The Federal Medicare Fraud Strike Force’s arrest of 36 providers in California and Florida highlights again the continuing and growing zeal of federal health care fraud investigation and enforcement efforts.  On May 14, 2013 the Justice Department announced it arrested and charged with Medicare fraud 12 defendants in Los Angeles here and 24 South Florida residents here in fraud enforcement actions on opposite coasts.  The charges show the continuing commitment by Federal officials to find an prosecute health care fraud.

Florida Arrests

In South Florida, Federal officials announced charges against 24 South Florida residents for their alleged participation in various schemes to defraud Medicare out of more than $45,299,935 million. The charges in South Florida are part of a nationwide takedown by Medicare Fraud Strike Force operations in eight cities that resulted in charges against 89 individuals, including doctors, nurses and other licensed professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings.

Specifically, the South Florida cases announced as part of the nationwide Medicare Fraud Strike Force takedown include the following:

• U.S. v. Emilio Amador, Cristobal Gonzalez, Eduims Mora, Jose Contreras, and Elizabeth Monteagudo, where five defendants are charged with conspiracy to receive health care kickbacks and substantive counts of receiving kickbacks in connection with a federal health care program. According to the indictment, the defendants participated in a scheme involving Caring Nurse Home Health, Corp. and Good Quality Home Health, Inc. The defendants allegedly supplied patients to Caring Nurse and/or Good Quality in exchange for kickbacks and bribes. Caring Nurse and Good Quality, in turn, fraudulently billed Medicare for approximately $50 million for home health services that were not provided and/or were not medically necessary. If convicted, the defendants face up to five years for each count.
• United States v. Rafael Meana and Janet Farigola, where Defendants Rafael Meana and Janet Farigola are charged with conspiracy to commit health care fraud and several substantive counts of health care fraud. According to the indictment, the defendants participated in a scheme involving Lord’s Medical & Rehab Center, Inc. (Lords), a medical clinic that purportedly provided Medicare Advantage beneficiaries with medical items and services. From February 2010 through July 2011, Meana and Farigola allegedly caused Lord’s to submit approximately $5,497,047 in Medicare claims falsely claiming that health care benefits and services were medically necessary and had been provided to Medicare beneficiaries. As a result of the submission of these claims, Medicare paid Lord’s approximately $2,240,134. If convicted, the defendants face up to ten years in prison for each count of health care fraud.
• United States v. Jose Moran, Rafael Meana, and Armando Rubio Cordero, where the defendants are charged with conspiracy to commit health care fraud and several substantive counts of health care fraud. According to the indictment, the defendants participated in a scheme involving Lord Family Services, Inc., a medical clinic that purportedly provided Medicare Advantage beneficiaries with medical items and services. From January 2010 through September 2011, the defendants allegedly caused Lord Family Services, Inc. to submit approximately $1,919,751 in Medicare claims falsely claiming that health care benefits and services were medically necessary and had been provided to Medicare beneficiaries. As a result of the submission of these claims, Medicare paid Lord Family Services, Inc. approximately $976,476. If convicted, the defendants face up to ten years in prison for each count of health care fraud.
• United States v. Karina Merino, where defendant Karina U. Merino is charged with a single count of health care fraud in connection with her role in a massive health care fraud scheme involving Ideal Home Health, Inc. (Ideal), which submitted more than $40 million in fraudulent claims to Medicare. The Information alleges that Merino, as a nurse for Ideal, falsified patient visitation logs to reflect that home health care nursing services had been provided to beneficiaries when such services had, in fact, not been provided. Ideal fraudulently billed the Medicare program for approximately $148,000. If convicted of the health care fraud charge, Merino faces up to ten years in prison.
• United States v. Delia Y. Chaveco and Arturo Y. Chaveco,
  where Delia Y. Chaveco and Arturo Y. Chaveco (the Chavecos) were charged by Information with a single count of conspiracy to receive kickbacks in connection with a federal health care benefit program. This charge stems from the Chavecos’ role in a health care fraud scheme involving Ideal Home Health Inc. (Ideal), an agency that submitted more than $40 million in fraudulent claims to the Medicare program. The Information alleges that Ideal and other Miami-Dade area home health agencies paid the Chavecos kickbacks in exchange for recruiting Medicare beneficiaries that they later used to bill the Medicare program. If convicted, the defendants face up to five years in prison.
• United States v. Roberto Marrero, Sandra Fernandez Viera and Enrique Rodriguez, where defendants are charged with conspiracy to commit health care fraud, conspiracy to receive and pay health care kickbacks, and substantive kickback charges. Defendants Roberto Marrero and Sandra Fernandez Viera were the owners and operators of Trust Care Health Services, Inc. (Trust Care), which allegedly paid kickbacks and bribes to patient recruiters and beneficiaries to obtain Medicare beneficiaries, and then submitted more than $20 million in false and fraudulent claims to Medicare, primarily for skilled nursing diabetic care and physical/occupational therapy. Defendant Enrique Rodriguez worked as a patient recruiter for Trust Care, supplying patients in exchange for kickbacks and bribes. A civil injunction is being filed under 18 U.S.C. § 1345 to restrain the defendants’ assets to satisfy restitution in the criminal matter. If convicted, the defendants face up to ten years for the health care fraud charges and five years for each count of the kickback charges.
• United States v. Dora Moreira, Ivan Alejo, and Hugo Morales,
  where  the defendants are charged with conspiracy to commit health care fraud, conspiracy to receive and pay health care kickbacks, substantive kickback charges, conspiracy to commit money laundering, and substantive money laundering. Defendant Dora Moreira was the owner and operator of Anna Nursing Services Corp. (Anna Nursing), which paid kickbacks and bribes to patient recruiters and beneficiaries to obtain Medicare beneficiaries. Anna Nursing was paid more than $7 million for the false claims it submitted to Medicare, which claims were primarily for physical/occupational therapy. Defendant Ivan Alejo worked at Anna Nursing, and was responsible for, among other things, negotiating kickback rates and distributing kickback payments to patient recruiters on behalf of Anna Nursing. Defendant Hugo Morales worked as a physical therapist on behalf of Anna Nursing, and was responsible for, among other things, fabricating patient medical documentation. Defendant Dora Moreira laundered money for the purpose, among others, of concealing the proceeds of the fraud and the payment of kickbacks to recruiters. The Asset Forfeiture Section has obtained restraining orders on the corporate bank account and on real property that is traceable to the fraud. If convicted, the defendants face up to ten years for the health care fraud charges, five years for each count of the kickback charges, and twenty years for the money laundering charges.
• United States v. Marina Sanchez Pajon and Miguel Jimenez,
  where Federal officials charge defendants with conspiracy to commit health care fraud, conspiracy to receive and pay health care kickbacks, and substantive kickback charges. Defendants Marina Sanchez Pajon and Miguel Jimenez were the owners and operators of Flores Home Health Care Inc. (Flores Home Health), which allegedly paid kickbacks and bribes to patient recruiters and beneficiaries to obtain Medicare beneficiaries. Flores Home Health was paid more than $8 million for the false claims it submitted to Medicare, which claims were primarily for physical/occupational therapy. The Asset Forfeiture Section has obtained seizure warrants and restraining orders on five vehicles and bank accounts containing $160,000. They have also filed lis pendens against four real properties that were purchased with proceeds of the fraud. If convicted, the defendants face up to ten years for the health care fraud charges and five years for each count of the kickback charges.
•  United States v. Miguel A. Rodriguez, where defendant Miguel A. Rodriguez is charged with three counts of paying kickbacks in connection with a federal health care program. The defendant allegedly paid kickbacks and bribes to induce medical providers to refer Medicare beneficiaries to his medical company for services, including x-rays. If convicted, the defendant faces up to five years in prison for each count of the kickback charges.
• United States v. Enrique Alberto Siret Rodriguez, where defendant Enrique Alberto Siret Rodriguez is charged with four counts of health care fraud and two counts of paying kickbacks in connection with a federal health care program. The defendant allegedly paid kickbacks and bribes to a doctor for fraudulent home health care prescriptions that could be used to fraudulently bill Medicare. If convicted, the defendant faces up to 10 years in prison for each health care fraud count and up to five years for each of the kickback counts.
• United States v. Alberto Cosme Garcia,  where defendant Alberto Cosme Garcia is charged with one count of health care fraud and two counts of paying kickbacks in connection with a federal health care program. The defendant allegedly paid kickbacks and bribes to a doctor for fraudulent home health care prescriptions that could be used to fraudulently bill Medicare. If convicted, the defendant faces up to 10 years in prison for the health care fraud count and up to five years for each of the kickback counts.

Los Angeles Charges

In Los Angeles, the Health Care Fraud Task Force action resulted in 12 arrests including California’s second-largest biller for chiropractic services, a physician’s assistant, and owners of durable medical equipment and ambulance companies, in relation to seven criminal cases that the Justice Department alleges resulted in the cumulative submission of more than $22 million in false billings to Medicare.  The charges filed in Los Angeles are part of a nationwide “takedown” by Medicare Fraud Strike Force operations in eight cities that led to charges against 89 individuals for their alleged participation in schemes to collectively submit about $223 million in fraudulent claims to Medicare. See here.

The dozen defendants taken into custody are among 13 people charged in Los Angeles in cases that allege health care fraud.  A thirteenth defendant is a fugitive. 

Federal officials charge Dr. Houshang Pavehzadeh, of the Sylmar Physician Medical Group, allegedly billed Medicare more than $1.7 million for chiropractic treatments he never performed.  During the scheme, which ran from 2005 through 2012, Dr. Pavehzadeh, 40, of Agoura Hills, became the second-largest Medicare biller in California for chiropractic services – even though he was not in the United States when some of the alleged services were performed. In addition to being charged with health care fraud, Pavehzadeh is charged with aggravated identity theft related to Medicare beneficiaries whose information he used to bill Medicare as a part of the scheme. When investigators tried to conduct an audit of Pavehzadeh’s claims, he falsely reported to the Los Angeles Police Department that he had been carjacked and that patient files requested by the auditors had been stolen from his car. Pavehzadeh surrendered this morning, and he is scheduled to be arraigned with other Los Angeles-area defendants this afternoon in the Roybal Federal Building.

Nine defendants affiliated with DME companies were also charged in five separate indictments.

• Olufunke Fadojutimi, 41, of Carson, a registered nurse; Ayodeji Temitayo Fatunmbi, 41, formerly of Carson, and now believed to be residing in Nigeria; and Maritza Velazquez, 40, of Las Vegas, were charged with health care fraud. The scheme allegedly revolved around Lutemi Medical Supplies, a DME company Fadojutimi owned and where Fatunmbi and Velazquez worked.  According to the indictment in this case, Lutemi billed Medicare more than $8.3 million in claims, primarily for medically unnecessary power wheelchairs. Fadojutimi and Fatunmbi allegedly laundered Medicare funds in order to purchase fraudulent prescriptions for those power wheelchairs and pay illegal kickbacks to recruit Medicare beneficiaries. Fadojutimi was arrested this morning in Los Angeles, while Velazquez was arrested in Las Vegas. Fatunmbi is currently a fugitive being sought by federal authorities.
• Susanna Artsruni, 45, of North Hollywood, and Erasmus Kotey, 76, of Montebello, a licensed physician’s assistant, allegedly worked together to commit health care fraud out of a medical clinic on Vermont Avenue where they both worked.  Kotey allegedly prescribed medically unnecessary DME, including power wheelchairs, for Medicare beneficiaries. Many of those power wheelchair prescriptions were then used by Artsruni’s DME company, Midvalley Medical Supply, to support fraudulent claims to Medicare. In only four months, the clinic and Midvalley billed Medicare more than $525,000 for these fraudulent claims. Artsruni has previously been convicted of health care fraud and was on pretrial supervision at the time she allegedly laundered some of the proceeds of this fraud. Artsruni was arrested this morning, while Kotey self-surrendered.

Three other DME cases were also charged, alleging fraudulent Medicare billing for medically unnecessary power wheelchairs that were sometimes never even delivered.

• In one case, Akinola Afolabi, 53, of Long Beach, the owner of Emmanuel Medical Supply, allegedly submitted more than $2.6 million in in false and fraudulent billing to Medicare.
• In another case, Queen Anieze-Smith, 52, of Encino, and Abdul King-Garba, 47, of Westwood, the owners and operators of ITC Medical Supply, allegedly submitted more than $1.8 million in false and fraudulent billing to Medicare. 
• In the third case, Clement Etim Aghedo, 53, of Fontana, the owner of Ace Medical Supply Company, allegedly submitted more than $1.8 in false and fraudulent claims to Medicare. Afolabi, Anieze-Smith, and King-Garba were all arrested this morning, while Aghedo self-surrendered.

In the seventh case brought as part of today’s takedown, three defendants affiliated with Gardena-based ProMed Medical Transportation, an ambulance company, were charged with submitting more than $5.9 million in false claims to Medicare between 2008 and 2011. ProMed’s owner, Yaroslav Proshak, 45, of Valley Village; general manager Sharetta Wallace, 35, of Inglewood; and office manager and biller Sergey Mumjian, 40, of West Hollywood, submitted claims for medically unnecessary transportation services and then created fake documentation purporting to support those claims. Proshak, Wallace, and Mumjian were arrested this morning.

The charge of health care fraud carries a statutory maximum penalty of 10 years in federal prison. Money laundering carries a potential penalty of 20 years in prison. Aggravated identity theft carries a mandatory two-year prison term.

Aggressive Medicare Health Care Fraud Task Force Enforcement Continues

The announcement of these arrests provides more evidence of the continuing zealousness of Federal health care fraud investment and enforcement efforts targeting heath care providers for health care fraud or other aggressive activities. 

The Medicare Fraud Strike Force operations that lead to todays’ charges are part of the continuing activities Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since March 2007, Federal officials credit Strike Force operations in nine locations with leading to charges against more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion.

In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

In announcing the Florida charges, HHS Secretary Sebelius commented on the effect of recent legal changes that have given Federal officials new tools in investigating and fighting health care fraud.  She said, “The Affordable Care Act has given us additional tools to preserve Medicare and protect the tens of millions of Americans who rely on it each day,” said Secretary Sebelius. “By expanding our authority to suspend Medicare payments and reimbursements when fraud is suspected, the law allows us to better preserve the system and save taxpayer dollars. Today we’re sending a strong, clear message to anyone seeking to defraud Medicare: You will get caught and you will pay the price. We will protect a sacred trust and an earned guarantee.”

Meanwhile, U.S. Attorney General Holder said, “Today’s announcement marks the latest step forward in our comprehensive efforts to combat fraud and abuse in our health-care systems.”

In the face of these criminal efforts and expanding civil and administrative enforcement actions by Federal officials targeting heaelth care fraud and other aggressive billing and referral efforts, health care providers should exercising continuing care to maintain compliance with applicable rules and carefully document these and other compliance and risk management efforts.

For Help With Compliance, Investigations Or Other Needs

If you need assistance providing compliance or other training, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. 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/ She also regularly designs and presents risk management, compliance and other training for health care providers, professional associations and others.   Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, 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 with these or other compliance concerns, wish to inquire about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail 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. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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• Detroit-Area Foot Doctor Pleads Guilty to Medicare Fraud Scheme
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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 see 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.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

New Charges Bring To A Total of 9 Charged for Their Roles in the Scheme 

Charges against five more individuals for their alleged participation in a $24.7 million Medicare fraud scheme involving purported home health and psychotherapy services were unsealed and made public in the Eastern District of Michigan on September 20, 2012 bring to a total of nine individuals now charged in the scheme. 

The Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the Department of Health and Human Services (HHS) jointly announced the charges. 

DOJ charges in court documents that the scheme allegedly involved a total of more than $24.7 million in fraudulent claims submitted to Medicare for purported home health care and psychotherapy services that were medically unnecessary and/or never provided.  Court documents allege that the defendants are operators, employees and marketers associated with home health care and psychotherapy clinics operating in and around Detroit.  Defendants charged in the unsealed court documents unsealed today include: Mohammed Sadiq; Jamella Al-Jumail; Firas Alky; Clarence Cooper and Beverly Cooper. 

Four defendants charged in the superseding indictment were previously charged and arrested in May 2012 for their roles in the scheme.  Defendants previously charged include: Sachin Sharma, Dana Sharma, Abdul Malik Al-Jumail, and Felicar Williams. 

The superseding indictment charges all defendants with one count of conspiracy to commit health care fraud; Sachin Sharma with five counts of health care fraud; Sachin Sharma, Abdul Malik Al-Jumail, Williams, Sadiq, Alky and Clarence Cooper with one count of conspiracy to pay and receive health care kickbacks; and Jamella Al-Jumail with one count of destruction of records in a federal investigation.  The superseding indictment also seeks forfeiture from all defendants. 

According to the superseding indictment, from January 2007 through April 2012, the defendants operated a large network of purported home health care and psychotherapy companies in the Detroit area through which they conspired to defraud Medicare. 

According to court documents, Sachin Sharma, Dana Sharma, Abdul Malik Al-Jumail, Williams, Jamella Al-Jumail, Sadiq, Alky and other alleged co-conspirators incorporated home health care, psychotherapy and other medical service companies to carry out the scheme, including Reliance Home Care, LLC; First Choice Home Health Care Services Inc.; Associates in Home Care Inc.; Haven Adult Day Care Center LLC; Swift Home Care LLC; ABC Home Care Inc.; Accessible Home Care Inc.; and Be Well Home Care LLC.  The defendants, along with co-conspirators, allegedly submitted Medicare enrollment applications to let these companies to bill Medicare. Sachin Sharma, Abdul Malik-Al-Jumail, Sadiq, Alky and others allegedly paid kickbacks and bribes to recruiters, including Williams and Clarence Cooper, to get Medicare beneficiaries’ information, which could be used to fraudulently bill Medicare for purported services provided by the companies they operated and controlled.  The defendants then allegedly caused these companies to bill Medicare for home health and psychotherapy services, even though these services were not medically necessary and were often not provided. 

According to the superseding indictment, the defendants caused Reliance, First Choice, Associates, Haven, Swift, ABC, Accessible and other home health, psychotherapy and medical services companies to bill approximately $24.7 million in claims to Medicare for services that were medically unnecessary and/or not provided.  In addition, Jamella Al-Jumail is charged with destroying records relating to Accessible’s Medicare billings upon learning of the May 2012 arrest of Abdul Malik Al-Jumail, her co-conspirator and father. 

Clarence and Beverly Cooper, Sadiq and Jamella Al-Jumail were arrested on September 21. 

The case is being prosecuted by Fraud Section Assistant Chief Gejaa T. Gobena and Trial Attorney William G. Kanellis.  The investigations were conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section. 

Act To Manage Health Care Fraud Exposures

As health care fraud enforcement remains a lead Federal priority, health care providers face ever-heightening exposures to HEAT task force scrutiny and prosecution. Along with these criminal investigation and enforcement activities, health care providers also face civil monetary penalty, federal program disqualification and other civil and administrative remedies from billing, reimbursement and other health care fraud, billing audits and other enforcement and audit activities.

 In response to these and other investigation and oversight activities, health care providers should strengthen their compliance practices and oversight and take other special care to position themselves and their billings to defend against possible challenge.

For Help With Compliance, Investigations Or Other Needs

If you need help providing compliance or other training, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. 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/ She also regularly designs and presents risk management, compliance and other training for health care providers, professional associations and others.   Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, 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. Contact Ms. Stamer at (469) 767-8872 or via e-mail 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. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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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 see 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.

©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

A Federal court on November 14, 2011 sentenced Armando Chavez, 42, a former physician and owner of the Chavez Medical Group in East Houston to 60 months for the conspiracy charge and to 70 months for each of the three mail fraud charges. In addition to the prison sentences, which will run concurrently, Chavez was also ordered to pay $3,821,082 in restitution.

The prosecution and sentencing of Chavez highlights the heightened risk that physicians and others engaging in aggressive health care billings risk if Federal officials view their actions as crossing the line.  The Chavez case is particularly notable as it primarily stemmed from claims submitted to private health care payers. 

The Chavez sentence resulted from Chavez’ guilty plea to one count of conspiracy and three counts of mail fraud in connection with billings made at the Chavez Medical Group.

The charges brought in April, 2011 stem from improper billing at the Chavez Medical Group between 2005 and 2007.  Federal prosecutors charged that Chavez billed for services he did not perform through a process of “unbundling” medical codes used on claims he filed to increase the amount he was paid by insurance companies.  While most health care providers recognize potential exposures to health care fraud prosecution for making false claims to Medicare, Medicaid or other federal programs, many providers fail to recognize this same exposure also can result from false billings to private health plans and insurers.

Following the initiation of the investigation, Chavez voluntarily surrendered his medical license to the Texas Board of Medicine.  Filing false health care claims is one of many types of personal misconduct that justifies loss of licensure or other discipline under Texas Medical Board rules.

According to the documents filed of record in the case, Chavez was board certified in internal medicine, licensed by the Texas Board of Medicine in 1997. He started his medical practice in family medicine and in 2005, began to perform endovenous laser ablation, a procedure used to repair varicose veins in the legs.

For purposes of billing, the medical insurance industry provides certain billing codes for the laser ablation procedure, which include a group of procedures billed under one code for the entire procedure. Chavez instructed his staff to “unbundle” or separate the codes for this procedure and to bill for individual steps in the procedure, resulting in greater reimbursement and payment for each patient. Additionally, Chavez submitted claims alleging he repaired all six veins for each patient, when in fact – in most cases – he repaired fewer than six veins. By alleging he repaired all six veins, Chavez alleged he performed six procedures over a period of six days, another aspect of the fraudulent billing which he used to justify the unbundling of codes and allowed him to be reimbursed at the highest possible rate.

Federal prosecutors claimed The typical patient whose billing was submitted as “bundled” into one code resulted in payment of approximately $6000, while the patient whose billing codes were “unbundled” typically resulted in payment of approximately $14,000. Based on these figures, Federal prosecutors claim that Chavez billed insurance companies and programs, including Medicare and Medicaid, a total of $14.1 million for which he collected $3.8 million between 2005 and 2007.

The investigation of this case was conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Assistant United States Attorney Cedric L. Joubert prosecuted the case.  According to the Justice Department, the case is being investigated by the Dallas Health Care Fraud Prevention and Enforcement Action Team (HEAT) Strike Force, which includes the U.S. Department of Health and Human Services Office of Inspector General, the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion.

While health care fraud enforcement remains a lead Federal priority, health care providers in Texas and other HEAT Strike Force targeted regions face heightened exposures to HEAT task force scrutiny and prosecution. In response to these and other investigation and oversight activities, health care providers should strengthen their compliance practices and oversight and take other special care to position themselves and their billings to defend against possible challenge.

For Help With Compliance, Investigations Or Other Needs

If you need assistance providing compliance or other training, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. 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/ She also regularly designs and presents risk management, compliance and other training for health care providers, professional associations and others.   Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, 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 with these or other compliance concerns, wish to inquire about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail 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. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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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 see 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.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.