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.
New Jersey Man Sentenced on Money Laundering Charges and Conspiracy to Distribute Steroids
On January 16, 2009, in Providence, R.I., Daniel McGlone, of New Jersey, was sentenced to 24 months in prison and ordered to pay $20,000 in restitution to Blue Cross Blue Shield of Rhode Island for reimbursements it made for illicit prescriptions. McGlone was also ordered to forfeit to the government $736,298 in proceeds from the scheme. In July 2007, McGlone pleaded guilty to 50 charges which included conspiracy to distribute hGH and anabolic steroids, distributing hGH, distributing anabolic steroids, health care fraud, and money laundering. According to court documents, McGlone, doing business as American Pharmaceutical Group, advertised in magazines and on the Internet to customers interested in procuring steroids, hGH, and other prescription medications. Operating out of his apartment in North Brunswick, New Jersey McGlone in essence acted as a broker between customers and compounding pharmacies that packaged and shipped the drugs. McGlone advised his customers what to order and then obtained prescriptions from physicians. One of those was Ana Maria Santi, whose license to practice in New York had been revoked in 1999. She wrote prescriptions at McGlone’s request, using the identity of another doctor. Another physician was Victor Mariani, practicing in Queens, New York. In November 2007, Santi was sentenced to 24 months in prison and ordered to pay approximately $20,000 in restitution to Blue Cross Blue Shield of Rhode Island. Also in November 2007, Mariani was sentenced to three years probation with one year home confinement. Santi forfeited $24,340 and Mariani $34,845.
Two Pharmed Directors and Four Others Sentenced on Tax Evasion and Health Care Fraud Charges
On January 7, 2009, in Miami, Fla., Carlos De Cespedes and Jorge De Cespedes, brothers and majority shareholders of The Pharmed Group, Corp. (Pharmed), were sentenced to 108 months in prison as a result of their plea to two separate Informations. The Informations charged them with conspiracy to commit health care-related wire fraud and tax evasion, respectively. Also sentenced were Sylvia Oramas, Erika Urquiza, Victor Garcia, and Joanna Delfel. Oramas was sentenced to 73 months imprisonment; Urquiza was sentenced to 60 months in prison; Garcia received 63 months in prison; and Delfel was sentenced to 30 months in prison. In addition, the Court ordered restitution in the following amounts: the De Cespedes brothers and Urquiza were ordered to pay $6,930,155 and Oramas, Garcia, and Delfel were ordered to pay $8,631,928. In a written and signed Factual Proffer filed with the Court in September 2008, the De Cespedes brothers admitted to participating in a purchase order fraud conspiracy that took advantage of Pharmed’s vendor relationship with Kendall Regional Medical Center. Jorge De Cespedes admitted that, starting at least as early as 1993, he made cash payments to Sylvia Oramas, a former employee of Kendall Regional, in exchange for various medical supplies that had been diverted from Kendall Regional’s warehouse. Jorge De Cespedes further admitted that, starting in the late 1990's, Oramas began generating phony purchase orders for Pharmed medical supplies for Pharmed. As part of the scheme, employees of Kendall Regional would use the hospital’s computer system to generate large volume purchase orders for Pharmed supplies, and then to falsely record that the phony orders had been delivered to Kendall Regional, thereby causing Kendall Regional to pay Pharmed for the fake orders. Upon receiving fraudulent payments from Kendall Regional for the phantom orders, the De Cespedes brothers would transfer the funds from Pharmed to various shell corporations they controlled. In the signed proffer submitted to the Court, both Carlos and Jorge De Cespedes admitted that they under-reported their individual income by over $10.8 million for tax years 2001-2003; resulting in a tax loss of over $4 million.
Chiropractor Sentenced to 48 Months in Prison for $12 Million Fraud Scheme
On December 19, 2008, in Pittsburgh, Pa., Douglas Henderson, of Lower Burrell, Pa., was sentenced to 48 months in prison on his conviction for defrauding Highmark Blue Cross/Blue Shield between 1995-2002. Henderson was also ordered to pay over $12.1 million restitution to Highmark. Henderson, a former chiropractor, pleaded guilty in April 2006 to health care fraud, conspiracy and tax fraud. According to information presented in court, Henderson defrauded Highmark by falsely claiming reimbursement under patients' health care insurance policies for treatment that had not actually been provided. False claims worth more than $20 million were submitted to Highmark, and Henderson received approximately $12.1 million in insurance benefits. The patients named in the claims agreed to cooperate with Henderson's scheme in return for kickbacks. One employee and 13 patients have also been prosecuted for participating in Henderson's fraudulent scheme against Highmark.
Former Houston Physician Sentenced for Illegally Distributing Prescription Drugs and Money Laundering
On November 20, 2008, in Houston, Texas, Alonzo Peters III, a former physician who practiced in Houston until his license was revoked by the Texas State Board of Medicine, was sentenced to 60 months in prison and fined $10,000 for conspiring to illegally distribute prescription drugs and money laundering. Peters and three pharmacists, Ansa Hogan, Dennis Martin George and Terry Green, pleaded guilty to various charges in October 2007 arising from their illegal actions to distribute prescription drugs without a legitimate medical purpose and outside the course of professional practice, knowing the drugs were being sold on the streets. Peters and his co-defendants were paid cash for the prescriptions. He directed recipients of the unlawfully issued prescriptions to go to his co-defendant’s pharmacies to have the prescriptions filled. Each defendant was enriched with large amounts of cash as a result of the illegal distribution of prescription drugs. The cash proceeds provided the basis for money laundering charges against Peters and his conviction. The court also ordered the forfeiture of various assets identified as having been purchased by Peters with the proceeds of the unlawful activity, including two condominium units and a Cadillac Escalade automobile, as well as $6,990 in cash.
Louisiana Doctor Sentenced for Tax Evasion
On October 31, 2008, in Shreveport, La., Garland Miller, a physician from Zwolle, Louisiana, was sentenced to 48 months in prison, to be followed by three years of supervised release. Miller was also ordered to pay restitution of $55,470 to the DeSoto Regional Health System and $89,130 to the Internal Revenue Service (IRS), with interest until paid in full. In July 2008, Miller was found guilty by jury on two counts of tax evasion. According to court documents, Miller was charged in March 2007 with attempting to evade a substantial amount of income tax by failing to file tax returns and by converting payments to him or his wife to cash and money orders, and by embezzling payments due to DeSoto Regional Health System which he then converted to cash and money orders.
Former Maine Chiropractor Sentenced to Prison for Health Care Fraud and Tax Fraud
On October 23, 2008, Portland, Maine, Steven P. Amato, formerly of Bremen, Maine, was sentenced to 24 months in prison, followed by three years of supervised release, and ordered to pay a $10,000 fine and $100,041 in restitution to insurance companies. According to court documents, the defendant previously paid more than $700,000 to the Internal Revenue Service (IRS) for his back taxes, interest and penalties. Amato pleaded guilty on June 27, 2008, to one count of health care fraud and three counts of federal income tax evasion for the years 2001, 2002 and 2003. Until 2005, Amato was a chiropractor practicing in Damariscotta, doing business as the Center for Alternative Healing. Court records stated that Amato committed health care fraud during the years 2000 to 2004 by submitting fraudulent claims to insurance companies that billed for services he did not actually render to his patients. Many of these false claims exaggerated the amount of time that Amato spent with his patients performing therapeutic procedures or conducting physical performance tests or measurements. Amato also submitted false claims that billed insurance companies for patient visits that never occurred. The false claims caused losses to insurance companies that totaled approximately $100,441. Court records also stated that Amato committed tax evasion by hiding a substantial amount of business receipts in a bank account that he opened at the Chase Manhattan Bank in New York which he failed to disclose to his return preparers. He then filed income tax returns that underreported taxable income by $193,096 for 2000, 165,362 for 2001, $241,146 for 2002 and $241,968 for 2003. His total tax loss for these years was approximately $319,675.
New Jersey Man Sentenced to 47 Months in Prison for Defrauding Insurance Companies of More than $2.5 Million
October 15, 2008, in Newark, N.J., Boris Sokha was sentenced to 47 months in prison and ordered to pay $2.5 million in restitution and a $10,000 fine. Sokha pleaded guilty in January 2008 and admitted he conspired to defraud insurance companies of more than $2.5 million through a false medical billing scheme and engaged in tax evasion. According to court documents, Sokha ran several medical management companies through which he and a co-conspirator submitted hundreds of false bills to insurance companies in New Jersey, New York, and in other states. These insurance companies provided no-fault insurance coverage to motorists. Sokha admitted that he recruited licensed psychiatrists and assisted these doctors in the creation of professional medical corporations that only existed on paper. Thereafter, Sokha and others hired individuals who possessed no medical licenses and instructed them to provide psychotherapy to individuals reportedly involved in automobile collisions. Sokha admitted that he defrauded the insurance companies by fraudulently billing them for services and treatments that had not been provided to patients and by falsely claiming that psychotherapy sessions were provided by licensed doctors or under the supervision of licensed doctors. Sokha and his co-conspirators fraudulently obtained in excess of $2.5 million from the various insurance companies and used the money for the benefit of themselves and others. In addition, Sokha admitted that he skimmed and diverted money from his billing companies for his own use and benefit. He then filed tax returns that failed to include significant amounts of this income. Sokha admitted that for tax year 2005 he did not report approximately $300,000 in additional taxable income on his individual income tax return which resulted in approximately $84,000 in tax due and owing to the Internal Revenue Service.
Co-Owner of Defunct Greeley Health Care Company Sentenced to Federal Prison in One of the Largest Employment Tax Fraud Cases in Colorado History
On October 9, 2008, in Denver, Colo., William C. Crabbe was sentenced to 37 months in federal prison for tax fraud and ordered to pay $2.2 million in restitution to the IRS. Crabbe was indicted in July 2006 on charges of failure to pay employee federal payroll taxes and filing false employment tax returns. He was found guilty following a three week jury trial. Crabbe’s co-defendant, James S. Rowan, pleaded guilty earlier to tax evasion for his failure to pay employee federal payroll taxes. According trial evidence, Crabbe was co-owner and principal officer of Columbine Health Care Systems, a national nurse-staffing agency which operated in 35 states. Columbine charged a fee for placing nurses in client hospitals, healthcare facilities, and doctor’s offices. Columbine also paid wages to the nurses. Crabbe was required to withhold federal income tax, Social Security taxes, and Medicare taxes from his employees’ pay checks. From June 2000 through December 2001, the defendant deducted and collected these taxes from his employees, but only paid these taxes for his corporate employees, and not for their nurses. From March 2002 through December 2002, Crabbe collected these taxes but did not pay them to the federal government for either his corporate employees or his nurses.
Fiscal Year 2008 - Examples of Healthcare Fraud Investigations
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