan wrote checks from these corporations to themselves and their associates. Aramyan and Hakobyan cashed some of the checks – and directed their associates to cash others – and returned the cash to the medical entities, typically after deducting a 10 percent commission. In some cases, they deposited the checks into their personal accounts and used the money to pay personal expenses. Aramyan also failed to report all of the income from the corporations on his 2009 tax return and agreed to pay $353,669 in back taxes for tax years 2007 through 2011.

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