Health Care Fraud Prosecutions Target Owners, Operators & Other Leaders

Lengthy prison  sentences imposed against the five former owners and operators convicted or having plead guilty to involvement in health care fraud schemes carried out by their various health care organizations in the first 10 days of December drive home the growing effectiveness of the Departments of Justice, Health & Human Services and other federal state agencies at investigating and prosecuting health care fraud. Owners, operators and other leaders of health care organizations should administer well documented health care fraud compliance and other defensive actions to avoid becoming one of these lessons as a result of their involvement with their own organizations.

Mississippi Hospice Owner Gets 36 Months

On December 4, 2015; U.S. Attorney; Northern District of Mississippi that the owner-operator of Millstone Hospice in Grenada, Mississippi, Sandra Livingston on January 25, 2016 will begin serving a 36 month prison sentence imposed by a Federal judge on December 3, 2015 as part of her punishment for her health care fraud conviction. In addition to her prison sentence, Ms. Livingston also must serve three years of supervised release and pay $1,098,639 in restitution to the Medicare program.

Ms. Livingston previously pled guilty on July 30, 2015 to conspiracy to commit healthcare fraud in violation of 18 U.S.C. §§ 1347 & 1349.   Ms. Livingston admitted that while she owned and operated Milestone Hospice in Grenada, Mississippi, Millstone Hospice used patient recruiters to solicit patients that were not hospice appropriate and then received more than $1 million of Medicare payments for fraudulent charges for these services submitted to Medicare. In announcing the sentence, Donald Alway, Special Agent in Charge of the FBI in Mississippi said “This scheme is particularly sickening because the defendant charged Medicare over a million dollars in services for “treating” folks who have no idea they were on hospice because they weren’t at the end of the lives.”

Ms. Livingston’s conviction is the third conviction as part of a joint effort by the United States Attorney’s Office, the U.S. Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation, the Mississippi Attorney General’s Medicaid Fraud Control Unit and targeting fraudulent hospice providers who have billed Medicare and Medicaid for medically unnecessary services.

Southern California Ambulance Company Owners & Management Combined 168 Months Sentence

Following the Livingston sentencing, the Justice Department on December 7, 2015 announced the sentencing of the former owner, operator and managers of a Southern California ambulance company for their role in a fraud scheme that resulted in more than $1.5 million in fraudulent claims to Medicare.

U.S. District Judge S. James Otero of the Central District of California sentenced Yaroslav Proshak, aka Steven Proshakof Valley Village, California to serve 108 months in prison. On December 2, 2015, Judge Otero sentenced Emilia Zverev of Van Nuys, California; and Sharetta Michelle Wallace of Inglewood, California, to serve 36 months and 24 months in prison, respectively. In addition to their prison terms, Judge Otero ordered Zverev and Wallace to pay restitution jointly and severally with Proshak in the amount of $804,755.

The sentences are imposed for health care fraud convictions obtained last summer. On August 18, 2015 a federal jury in Los Angeles convicted Proshak, Zverev and Wallace of one count of conspiracy to commit health care fraud and five counts of health care fraud. Zverev and Wallace worked for ProMed Medical Transportation, an ambulance transportation company owned and operated by Proshak in the greater Los Angeles area that provided non-emergency services to Medicare beneficiaries, many of whom were dialysis patients. Zverev was the billing manager and Wallace supervised the ProMed EMTs.

The evidence at trial showed that between May 2008 and October 2010, the defendants conspired to bill Medicare for ambulance transportation services for individuals that did not need such services. The defendants also instructed ProMed EMTs to conceal the patients’ true medical conditions by altering paperwork and creating fraudulent documents to justify the services. During the course of the conspiracy, ProMed submitted at least $1.5 million in false and fraudulent claims to Medicare for medically unnecessary transportation services; Medicare paid at least $804,755 on those claims.

Pharmacy Owner Gets 108 Months Sentence

Subsequently on December 10, 2015, the Justice Department announced that U.S. District Judge Donald M. Middlebrooks sentenced Daniel Suarez to 108 months in prison, followed by three years of supervised release and ordered Suarez to pay $20,988,632 in restitution for pleading guilty to one count of conspiracy to commit health care fraud and wire fraud, in violation of Title 18, United States Code, Section 1349.

According to the court record, Suarez and his co-conspirators were the owners of eight separate pharmacies that submitted and caused the submission of false and fraudulent claims to Medicare that they provided pharmaceutical drugs pursuant to properly written prescriptions when, in fact, such items were not properly prescribed or actually provided to Medicare beneficiaries.  This fraud was accomplished in part by the use of a number of patient recruiters who received kickbacks in return for referring Medicare Part D beneficiaries to the eight separate pharmacies that Suarez controlled.  These patient recruiters then purchased the prescriptions for the medically unnecessary pharmaceutical items that the pharmacies billed to Medicare.  Suarez placed the pharmacies he controlled in the names of co-conspirator family members.  In total, Suarez and his co-conspirators submitted and caused the submission of more than $20 million in false claims to the Medicare Part D program.  Suarez used the fraudulently obtained proceeds to benefit himself and his family, including the purchase of luxury automobiles (i.e.: a Rolls Royce Ghost, Bentley, Range Rover and Mercedes Benz S63 AMG).

Like the lengthy and ever growing list of convictions and sentencings of other owners, operators, management, marketing representatives and others charged with involvement in health care fraud, these sentences drive home the commitment and effectiveness of the Justice Department, the Department of Health & Human Resources Office of Inspector General, and other federal and state agencies to investigating and prosecuting health care organizations and their leaders or others acting on their behalf to inappropriately bill or otherwise defraud Medicare, Medicaid or other federal health care programs. These convictions and settlements are intended to and should send a strong message to other health care organizations and their owners, leaders and other representatives about the need to exercise care to avoid wrongful or questionable billing for health care services. As reflected in these prosecutions and sentences, health care organizations found guilty of engaging in health care fraud can expect crippling if not fatal restitution requirements, Medicare and other federal program participation exclusion and other serious consequences. However, these stiff organizational sanctions pale to the prison sentences, program exclusion, restitution and other punishment that individual owners, operators, management, and marketing or other staff generally incur when convicted of these schemes. In light of the heavy handed interpretation and enforcement of federal and state health care fraud rules, health care organization owners, operators, and others involved in the marketing, billing, delivery, recruitment or other elements of health care billed to Medicare, Medicaid or other public or private health care programs should exercise care both to verify that their practices comply with applicable requirements and that they carefully preserve the necessary documentation and other evidence to defend the actions of themselves and their organizations.

With health care fraud enforcement a key component of the federal government’s efforts to bring down health care costs and the continuing success of federal and state health care fraud investigation and enforcement efforts like those already achieved by the Justice Department against the 12 defendants that already pleaded guilty, health care providers providing substance abuse or other treatments reimbursed by federal or state programs should must ensure that their care and billings are appropriately delivered and documented to withstand almost inevitable government scrutiny of their operations and activities.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, Board Certified in Labor & Employment Law, and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 26 years of experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.  The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights,  Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns.  Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others.  In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans,  as well as  HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for  Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here.  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Examples of some of these recent health care related publications include:

©2015 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.


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