Massachusetts nurse pleads guilty in $100M fraud scheme

A Massachusetts nurse has pleaded guilty in federal court in Boston in connection with a $100 million healthcare fraud scheme, the Justice Department announced Sept. 13. 

Winnie Waruru, a licensed practical nurse, pleaded guilty Sept. 8 to conspiracy to commit healthcare fraud, healthcare fraud – aiding and abetting, conspiracy to pay and receive kickbacks, making false statements and making a false statement in a healthcare matter. 

Ms. Waruru was employed by Chelmsford, Mass.-based Arbor Homecare Service. She was charged in February 2021 alongside Faith Newton, who was part owner and operator of the home healthcare company from 2013 to 2017. Ms. Newton has pleaded not guilty, according to the Justice Department. 

Prosecutors allege that the duo used Arbor to defraud MassHealth and Medicare of at least $100 million by committing fraud and paying kickbacks to get referrals. Specifically, prosecutors allege that Arbor billed payers for home health services that were never provided or weren’t medically necessary. Arbor billed MassHealth for Waruru’s skilled nursing visits, many of which she did not perform, according to the Justice Department. 

Ms. Waruru is slated to be sentenced in January.

Healthcare CEO, physicians sentenced to prison for $27M fraud

Thirteen people involved in a $27 million healthcare fraud scheme have been sentenced to a combined 84 years in federal prison, the Justice Department announced Aug. 31. 

The defendants allegedly participated in a fraud scheme that involved Novus Health Services, a Dallas-based hospice agency. The defendants allegedly defrauded Medicare by submitting false claims for hospice services, providing kickbacks for referrals and violating HIPAA to recruit beneficiaries. Novus employees also dispensed controlled substances to patients without the guidance of medical professionals, according to the Justice Department. 

Novus CEO Bradley Harris admitted to the fraud and testified against two physicians who elected to go to trial. Mr. Harris pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of healthcare fraud and aiding and abetting. He was sentenced to 159 months in federal prison in January. 

The 12 others convicted in the scheme include three physicians, four nurses and several executives. 

Read more here

Ex-Theranos president Sunny Balwani found guilty of fraud

Sunny Balwani, the former president and chief operating officer of bankrupt blood-testing company Theranos, on Thursday was found guilty of 12 counts of conspiracy and fraud against certain investors and patients.

  • It’s a similar verdict to one handed down in January to Theranos founder and ex-CEO Elizabeth Holmes, who once dated Balwani.

Why it matters: Balwani isn’t a household name like Holmes, but he was instrumental in building a billion-dollar house of cards that duped both investors and patients.

Courtroom drama: Balwani’s attorneys tried to pin the blame for Theranos’ failures on Holmes, much as her attorneys had tried to blame Balwani.

  • As we wrote when the trial began: Holmes tried to thread an incredibly narrow rhetorical needle, denying the existence of fraud while also redirecting blame. Balwani seems to be attempting something similar; claiming he was a savvy executive with lots of past success, but also a naif who was bamboozled by Holmes.
  • But prosecutors, who originally wanted to try the pair together, often used Balwani’s own words against him. For example, they presented a text message from Balwani to Holmes that read: “I am responsible for everything at Theranos.”
  • One big difference between the trials, however, was that Balwani didn’t testify in his own defense.

Details: Balwani was convicted on all 12 counts brought against him, after nearly five days of jury deliberations. This includes a wire fraud charge related to a $100 million investment in Theranos from the family of former U.S. Education Sec. Betsy DeVos.

  • Holmes had been convicted on four of seven counts, each one related to investors and carrying a maximum sentence of 20 years in prison.

Look ahead: Expect Balwani to appeal the verdict, as has Holmes already has done.

Former hospital executive convicted in $1.4B billing scheme

The former leader of a rural hospital chain has been convicted for his role in an elaborate pass-through billing scheme, the Justice Department announced June 27. 

After a 24-day trial, Jorge Perez, 62, of Miami, was convicted of conspiracy to commit healthcare fraud and wire fraud, healthcare fraud and conspiracy to commit money laundering of proceeds greater than $10,000.

Prosecutors said Mr. Perez conspired with others to bill for $1.4 billion of medically unnecessary laboratory testing services. He used rural hospitals as billing shells to submit claims for services that were mostly performed at outside laboratories. 

The evidence presented at trial showed that Mr. Perez and other defendants targeted and obtained control of financially distressed rural hospitals through management agreements and purchases. They targeted rural hospitals because they often get higher reimbursement rates for laboratory testing from private insurers, according to the Justice Department. 

The defendants promised to save the rural hospitals from closure by turning them into laboratory testing sites, but instead billed for fraudulent laboratory testing. Through the scheme, Mr. Perez and others made it appear the laboratory testing was performed at the rural hospitals when, in most cases, it was done by outside testing laboratories owned by defendants, prosecutors said. 

“After private insurance companies began to question the defendants’ billings, they would move on to another rural hospital, leaving the rural hospitals they took over in the same or worse financial status as before,” the Justice Department said. At least three of the hospitals were forced to close. 

Ricardo Perez, 59, of Miami, was also convicted of conspiracy to commit healthcare fraud and wire fraud, healthcare fraud and conspiracy to commit money laundering of proceeds greater than $10,000 on June 27. He is Jorge Perez’s brother, according to Kaiser Health News

Florida physician convicted of $110M fraud

Report from the Department of Justice Fraud & Abuse Control for 2017 sheds  light upon the importance of compliance - The Coding Network

A Florida physician was convicted Feb. 10 for his role in a healthcare fraud scheme that involved billing health insurance companies for $110 million in medically unnecessary services, according to the Justice Department

Mark Agresti, MD, of Palm Beach, Fla., unlawfully billed insurers for $110 million of drug testing services that were medically unnecessary. The patients who received the unnecessary drug tests were residents of Good Decisions Sober Living in West Palm Beach. Dr. Agresti was the medical director of the facility, according to the Justice Department. 

“Patients at GDSL were required to submit to excessive, medically unnecessary urine drug tests as a condition of residency approximately three or four times per week,” the Justice Department said. “These [urinalysis] drug tests cost as much as $6,000 to $9,000 per test.”

According to evidence presented at trial, Dr. Agresti also had Good Decisions Sober Living patients sent to his own medical practice to fraudulently bill for services. 

Dr. Agresti was convicted of 11 counts of healthcare fraud and one count each of conspiracy to commit healthcare fraud and wire fraud. He is scheduled to be sentenced April 21. 

Ohio AG Yost files suit against Centene, launching latest salvo in his war on PBMs

Ohio Attorney General Dave Yost has filed suit against Centene and several of its subsidiaries, alleging that they schemed to misrepresent pharmacy costs and gain overpayments from the state’s Medicaid program.

According to the lawsuit, Centene subsidiary Buckeye Health Plan used sister companies Envolve Health Solutions and Health Net Pharmacy Solutions to administer its pharmacy benefit. Yost’s office said it began to investigate their business practices as the arrangement “raised questions.”

In a statement, Yost’s office said the investigation, which was conducted by outside counsel, found that the companies filed reimbursement requests for amounts that had already been paid by third parties, and failed to accurately represent costs to the Ohio Department of Medicaid.

In addition, the scheme led to artificially inflated dispensing fees, the AG’s office said.

Corporate greed has led Centene and its wholly-owned subsidiaries to fleece taxpayers out of millions. This conspiracy to obtain Medicaid payments through deceptive means stops now,” Yost said in a statement. “My office has worked tirelessly to untangle this complex scheme, and we are confident that Centene and its affiliates have materially breached their obligations both to the Department of Medicaid and the state of Ohio.”

Yost has openly declared war on PBMs and has made investigating their business practices a critical initiative within his office. In March 2019, the AG filed suit against Optum, seeking to reclaim $16 million in what he says are drug overcharges.

The AG filed a similar suit against Express Scripts in July 2020.

In a statement, Centene called the claims in the lawsuit “unfounded” and said it will “aggressively defend” against the allegations.

“Envolve’s pharmacy contracts with the State are reviewed and pre-approved by state agencies before they ever go into effect. Furthermore, these services saved millions of tax-payer dollars for Ohioans from market-based pharmaceutical pricing,” Centene said.

“We look forward to answering any of the Attorney General’s questions. Our company is committed to the highest levels of quality and transparency,” the insurer said.

Michigan healthcare CEO gets 15 years in prison for $150M fraud

IIG trade finance fund caught in alleged Ponzi scheme | Global Trade Review  (GTR)

The CEO of a chain of medical clinics in Michigan and Ohio was sentenced March 3 to 15 years in prison and ordered to pay $51 million in restitution for his role in a $150 million healthcare fraud scheme, according to the U.S. Justice Department

Mashiyat Rashid was sentenced after pleading guilty in 2018 to money laundering and conspiracy to commit healthcare fraud and wire fraud. Twenty other defendants, including 12 physicians, have been convicted for their involvement in the scheme. 

Mr. Rashid, who served as CEO of Tri-County Wellness Group from 2008 to 2016, developed and approved a corporate policy to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids, according to the Justice Department. 

Many patients experienced pain from the unnecessary injections, and some developed adverse conditions, including open holes in their backs, according to testimony at Mr. Rashid’s trial. Physicians at the clinics denied patients, including those addicted to opioids, medication until they agreed to get the injections, according to court documents. 

According to evidence presented at trial, Mr. Rashid only hired physicians who were willing to administer the unnecessary injections in exchange for a split of the Medicare reimbursements for the procedures. Tri-County Wellness Group was paid more for facet joint injections than any other medical clinic in the U.S., according to the Justice Department. 

Proceeds of the fraud were used to fund private jets and to buy luxury cars, real estate and tickets to NBA games, prosecutors said. Mr. Rashid was ordered to forfeit to the U.S. government $11.5 million in proceeds traceable to the healthcare fraud scheme, including commercial and residential real estate and Detroit Pistons season tickets. 

7 plead guilty in $931M telemedicine fraud scheme

Telemedicine owners charged in million dollars' worth fraud scheme | My  Front Page Investigative Reports

The owner of two pharmacies and a management company in Florida pleaded guilty Jan. 25 to his role in a $931 million healthcare fraud scheme. He is the seventh defendant to plead guilty in the scheme, according to the U.S. Justice Department

Larry Smith pleaded guilty to conspiracy to commit healthcare fraud, and his sentencing is set for Oct. 25. In his written plea agreement, Mr. Smith admitted to conspiring with others to defraud pharmacy benefit managers into paying for fraudulent prescriptions. As part of the plea agreement, Mr. Smith agreed to pay restitution of $24.9 million and forfeit approximately $3.1 million.

An indictment charged Mr. Smith and others with a nationwide conspiracy to defraud pharmacy benefit managers by submitting $931.4 million in bills for fraudulent prescriptions purchased from a telemarketing company. After improperly soliciting patient information, the marketing companies received approvals through telemedicine prescribers then sold the prescriptions to pharmacies in exchange for kickbacks, said Derrick Jackson, special agent in charge at HHS’ Office of Inspector General in Atlanta. 

In September 2018, HealthRight, a telemedicine company, and its CEO Scott Roix pleaded guilty to conspiracy to commit healthcare fraud for their roles in the scheme. They agreed to pay $5 million in restitution. Mr. Roix’s sentencing is scheduled for Oct. 25. 

Mihir Taneja, Arun Kapoor, Maikel Bolos and Sterling-Knight Pharmaceuticals also pleaded guilty in December 2020, according to the Justice Department. 

Beaumont victimized by medical equipment thieves, feds say

https://www.detroitnews.com/story/news/local/michigan/2021/01/14/beaumont-victimized-medical-equipment-thieves-feds-say/6655265002/

The indictment describes an inside job involving Beaumont employees who sold stolen sponges, adhesives and instruments used to inspect eyes and ears. The equipment included cystoscopes, a thin tube with a camera that is inserted through the urethra and into the bladder.

“Some of the medical devices stolen and re-sold over the Internet were possibly contaminated devices that were previously used in various surgical and other medical procedures on patients,” according to the indictment.

The three individuals charged in the indictment are:

  • Paul Purdy, 49, of Bellbrook, Ohio
  • Valdet Seferovic, 32, of Auburn Hills
  • Zafar Khan, 40, of Fenton

Purdy and Seferovic not respond to messages seeking comment Thursday while Harold Gurewitz, a lawyer for Khan, declined comment. The three defendants are scheduled to make initial appearances Jan. 21 in federal court.

“These defendants used their employment status to circumvent the safety protocols established by Beaumont Hospital to profit from the theft of medical devices and put the health and safety of the general public at risk in doing so,” U.S. Attorney Matthew Schneider said in a statement.

The wire fraud and conspiracy charges listed in the 18-count indictment are punishable by up to 20 years in federal prison.

Beaumont officials have cooperated fully with the investigation, health system spokesman Mark Geary wrote in an email to The Detroit News.

This kind of theft does a disservice to more than just Beaumont — it does a disservice to the community,” Geary wrote. “We have confidence in the legal process and trust a just result will be achieved.”

Purdy and Seferovic were friends who worked at Beaumont and had access to storage areas inside one of the system’s hospitals, prosecutors alleged. The duo gained access to medical supplies and devices, according to the government, and devised a plan to steal the equipment and sell the items throughout the U.S.

Purdy, who worked for Beaumont until resigning in 2017, never told buyers the items were stolen, prosecutors said. After he quit, Purdy recruited Seferovic to continue stealing items from the medical supply, cleaning and disinfecting rooms, according to prosecutors.

“Medical devices that are removed from their rightful place in a hospital or other medical setting put patients’ health at risk by denying them access to needed diagnostic imaging and treatment,” Lynda Burdelik, special agent in charge of the U.S. Food and Drug Administration’s Criminal Investigations field office in Chicago, said in a statement.

Purdy paid Seferovic for stolen items via PayPal and resold the devices on eBay and Amazon, according to the government. On March 28, 2018, the indictment alleges Purdy received a $4,800 wire payment from the sale of two cystoscopes.

That same day, Seferovic received a $2,550 payment via PayPal, according to the government.

In fall 2017, Seferovic also agreed to steal and sell medical devices and supplies to Khan, who owns Wholesale Medical & Surgical Suppliers of America, LLC in Flint, according to the indictment.

Seferovic would transfer stolen supplies to Khan during meetings in metro Detroit, including at a Walmart parking lot, according to the indictment. Khan, in turn, would sell the supplies and devices online at below retail price.

Seferovic’s job duties and status was unclear Thursday.

The investigation and alleged crimes have prompted internal changes at Beaumont.

“…Beaumont has enhanced security protocols and implemented additional checks and balances across the organization to reduce the chances of something like this happening again,” Geary said.

New York pharmacy owners charged in $30M COVID-19 scam

2 NYC Pharmacy Owners Charged In COVID Fraud Case | PYMNTS.com

The owners of more than a dozen pharmacies in New York City and Long Island have been arrested and charged for their roles in an alleged $30 million healthcare fraud and money laundering scheme, the Department of Justice announced Dec. 21. 

Peter Khaim and Arkadiy Khaimov are accused of submitting fraudulent claims for expensive cancer drugs by exploiting emergency codes and edits in the Medicare system that went into effect due to the COVID-19 pandemic. The drugs were allegedly never provided, ordered or authorized by a medical professional. 

Mr. Khaim and Mr. Khaimov allegedly used COVID-19 emergency override billing codes to submit fraudulent claims to Medicare for cancer medication Targretin Gel 1%. The medication has an average wholesale price of about $34,000 for each 60 gram tube, according to the Justice Department. 

Prosecutors charged Mr. Khaim and Mr. Khaimov with conspiracy to commit healthcare fraud and wire fraud, conspiracy to commit money laundering and aggravated identity theft, according to the Justice Department. Mr. Khaimov was separately charged with concealment of money laundering.