The CEO of a group of Texas-based hospice and home health companies was sentenced Feb. 3 to 15 years in prison for his role in a $150 million healthcare fraud and money laundering scheme, according to the Department of Justice.
Henry McInnis was sentenced more than a year after he was convicted of conspiracy to commit healthcare fraud, conspiracy to commit money laundering, obstruction of justice and healthcare fraud.
From 2009 to 2018, Mr. McInnis and others submitted more than $150 million in false and fraudulent claims for healthcare services. The claims were submitted through Merida Group, a hospice company with dozens of locations in Texas.
Mr. McInnis was CEO of Merida. He had no medical training but acted as the director of nursing for the company. He also enforced a companywide practice of falsifying medical records to conceal the scheme and ordered employees to change medical records to make it appear patients were terminally ill.
Mr. McInnis also paid bribes to physicians to certify unqualified patients for home health and hospice.
Mr. McInnis was sentenced less than two months after the owner of Merida Group, Rodney Mesquias, was sentenced to 20 years in prison and ordered to pay $120 million in restitution.
At the last minute, President Donald Trump granted pardons to several individuals convicted in huge Medicare swindles that prosecutors alleged often harmed or endangered elderly and infirm patients while fleecing taxpayers.
“These aren’t just technical financial crimes. These were major, major crimes,” said Louis Saccoccio, chief executive officer of the National Health Care Anti-Fraud Association, an advocacy group.
The list of some 200 Trump pardons or commutations, most issued as he vacated the White House this week, included at least seven doctors or health care entrepreneurs who ran discredited health care enterprises, from nursing homes to pain clinics. One is a former doctor and California hospital owner embroiled in a massive workers’ compensation kickback scheme that prosecutors alleged prompted more than 14,000 dubious spinal surgeries. Another was in prison after prosecutors accused him of ripping off more than $1 billion from Medicare and Medicaid through nursing homes and other senior care facilities, among the largest frauds in U.S. history.
“All of us are shaking our heads with these insurance fraud criminals just walking free,” said Matthew Smith, executive director of the Coalition Against Insurance Fraud. The White House argued all deserved a second chance. One man was said to have devoted himself to prayer, while another planned to resume charity work or other community service. Others won clemency at the request of prominent Republican ex-attorneys general or others who argued their crimes were victimless or said critical errors by prosecutors had led to improper convictions.
Trump commuted the sentence of former nursing home magnate Philip Esformes in late December. He was serving a 20-year sentence for bilking $1 billion from Medicare and Medicaid. An FBI agent called him “a man driven by almost unbounded greed.” Prosecutors said that Esformes used proceeds from his crimes to make a series of “extravagant purchases, including luxury automobiles and a $360,000 watch.”
Esformes also bribed the basketball coach at the University of Pennsylvania “in exchange for his assistance in gaining admission for his son into the university,” according to prosecutors.
Fraud investigators had cheered the conviction. In 2019, the National Health Care Anti-Fraud Association gave its annual award to the team responsible for making the case. Saccoccio said that such cases are complex and that investigators sometimes spend years and put their “heart and soul” into them. “They get a conviction and then they see this happen. It has to be somewhat demoralizing.”
Tim McCormack, a Maine lawyer who represented a whistleblower in a 2007 kickback case involving Esformes, said these cases “are not just about stealing money.”
“This is about betraying their duty to their patients. This is about using their vulnerable, sick and trusting patients as an ATM to line their already rich pockets,” he said. He added: “These pardons send the message that if you are rich and connected and powerful enough, then you are above the law.”
The Trump White House saw things much differently.
“While in prison, Mr. Esformes, who is 52, has been devoted to prayer and repentance and is in declining health,” the White House pardon statement said.
The White House said the action was backed by former Attorneys General Edwin Meese and Michael Mukasey, while Ken Starr, one of Trump’s lawyers in his first impeachment trial, filed briefs in support of his appeal claiming prosecutorial misconduct related to violating attorney-client privilege.
Trump also commuted the sentence of Salomon Melgen, a Florida eye doctor who had served four years in federal prison for fraud. That case also ensnared U.S. Sen. Robert Menendez (D-N.J.), who was acquitted in the case and helped seek the action for his friend, according to the White House.
Prosecutors had accused Melgen of endangering patients with needless injections to treat macular degeneration and other unnecessary medical care, describing his actions as “truly horrific” and “barbaric and inhumane,” according to a court filing.
Melgen “not only defrauded the Medicare program of tens of millions of dollars, but he abused his patients — who were elderly, infirm, and often disabled — in the process,” prosecutors wrote.
These treatments “involved sticking needles in their eyes, burning their retinas with a laser, and injecting dyes into their bloodstream.”
Prosecutors said the scheme raked in “a staggering amount of money.” Between 2008 and 2013, Medicare paid the solo practitioner about $100 million. He took in an additional $10 million from Medicaid, the government health care program for low-income people, $62 million from private insurance, and approximately $3 million in patients’ payments, prosecutors said.
In commuting Melgen’s sentence, Trump cited support from Menendez and U.S. Rep. Mario Diaz-Balart (R-Fla.). “Numerous patients and friends testify to his generosity in treating all patients, especially those unable to pay or unable to afford healthcare insurance,” the statement said.
In a statement, Melgen, 66, thanked Trump and said his decision ended “a serious miscarriage of justice.”
“Throughout this ordeal, I have come to realize the very deep flaws in our justice system and how people are at the complete mercy of prosecutors and judges. As of today, I am committed to fighting for unjustly incarcerated people,” Melgen said. He denied harming any patients.
Faustino Bernadett, a former California anesthesiologist and hospital owner, received a full pardon. He had been sentenced to 15 months in prison in connection with a scheme that paid kickbacks to doctors for admitting patients to Pacific Hospital of Long Beach for spinal surgery and other treatments.
“As a physician himself, defendant knew that exchanging thousands of dollars in kickbacks in return for spinal surgery services was illegal and unethical,” prosecutors wrote.
Many of the spinal surgery patients “were injured workers covered by workers’ compensation insurance. Those patient-victims were often blue-collar workers who were especially vulnerable as a result of their injuries,” according to prosecutors.
The White House said the conviction “was the only major blemish” on the doctor’s record. While Bernadett failed to report the kickback scheme, “he was not part of the underlying scheme itself,” according to the White House.
The White House also said Bernadett was involved in numerous charitable activities, including “helping protect his community from COVID-19.” “President Trump determined that it is in the interests of justice and Dr. Bernadett’s community that he may continue his volunteer and charitable work,” the White House statement read.
Others who received pardons or commutations included Sholam Weiss, who was said to have been issued the longest sentence ever for a white collar crime — 835 years.“Mr. Weiss was convicted of racketeering, wire fraud, money laundering, and obstruction of justice, for which he has already served over 18 years and paid substantial restitution. He is 66 years old and suffers from chronic health conditions,” according to the White House.
John Davis, the former CEO of Comprehensive Pain Specialists, the Tennessee-based chain of pain management clinics, had spent four months in prison. Federal prosecutors charged Davis with accepting more than $750,000 in illegal bribes and kickbacks in a scheme that billed Medicare $4.6 million for durable medical equipment.
Trump’s pardon statement cited support from country singer Luke Bryan, said to be a friend of Davis’.
“Notably, no one suffered financially as a result of his crime and he has no other criminal record,” the White House statement reads.
“Prior to his conviction, Mr. Davis was well known in his community as an active supporter of local charities. He is described as hardworking and deeply committed to his family and country. Mr. Davis and his wife have been married for 15 years, and he is the father of three young children.”
CPS was the subject of a November 2017 investigation by KHN that scrutinized its Medicare billings for urine drug testing. Medicare paid the company at least $11 million for urine screenings and related tests in 2014, when five of CPS’ medical professionals stood among the nation’s top such Medicare billers.
A Florida healthcare executive is appealing $43 million in financial penalties after President Donald Trump commuted his 20-year prison sentence in December, according to law.com.
Philip Esformes, who operated a chain of skilled nursing facilities and assisted living facilities in Florida, was sentenced Sep. 12 to 20 years in prison. The sentencing came roughly five months after a 12-person jury found him guilty of more than 20 charges, including paying and receiving kickbacks, money laundering and bribery. He was convicted after an eight-week trial for his role in a $1.3 billion Medicare and Medicaid fraud case.
President Trump in late December commuted Mr. Esformes’ prison sentence. The communication left other aspects of his sentence intact, including restitution.
Mr. Esformes still must forfeit $38 million and owes about $5 million in restitution, according to McKnight’s Senior Living. In the appeal of the financial penalties, lawyers cite the federal government’s “inability to show a single instance of fraudulent billing,” according to the report.
President Donald Trump commuted a 20-year sentence for a Florida healthcare executive who was convicted for his role in a $1.3 billion Medicare fraud case. It was the largest healthcare fraud scheme ever charged by the U.S. Justice Department.
In April 2019, Philip Esformes, who operated a network of more than 30 skilled nursing homes and assisted living facilities in Florida, was found guilty of 20 charges, including paying and receiving kickbacks, money laundering and bribery, according to the Department of Justice. He was sentenced to 20 years in prison and ordered to pay $44.2 million in forfeiture and restitution. The commutation doesn’t overturn the restitution order.
Mr. Esformes was among several people President Trump granted a full pardon or commutation of all or some of their sentences. In a Dec. 22 news release, the White House said Mr. Esformes is in declining health.
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.
Federal agencies have charged 345 people across the country, including more than 100 providers and four telehealth executives, with submitting more than $6 billion in fraudulent claims to payers. Of that, $4.5 billion was connected to telemedicine schemes and about $800 million each to substance abuse treatment and illegal opioid distribution.
More than 250 medical professionals had their federal healthcare billing privileges revoked for being involved in the scams, according to a statement released Wednesday.
The U.S. Department of Justice also said it is creating a new rapid response strike force to investigate fraud cases involving major providers that operate in multiple jurisdictions.
Telehealth fraud has increased significantly since 2016, the HHS Office of Inspector General said. As providers have quickly pivoted many services to virtual care during the COVID-19 pandemic, attempts at fraud will likely follow.
One of the cases outlined Wednesday included false claims for COVID-19 testing while another involved a COVID-19 related scheme to defraud insurers out of more than $4 million.
The telehealth fraud allegedly involved a marketing network that lured hundreds of thousands of people into a criminal scheme with phone calls, direct mail, TV ads and online pop-up ads. Telemedicine executives then paid doctors to order unneeded medical equipment, testing or drugs with either no patient interaction or only a brief call.
Those were either not given to the patients or were worthless to them. The proceeds were then laundered through international shell corporations and banks.
The scheme is similar to one DOJ prosecuted in April 2019involving fraudulent telehealth companies that pushed unneeded braces on Medicare beneficiaries in exchange for kickbacks from durable medical equipment companies.
The massive bust included the work of 175 HHS OIG agents and analysts and targeted myriad fraud operations across the U.S. and its territories.
One of the larger scams involved 29 defendants in the Middle District of Florida. A telemedicine company and medical professionals working for it billed Medicare for medical equipment for patients they never spoke to.
In New Jersey, laboratory owners paid marketers to get DNA samples at places like senior health fairs. Doctors on telemedicine platforms then ordered medically unnecessary and not reimbursable genetic testing.
An indictment unsealed July 10 charges Vasso Godiali, MD, with orchestrating a $60 million healthcare fraud scheme and laundering proceeds from the scheme, according to the Department of Justice.
Dr. Godiali, a vascular surgeon, allegedly submitted false claims to Medicaid, Medicare and Blue Cross of Michigan for services that weren’t provided and exploited Modifier 59 to improperly unbundle claims. Dr. Godiali allegedly claimed he was performing several separate procedures when he was only entitled to a single reimbursement for a single procedure, according to the Justice Department.
The indictment further alleges Dr. Godiali used six corporations to launder roughly $49 million in proceeds from the healthcare fraud scheme, according to the Justice Department.
Dr. Godiali faces a maximum sentence of 10 years in prison for the healthcare fraud charge and a maximum sentence of 20 years in prison for money laundering, according to the Justice Department.