Monday, June 29, 2009


June 28, 2009 by Robert David Malove

MIAMI, FL (June 26) - Gladys Zambrana, Javier Zambrana, Enrique Perez, Alejandro Hernandez Quiros aka Alex Hernandez, Vanessa Estrada, Vicenta Tellechea, Modesto Hidalgo and Carlos Castaneda were indicted in connection with an alleged $22 million Medicare fraud scheme operated out of Miami businesses purporting to specialize in home health care services.

Gladys Zambrana was also charged with four counts of health care fraud. Gladys Zambrana and Hernandez Quiros were charged with three counts each of paying health care kickbacks, while Perez, Hidalgo and Tellechea were charged with one count each of paying health care kickbacks. Gladys Zambrana, Perez, Alejandro Quiros, Tellechea and Castaneda were also charged with conspiracy to launder health care fraud proceeds.

According to the indictment, Gladys Zambrana, Perez and Hernandez Quiros operated ABC Home Health Care Inc. (ABC), listing Javier Zambrana as the owner; and Gladys Zambrana and Castaneda operated Florida Home Health Care Providers Inc. (Florida Home Health), listing Tellechea as the owner. Both ABC and Florida Home Health purported to be home health agencies that catered to Medicare beneficiaries. The indictment alleges that at both agencies, beneficiaries were recruited and paid kickbacks and bribes to arrange for their Medicare beneficiary numbers to be used by their co-conspirators to file claims with Medicare for purported home health care services. The indictment alleges that the services were not provided and were not medically necessary.

The indictment alleges that in addition to exerting ownership and control of the home health agencies, Hernandez Quiros and Castaneda acted as Medicare beneficiary recruiters for ABC and Florida Home Health, respectively; and Hidalgo, a medical assistant, falsified medical tests and records to make it appear that the services were needed. The indictment alleges that ABC billed more than $17 million to the Medicare program for services provided from January 2006 through December 2008 that were medically unnecessary and were not actually provided. During that time frame, Medicare paid more than $11 million on those fraudulent claims submitted by ABC. The indictment also alleges that from October 2007 through March 2009, Florida Home Health billed more than $5 million to the Medicare program for services that were medically unnecessary and not actually provided. During that time frame, Medicare paid more than $4 million on those fraudulent claims submitted by Florida Home Health.

The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. Each charged count of health care fraud carries a maximum prison sentence of 10 years and each count of paying health care kickbacks carries a maximum prison sentence of five years. Conspiracy to launder health care fraud proceeds carries a maximum prison sentence of 10 years per count.

In conjunction with the criminal case, on June 24, 2009, the U.S. Attorney’s Office also filed a civil complaint for injunctive relief under the fraud injunction statute and obtained a temporary restraining order freezing the assets of ABC, Florida Home Health, Gladys Zambrana, Javier Zambrana, Perez, Hernandez Quiros, Castaneda and Tellechea. In addition, that temporary restraining order also freezes certain financial assets of four other companies the defendants owned or controlled and allegedly used to launder money fraudulently obtained from Medicare. The temporary restraining order is intended to preserve the remaining proceeds of the fraud for recovery by the United States as part of the criminal case and any related civil proceedings.

According to Acting U.S. Attorney Jeffrey H. Sloman, the “[c]oordinated criminal and civil action delivers an effective one-two punch to health care fraudsters: they were not only caught and criminally charged, but they are also being stripped of their illegal proceeds.”

Posted by Robert David Malove | Permalink | Email This Post

Posted In: Home Health Care Fraud

Friday, June 19, 2009

Fraud ran for seven years

Published: June 18, 2009

Four years ago, Richard M. Scrushy, the former chief executive of HealthSouth, walked out of a federal courthouse in Alabama and thanked God that he had been acquitted of criminal charges that he defrauded the company. But on Thursday, a state judge still found Mr. Scrushy responsible for the fraud and ordered him to pay $2.9 billion to the company’s shareholders.

In his decision, the judge, Allwin E. Horn, declared that Mr. Scrushy knew about and took part in concocting false financial statements that inflated HealthSouth’s earnings to meet Wall Street’s expectations and to buoy the stock.

The fraud ran for seven years, totaled $2.7 billion and was “remarkable and perhaps unique” in its size and scope, the judge wrote.

“Scrushy was the C.E.O. of the fraud,” Judge Horn wrote.

The ruling was a coda on an era of scandals at companies like Enron, WorldCom, Tyco International and ImClone.

“This is the last chapter in the great epic drama of major corporate scandals that we saw in the last 10 years,” said Robert J. Mintz, a former federal prosecutor who followed Mr. Scrushy’s criminal trial. “It in some ways closes the book on the wave of unprecedented corporate fraud we saw. This one has dragged out even longer than Enron.”

For prosecutors who failed to win a conviction of Mr. Scrushy and shareholders whose HealthSouth shares crumbled after the fraud was unmasked, the judge’s decision offered a belated, if anticlimactic, vindication.

“He was the orchestrator of this fraud,” said Alice H. Martin, the United States attorney who unsuccessfully prosecuted Mr. Scrushy on 36 criminal counts. Ms. Martin is retiring on Friday. “That’s what I’m calling my retirement gift.”

While Mr. Scrushy’s criminal trial in 2005 was a five-month drama that fascinated many in Alabama and drew throngs of reporters to the courtroom, this civil trial was a quieter proceeding. It lasted two weeks and was decided by a judge, and Mr. Scrushy was often not even present.

Mr. Scrushy had already been sentenced to nearly seven years in prison for bribing a former governor of Alabama, and he spent much of the civil trial in a holding cell away from the courtroom, lawyers said. He appeared in court only to testify in his own defense.

Lawyers said the judgment was the first time that Mr. Scrushy had been found liable in any courtroom for his actions at HealthSouth, which operates dozens of rehabilitation clinics and hospitals across the country. He has already been ordered to pay fines and to repay millions of dollars in bonuses. Several other executives of HealthSouth have been convicted in the case.

Mr. Scrushy has maintained his innocence and has said he knew nothing about the fraud. His lawyers did not return calls for comment on Thursday, but other lawyers connected to the case said they expected Mr. Scrushy to appeal. He is appealing his criminal conviction in the bribery case.

Lawyers for HealthSouth and shareholders said they were poised to go after Mr. Scrushy’s assets, but it is doubtful they will ever squeeze anything close to $2.9 billion from him. Mr. Scrushy has sold his shares of HealthSouth — which closed at $13.02 on Thursday — and was estimated to have $275 million in assets in 2005, said John Haley, a lawyer for shareholders.

“The only thing that remains now is collecting on it,” said Donald Q. Cochran, a law professor at Samford University in Birmingham, Ala.