FBI Raids Hospitals, Arrests CEO
Previous posts on Health Care Renewal have featured a rogues gallery of disgraced leaders of health care organizations. For example, we recently discussed a former hospital CEO who concealed that he had served time in the US Navy's brig. The Los Angeles Times just reported a story that suggests a new low in hospital leadership,
FBI agents served search warrants this morning on three hospitals as part of an investigation into alleged Medicare fraud involving homeless patients who were recruited from skid row.
Dr. Rudra Sabaratnam, an owner and the chief executive of City of Angels Medical Center, and Estill Mitts, an alleged patient recruiter, were indicted by a federal grand jury last week on 21 counts of healthcare fraud, money laundering and income tax evasion.
The men were arrested this morning as part of the federal government's criminal investigation, according to FBI spokeswoman Laura Eimiller.
''It's a scheme that ranged from street operatives to the CEO of a hospital,' said U.S. Atty. Thomas P. O'Brien, adding that he expects several more arrests in coming weeks.
At the same time, Los Angeles City Atty. Rocky Delgadillo announced civil litigation against the three hospitals and their operators in what officials said was a 'scheme to defraud the Medi-Cal and Medicare programs out of millions of dollars.'
Beginning at 8 a.m., agents working with the federal Department of Health and Human Services, the Internal Revenue Service and the California Department of Justice raided City of Angels Medical Center, Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center.
The raids cap what law enforcement sources told The Times was a nearly two-year investigation of alleged medical fraud on skid row.
The city attorney's office alleged that the hospitals tried to fill empty beds in a bid to boost their finances.
The hospitals allegedly were aided by a patient recruiting operation on skid row that plucked homeless people from the streets and delivered them with fake medical conditions to the hospitals.
Metropolitan Medical Center in 2006 was accused by the Los Angeles Police Department of using ambulances to 'dump' five patients in one day onto the streets of the downtown skid row area against their will after their discharge from the hospital. At the time, officials at the hospital strongly denied any wrongdoing.
But the city attorney now alleges that those patients had been recruited 'by runners' who directed them to an assessment center on 7th Street, where their Medicare and Medi-Cal benefits eligibility was checked and a 'fabricated description of conditions' was prepared by non-doctors so they could be eligible for treatment. All five of the patients were admitted to Metropolitan Medical Center.
Each of the patients received $20 to $30 when they returned to the assessment center after spending one to three days in the hospital, according to the suit.
'Within the past four years, hundreds, if not thousands of other homeless persons in skid row have been recruited, hospitalized, treated and discharged in a manner substantially similar . . . as part of a long-running scheme to bilk the Medicare and Medi-Cal programs out of millions of dollars by causing unnecessary hospitalization for paid recruits,' the lawsuit alleges.
The list of the accused is striking.
Among those named in the suit are Pacific Health Care Corp.; Los Angeles Metropolitan Medical Center, its Chief Executive John Fenton and admitting physician Frederick Rundall; Tustin Hospital and Medical Center, its Chief Executive Daniel Davis, Chief Financial Officer Vincent Rubio and admitting physicians Kenneth Thaler and Al-Reza Tajik; and City of Angels Medical Center and its owner-operators Robert Borseau and Sabaratnam. Mitts, the owner and manager of Metropolitan Healthcare LLC and the president of the 7th Street Christian Day Center, which was until recently located on skid row, is also named in the suit.
City attorneys allege that the Tustin hospital was guaranteed 40 to 50 patients a month while City of Angels got 25 to 30 patients month. Metropolitan Medical Center received patients whenever beds were available, according to the suit. City attorneys allege the admitting Drs. Rundall, Thaler and Tajik did not see their patients until shortly before their discharge. City attorneys allege that for patient referrals, Mitts' group was paid $20,000 per month each from Metropolitan Medical Center and Tustin, while City of Angels paid between $400 to $1,000 a week to the recruiting group.
The suit also alleges that the Tustin hospital's chief financial officer personally received a $3,500-a-month kickback from Mitts' group to ensure that Tustin continued to take homeless patients from the skid row center.
The Associated Press (here, via the San Diego Union-Tribune) reported that two people, including one hospital CEO, were arrested during the raids.
FBI agents arrested Rudra Sabaratnam, 64, chief executive officer of City of Angels hospital, and Estill Mitts, 64, who operated the 7th Street Assessment Center, where people are screened for health needs, the U.S. attorney's office said in a statement.A federal jury last week indicted both men. The 21-count indictment, which was unsealed Wednesday, charged them with conspiring to receive and take kickbacks for patient referrals and to commit health care fraud.
Sabaratnam also was charged with paying kickbacks while Mitts also was charged with money laundering and tax evasion.
If convicted, Sabaratnam could face 50 years in federal prison, and Mitts could face 140 years, authorities said.
We have often discussed how health care has come to be dominated more and more by ever larger organizations. Thus, the leadership of these organizations has increasing influence over health care, and hence on people's health and safety. Yet on this blog we have documented more and ever sleazier examples of ill-informed, incompetent, self-interested, and even corrupt leadership of health care organizations.
The story above is of allegations, indictments, and lawsuits. But if half of the allegations in it are true, it would represent a new low for hospital leadership.
Thus, I raise again a proposal for licensure of leaders of all organizations that affect health care, starting with hospitals, academic medical centers, and hospital systems; but also including managed care organizations and health care insurers; drug, biotechnology, and device companies; health information technology companies; etc, etc, etc. Such licensure could assure that leaders have some minimum level of knowledge about and exposure to health care; and that they must conform to some ethical standards. Licensure could be subject to removal under due process. Clearly, licensing health care organizational leaders would not solve all or most of health care's problems. But it would at least assure some minimum standard of leadership.
http://hcrenewal.blogspot.com/2008/08/fbi-raids-hospitals-arrests-ceo.html
Thursday, August 7, 2008
Wednesday, August 6, 2008
HMO's are currently embracing "pay for performance"
Quality of Care
August 5th, 2008
by Nick Jacobs
When the word quality was discussed back in the 80's, you often heard of the Baldridge Award or TQM, total quality management, as the programs that would take your organization to new heights. Today, more often than not, we hear about the Toyota Model of management or a more dated Six Sigma, 99.999999% approach to perfection. Recently, though, the government has taken over the quality quest in health care to push this industry to achieve levels of perfection.
U.S. medicine is about to launch into a new world order that will functionally save the government money, but will it produce quality? Of course, when it comes to life and death issues, there is no question that we must strive toward perfection, but when it just comes to human beings attempting to function in this very competitive environment, the game change causes casualties for both the providers and the patients.
The Government is taking a three-pronged approach to improve quality in health care:
1. They are pushing quality through public reporting. 2. Enforcing quality through the False Claims Act. 3. Incentivizing quality through payment reform.
Senator Chuck Grassley is quoted as saying, "Today, Medicare rewards poor quality care. That is just plain wrong, and we need to address this problem." HMO's are currently embracing "pay for performance" plans for physicians and hospitals. Medicare is introducing value based purchase plans and is proposing the linking of quality outcomes to physician payments.
As I have written before, hospitals will no longer be paid for hospital acquired conditions. That seems like a rather simple fix, but to appropriately determine if the condition was not acquired at the hospital, extensive testing must be added pre-admission at considerable costs to the hospitals. These additional unrecompensed costs be balanced by having fewer employees per patient, less updated equipment, and less flexibility to use more expensive drugs, but it will determine if your infection was present upon admission.
James G. Sheehan, Medicaid Inspector General of New York said, "We are reviewing assorted sources of quality information on your facility to see what it says and if it is consistent. You should be doing the same."
The spoken goal is to work toward perfection, but the underlying goals are also directed toward the financial implications. The public reporting of quality of care is intended to: correct inappropriate behavior; identify over payments, or deny payments altogether.
The False Claims Act, on the other hand has more draconian goals. When asked how he viewed the False Claims Act, Kirk Ogrosky, Deputy Chief for Health Care Fraud said, "You will see more and more physicians going to jail." Just what we need when there aren't enough docs to go around now.
Will these changes improve health care delivery? For the patients who can find the few docs and hospitals that will be left, there may be some improvement, but my personal opinion is that it will break the back of an already broken system and force more small and mid-sized hospitals out of business.
I recently had a conversation with a young medical computer specialist who took care of physician practices. He said, "Doctors and hospitals haven't figured it out yet, but they are simply becoming data entry centers for 'Big Brother' as the facts and figures are accumulated to be used against them in any manner that the payers may decide."
Maybe this is all too complicated to get our arms around, but if there are 78 M Baby Boomers and the Medicare Trust Fund is heading toward bankruptcy, then we probably will see every rule in the book being applied to keep from paying hospitals and doctors. There will simply not be enough money to go around.
Is that quality? Will these initiatives improve health care?
Prevention, wellness, optimal healing environments, and systems approaches to health and wellness will improve healthcare. Improvement will not come from the new rules that are unfolding. They may save some money, but how many lives?
August 5th, 2008
by Nick Jacobs
When the word quality was discussed back in the 80's, you often heard of the Baldridge Award or TQM, total quality management, as the programs that would take your organization to new heights. Today, more often than not, we hear about the Toyota Model of management or a more dated Six Sigma, 99.999999% approach to perfection. Recently, though, the government has taken over the quality quest in health care to push this industry to achieve levels of perfection.
U.S. medicine is about to launch into a new world order that will functionally save the government money, but will it produce quality? Of course, when it comes to life and death issues, there is no question that we must strive toward perfection, but when it just comes to human beings attempting to function in this very competitive environment, the game change causes casualties for both the providers and the patients.
The Government is taking a three-pronged approach to improve quality in health care:
1. They are pushing quality through public reporting. 2. Enforcing quality through the False Claims Act. 3. Incentivizing quality through payment reform.
Senator Chuck Grassley is quoted as saying, "Today, Medicare rewards poor quality care. That is just plain wrong, and we need to address this problem." HMO's are currently embracing "pay for performance" plans for physicians and hospitals. Medicare is introducing value based purchase plans and is proposing the linking of quality outcomes to physician payments.
As I have written before, hospitals will no longer be paid for hospital acquired conditions. That seems like a rather simple fix, but to appropriately determine if the condition was not acquired at the hospital, extensive testing must be added pre-admission at considerable costs to the hospitals. These additional unrecompensed costs be balanced by having fewer employees per patient, less updated equipment, and less flexibility to use more expensive drugs, but it will determine if your infection was present upon admission.
James G. Sheehan, Medicaid Inspector General of New York said, "We are reviewing assorted sources of quality information on your facility to see what it says and if it is consistent. You should be doing the same."
The spoken goal is to work toward perfection, but the underlying goals are also directed toward the financial implications. The public reporting of quality of care is intended to: correct inappropriate behavior; identify over payments, or deny payments altogether.
The False Claims Act, on the other hand has more draconian goals. When asked how he viewed the False Claims Act, Kirk Ogrosky, Deputy Chief for Health Care Fraud said, "You will see more and more physicians going to jail." Just what we need when there aren't enough docs to go around now.
Will these changes improve health care delivery? For the patients who can find the few docs and hospitals that will be left, there may be some improvement, but my personal opinion is that it will break the back of an already broken system and force more small and mid-sized hospitals out of business.
I recently had a conversation with a young medical computer specialist who took care of physician practices. He said, "Doctors and hospitals haven't figured it out yet, but they are simply becoming data entry centers for 'Big Brother' as the facts and figures are accumulated to be used against them in any manner that the payers may decide."
Maybe this is all too complicated to get our arms around, but if there are 78 M Baby Boomers and the Medicare Trust Fund is heading toward bankruptcy, then we probably will see every rule in the book being applied to keep from paying hospitals and doctors. There will simply not be enough money to go around.
Is that quality? Will these initiatives improve health care?
Prevention, wellness, optimal healing environments, and systems approaches to health and wellness will improve healthcare. Improvement will not come from the new rules that are unfolding. They may save some money, but how many lives?
"...masters of Medicare fraud, prosecutors say"
A Rolls-Royce valued at $200,000 once belonged to Eduardo Moreno, a fugitive wanted in connection with Medicare fraud.
Gallery | Fugitives suspected of fraud
The Benitez brothers were masters of Medicare fraud, prosecutors say.
They spent their Medicare millions on Mediterranean-style homes, apartments, hotels, boats, a helicopter, even a water park — all in the resort area of Bavaro, Dominican Republic, court records show.
After they were indicted on fraud charges in late May, Carlos, Jose and Luis Benitez used their Cuban passports to travel from Miami to the Dominican Republic, then to Cuba.
The three brothers are accused of defrauding the U.S. government’s health insurance program by billing $110 million in false claims for HIV drug-infusion treatments at their dozen Miami-Dade clinics. Medicare paid their companies about $84 million in reimbursements between 2001 and 2004, according to federal authorities and court records.
The Benitezes — who came to this country in 1995 and became U.S. citizens five years later — have a lot of company. They are among 56 fugitives charged since 2004 with filing at least $272 million in phony Medicare claims before disappearing from Miami-Dade. Collectively, the fugitives absconded with at least $142 million in taxpayer funds.
Thirty-three of the 36 fugitives whose names have been released by authorities are Cuban immigrants, most of whom came to the United States during the past 15 years, according to FBI, immigration and court records obtained by The Miami Herald. Half of those fugitives have fled to Cuba, according to the FBI, which based its information on travel, customs, passports, bank and computer records.
The majority of some 700 Medicare fraud defendants charged since 2004 are immigrants who share an implicit trust when they join small criminal enterprises in South Florida to defraud the government program, according to perpetrators, prosecutors and investigators.
Timothy Delaney, assistant special agent in charge of the FBI’s office in Miami, said Medicare fraud has spread over the past decade in certain pockets of South Florida’s population of 750,000 Cuban Americans — just as it has in heavily populated immigrant communities in other major cities.
Medicare is seen as an easy mark for fraud because it is built on an honor system that pays claims quickly with scant review. Also, the odds of getting caught are low and the odds of making millions are high.
Delaney said certain segments of Cuban immigrants in Miami and Hialeah — just like Armenians in Los Angeles, West Africans in Houston and Russians in New York — trust one another to form mini-rackets.
‘’We have unscrupulous providers, willing doctors and willing practitioners,'’ said Delaney. “They don’t think they’ve committed a crime.'’
CHASING FUGITIVES
Among the known Medicare fugitives who fled to Cuba: Eduardo Moreno, who came to the United States in 1997.
Moreno, 39, used a network of offices to operate medical equipment and HIV drug-infusion scams totaling $7.2 million in false Medicare claims, according to federal court records. He bought himself a $445,000 southwest Miami-Dade home and a $200,000 Rolls-Royce Phantom.
When the FBI arrested him last year on fraud charges, he made a $250,000 bond, then skipped the country — back to Havana, according to the FBI. Agents tracked him through his travel records and his relatives.
Moreno is among at least 18 identified fugitives suspected of fleeing to Cuba — with another 18 escaping to other parts of Latin America, Europe, Canada, Florida or unknown locations, according to the FBI’s account of travel records and other information.
In addition, there are 20 unidentified fugitives whose names remain under seal until their arrests.
‘’A good number of them are Cuban and they will return to Cuba, where, as you know, there is no extradition policy and we have no way to get them back at this point,'’ said Delaney, who headed the FBI’s national healthcare fraud program before transferring to Miami in 2005.
U.S. Sen. Mel Martinez, R-Florida, a Pedro Pan Cuban exile who benefited like thousands of others from the Cuban Adjustment Act, is pushing legislation in Congress to double the criminal and civil penalties for Medicare fraud offenders. While Martinez said he didn’t think Medicare fraud was strictly a ‘’Cuban issue,'’ he also condemned the Cuban government for harboring the fugitives.
‘’My first thought is, it’s one more reason why the Cuban government is an outlaw state because it allows fugitives of justice to find refuge there,'’ Martinez said.
Cuban leaders Fidel Castro and his brother Raul Castro have rarely turned over fugitives of any kind.
Tracking down Medicare fugitives in countries such as the Dominican Republic, however, can be successful because they have extradition agreements with the United States. Federal authorities are working with the Dominican Republic to pursue the Benitez brothers and seize their extensive assets in Bavaro — including a hotel called Cabañas Singapur.
Other assets include more tourist hotels, a Robinson R44 Raven helicopter, apartment complexes, luxury homes, supermarkets and a rental car agency — registered under shell companies or straw names. Dominican officials started seizing properties and freezing their bank accounts in July in cooperation with the U.S. government, which plans to return the proceeds to Medicare.
On Friday, Justice Department prosecutors filed a proposed restraining order in federal court in Miami to ensure the Benitez brothers’ assets are not sold or transferred to other parties.
The Benitez brothers’ fugitive case has made headlines in the Dominican Republic not only because of the U.S. government’s pursuit of their ill-gotten gains. Over the Fourth of July weekend, Carlos Benitez’s daughter and son-in-law — Yanelkis Benitez Ramirez and Lenin Linares Guerrero — were kidnapped. Days later, Dominican authorities rescued the couple.
Meanwhile, FBI agents have traced the Benitez brothers to Havana, according to federal authorities.
In general, the FBI has had little luck capturing Medicare fugitives abroad in recent years. ‘’We’ve had no one returned on a healthcare fraud warrant that I’m aware of,'’ Delaney said.
The one exception: In June 2004, authorities in the Dominican turned over three Medicare fugitives — Ruben Martinez; his daughter, Adriana Ramos, and her husband, Daniel Ramos — who had fled to that country months before their indictment on fraud charges.
They were part of a Miami-Dade family racket headed by Martinez, 57, that was eventually convicted of bilking $14.5 million from Medicare by charging for bogus medical equipment orders such as hospital beds, oxygen tanks and foot arch supports in 2000-02. Federal authorities recovered $1 million from Dominican bank accounts, $900,000 from U.S. banks, real estate, jewelry and a Porsche Boxster.
‘’It was a classic case of international cooperation,'’ said former federal prosecutor Wifredo Ferrer, the lead attorney in the prosecution of Martinez and 11 others. “The three fugitives were Cuban nationals, not citizens of the Dominican Republic. The Dominican authorities deemed them persona non grata and expelled them to the United States.'’
FEDERAL JUDGES
Still, one Medicare fugitive in that case is still at large: Emilio R. Seijo, who is in Cuba, according to the FBI.
The escalating problem of Medicare fraud defendants who flee has become a sore point for federal judges in South Florida.
This spring, the chief judge of the U.S. District Court in Miami raised the issue in a memo to magistrate judges, cautioning them about flight risks. U.S. District Judge Federico Moreno also reviewed Medicare defendants’ bonds in cases before him, citing the unusual pattern of defendants fleeing after they were charged with Medicare fraud and granted bail.
In June, Moreno said in court that “it seems to me that our thinking has to change — that someone from Cuba can flee back to Cuba just like someone from Mexico.'’
Moreno questioned whether the Cuban Adjustment Act — passed by Congress in 1966 to grant asylum and residency to the first wave of Cuban political refugees — was being abused by a new generation of Medicare fraud suspects. The judge wondered aloud “whether someone can be categorized as a political refugee when you can pick up and go back.'’
Moreno raised the point after learning that a former secretary charged in an $11 million Medicare healthcare scheme fled to Cuba with her son and father.
The judge had given Carmen González a $50,000 bond. Her father, Enrique González, who co-signed it, was indicted in May on separate Medicare fraud charges in a $26.2 million HIV-drug scam at other Miami-Dade clinics.
‘’I don’t know what your client’s situation is, but money goes a lot farther in Cuba,'’ the judge told Gonzalez’s attorney, Joel DeFabio. “Dollars do. And the government’s allegation is that dollars are the result of Medicare fraud.'’
Moreno isn’t the only federal judge to be blindsided.
The case of Medicare fraud felon Gustavo Smith illustrates how easy it is for fugitives to leave the United States.
After Smith was convicted on healthcare fraud charges at trial in April, U.S. District Judge Marcia Cooke allowed him to remain free on a $300,000 bond while he awaited sentencing. Prosecutors insisted that Smith be detained. Cooke placed him on home confinement.
On June 11, Smith, who had surrendered his U.S. passport, took an American Airlines flight to Santo Domingo with his girlfriend. How? Smith used his Cuban passport under the name Gustavo Smith Wong. The FBI and Dominican authorities are tracking him down. In early July, Cooke sentenced him in absentia to 10 years and 10 months in prison.
MEDICARE OUTLAWS
One of the obvious reasons that Medicare defendants can evade prosecution is because they’re routinely allowed to post bond before trial. But most of the Medicare defendants who fled since 2004 left South Florida before federal agents could arrest them, according to the FBI and prosecutors. In some cases, suspects get nervous when a colleague is arrested and flee before they can be implicated.
A typical example: Fermin Rey, 49, who emigrated from Cuba in 1995 and was indicted last year on charges of using a series of healthcare corporations to bill Medicare for $5.2 million in bogus medical equipment claims. Rey, described by authorities as a Santeria high priest who used associates as straw owners of his illegal businesses, failed to appear in court and is believed to be in Mexico.
Why do so many Cuban immigrants become Medicare fraud perpetrators? Andy Gomez, a senior fellow at the University of Miami’s Institute for Cuban and Cuban-American Studies, has a theory.
Gomez said some immigrants came with survival instincts cultivated under the totalitarian regime of Fidel Castro. They distrusted and cheated his communist government as a way of getting around the system, but they did not shed that behavior when they came to Miami simply because they were living in a free country.
‘’They are a product of their element,'’ Gomez said. “It’s a very difficult habit to break.'’
FBI agents not only have a hard time tracking down Medicare fugitives, but also their money.
Law enforcement officials suspect that most Medicare defendants who flee — such as the Benitezes — launder their money offshore.
Prosecutor Eric Bustillo, chief of the economic crimes section at the U.S. attorney’s office in Miami, said that once Medicare money is withdrawn from local banks it’s difficult for federal authorities to follow it.
‘’It’s the opposite of drug trafficking,'’ Bustillo said. “The drug traffickers get paid in cash, so they have to find businesses and other ways to launder it. The Medicare providers must receive all of their payments in checks or wire transfers to a designated bank account. So the money can be tracked down to that bank. But they immediately cash it out. And once they do that, who knows where it goes?'’
Federal authorities and money-laundering experts know some of the Medicare fugitives’ money ends up outside the United States. Case in point: the Benitezes’ assets in the Dominican Republic.
But unless authorities can identify the laundered Medicare millions — bank accounts, real estate, cars, boats — they can’t take legal action to go after the assets.
According to money-laundering experts, it’s easy to move dirty money to certain countries.
For a pittance, Medicare violators can hire lawyers offshore to set up shell companies and assist in the opening of related bank accounts, said Brett Wolf, a U.S. money-laundering analyst with Complinet, a London-based firm that helps financial institutions meet their compliance obligations.
‘’Cash smuggling is almost certainly playing a role,'’ Wolf said. “Considering the heavily state-controlled nature of Cuba’s financial network, it’s very unlikely that these Medicare funds are being moved through the formal banking system.'’
Fugitives, based in a country such as the Bahamas or Mexico where there is regular travel to Cuba, can go back and forth to the island, carrying thousands in cash that can be exchanged for a currency called CUCs (pronounced “kooks'’).
But it would be risky business for fugitives carrying a lot of cash, say $50,000, to attempt to bribe communist government officials unless they have connections.
Still, a Medicare fugitive with hundreds of thousands or even millions of dollars stashed in offshore accounts could live like a tycoon in Cuba, where the monthly salary averages $17.
Source
Gallery | Fugitives suspected of fraud
The Benitez brothers were masters of Medicare fraud, prosecutors say.
They spent their Medicare millions on Mediterranean-style homes, apartments, hotels, boats, a helicopter, even a water park — all in the resort area of Bavaro, Dominican Republic, court records show.
After they were indicted on fraud charges in late May, Carlos, Jose and Luis Benitez used their Cuban passports to travel from Miami to the Dominican Republic, then to Cuba.
The three brothers are accused of defrauding the U.S. government’s health insurance program by billing $110 million in false claims for HIV drug-infusion treatments at their dozen Miami-Dade clinics. Medicare paid their companies about $84 million in reimbursements between 2001 and 2004, according to federal authorities and court records.
The Benitezes — who came to this country in 1995 and became U.S. citizens five years later — have a lot of company. They are among 56 fugitives charged since 2004 with filing at least $272 million in phony Medicare claims before disappearing from Miami-Dade. Collectively, the fugitives absconded with at least $142 million in taxpayer funds.
Thirty-three of the 36 fugitives whose names have been released by authorities are Cuban immigrants, most of whom came to the United States during the past 15 years, according to FBI, immigration and court records obtained by The Miami Herald. Half of those fugitives have fled to Cuba, according to the FBI, which based its information on travel, customs, passports, bank and computer records.
The majority of some 700 Medicare fraud defendants charged since 2004 are immigrants who share an implicit trust when they join small criminal enterprises in South Florida to defraud the government program, according to perpetrators, prosecutors and investigators.
Timothy Delaney, assistant special agent in charge of the FBI’s office in Miami, said Medicare fraud has spread over the past decade in certain pockets of South Florida’s population of 750,000 Cuban Americans — just as it has in heavily populated immigrant communities in other major cities.
Medicare is seen as an easy mark for fraud because it is built on an honor system that pays claims quickly with scant review. Also, the odds of getting caught are low and the odds of making millions are high.
Delaney said certain segments of Cuban immigrants in Miami and Hialeah — just like Armenians in Los Angeles, West Africans in Houston and Russians in New York — trust one another to form mini-rackets.
‘’We have unscrupulous providers, willing doctors and willing practitioners,'’ said Delaney. “They don’t think they’ve committed a crime.'’
CHASING FUGITIVES
Among the known Medicare fugitives who fled to Cuba: Eduardo Moreno, who came to the United States in 1997.
Moreno, 39, used a network of offices to operate medical equipment and HIV drug-infusion scams totaling $7.2 million in false Medicare claims, according to federal court records. He bought himself a $445,000 southwest Miami-Dade home and a $200,000 Rolls-Royce Phantom.
When the FBI arrested him last year on fraud charges, he made a $250,000 bond, then skipped the country — back to Havana, according to the FBI. Agents tracked him through his travel records and his relatives.
Moreno is among at least 18 identified fugitives suspected of fleeing to Cuba — with another 18 escaping to other parts of Latin America, Europe, Canada, Florida or unknown locations, according to the FBI’s account of travel records and other information.
In addition, there are 20 unidentified fugitives whose names remain under seal until their arrests.
‘’A good number of them are Cuban and they will return to Cuba, where, as you know, there is no extradition policy and we have no way to get them back at this point,'’ said Delaney, who headed the FBI’s national healthcare fraud program before transferring to Miami in 2005.
U.S. Sen. Mel Martinez, R-Florida, a Pedro Pan Cuban exile who benefited like thousands of others from the Cuban Adjustment Act, is pushing legislation in Congress to double the criminal and civil penalties for Medicare fraud offenders. While Martinez said he didn’t think Medicare fraud was strictly a ‘’Cuban issue,'’ he also condemned the Cuban government for harboring the fugitives.
‘’My first thought is, it’s one more reason why the Cuban government is an outlaw state because it allows fugitives of justice to find refuge there,'’ Martinez said.
Cuban leaders Fidel Castro and his brother Raul Castro have rarely turned over fugitives of any kind.
Tracking down Medicare fugitives in countries such as the Dominican Republic, however, can be successful because they have extradition agreements with the United States. Federal authorities are working with the Dominican Republic to pursue the Benitez brothers and seize their extensive assets in Bavaro — including a hotel called Cabañas Singapur.
Other assets include more tourist hotels, a Robinson R44 Raven helicopter, apartment complexes, luxury homes, supermarkets and a rental car agency — registered under shell companies or straw names. Dominican officials started seizing properties and freezing their bank accounts in July in cooperation with the U.S. government, which plans to return the proceeds to Medicare.
On Friday, Justice Department prosecutors filed a proposed restraining order in federal court in Miami to ensure the Benitez brothers’ assets are not sold or transferred to other parties.
The Benitez brothers’ fugitive case has made headlines in the Dominican Republic not only because of the U.S. government’s pursuit of their ill-gotten gains. Over the Fourth of July weekend, Carlos Benitez’s daughter and son-in-law — Yanelkis Benitez Ramirez and Lenin Linares Guerrero — were kidnapped. Days later, Dominican authorities rescued the couple.
Meanwhile, FBI agents have traced the Benitez brothers to Havana, according to federal authorities.
In general, the FBI has had little luck capturing Medicare fugitives abroad in recent years. ‘’We’ve had no one returned on a healthcare fraud warrant that I’m aware of,'’ Delaney said.
The one exception: In June 2004, authorities in the Dominican turned over three Medicare fugitives — Ruben Martinez; his daughter, Adriana Ramos, and her husband, Daniel Ramos — who had fled to that country months before their indictment on fraud charges.
They were part of a Miami-Dade family racket headed by Martinez, 57, that was eventually convicted of bilking $14.5 million from Medicare by charging for bogus medical equipment orders such as hospital beds, oxygen tanks and foot arch supports in 2000-02. Federal authorities recovered $1 million from Dominican bank accounts, $900,000 from U.S. banks, real estate, jewelry and a Porsche Boxster.
‘’It was a classic case of international cooperation,'’ said former federal prosecutor Wifredo Ferrer, the lead attorney in the prosecution of Martinez and 11 others. “The three fugitives were Cuban nationals, not citizens of the Dominican Republic. The Dominican authorities deemed them persona non grata and expelled them to the United States.'’
FEDERAL JUDGES
Still, one Medicare fugitive in that case is still at large: Emilio R. Seijo, who is in Cuba, according to the FBI.
The escalating problem of Medicare fraud defendants who flee has become a sore point for federal judges in South Florida.
This spring, the chief judge of the U.S. District Court in Miami raised the issue in a memo to magistrate judges, cautioning them about flight risks. U.S. District Judge Federico Moreno also reviewed Medicare defendants’ bonds in cases before him, citing the unusual pattern of defendants fleeing after they were charged with Medicare fraud and granted bail.
In June, Moreno said in court that “it seems to me that our thinking has to change — that someone from Cuba can flee back to Cuba just like someone from Mexico.'’
Moreno questioned whether the Cuban Adjustment Act — passed by Congress in 1966 to grant asylum and residency to the first wave of Cuban political refugees — was being abused by a new generation of Medicare fraud suspects. The judge wondered aloud “whether someone can be categorized as a political refugee when you can pick up and go back.'’
Moreno raised the point after learning that a former secretary charged in an $11 million Medicare healthcare scheme fled to Cuba with her son and father.
The judge had given Carmen González a $50,000 bond. Her father, Enrique González, who co-signed it, was indicted in May on separate Medicare fraud charges in a $26.2 million HIV-drug scam at other Miami-Dade clinics.
‘’I don’t know what your client’s situation is, but money goes a lot farther in Cuba,'’ the judge told Gonzalez’s attorney, Joel DeFabio. “Dollars do. And the government’s allegation is that dollars are the result of Medicare fraud.'’
Moreno isn’t the only federal judge to be blindsided.
The case of Medicare fraud felon Gustavo Smith illustrates how easy it is for fugitives to leave the United States.
After Smith was convicted on healthcare fraud charges at trial in April, U.S. District Judge Marcia Cooke allowed him to remain free on a $300,000 bond while he awaited sentencing. Prosecutors insisted that Smith be detained. Cooke placed him on home confinement.
On June 11, Smith, who had surrendered his U.S. passport, took an American Airlines flight to Santo Domingo with his girlfriend. How? Smith used his Cuban passport under the name Gustavo Smith Wong. The FBI and Dominican authorities are tracking him down. In early July, Cooke sentenced him in absentia to 10 years and 10 months in prison.
MEDICARE OUTLAWS
One of the obvious reasons that Medicare defendants can evade prosecution is because they’re routinely allowed to post bond before trial. But most of the Medicare defendants who fled since 2004 left South Florida before federal agents could arrest them, according to the FBI and prosecutors. In some cases, suspects get nervous when a colleague is arrested and flee before they can be implicated.
A typical example: Fermin Rey, 49, who emigrated from Cuba in 1995 and was indicted last year on charges of using a series of healthcare corporations to bill Medicare for $5.2 million in bogus medical equipment claims. Rey, described by authorities as a Santeria high priest who used associates as straw owners of his illegal businesses, failed to appear in court and is believed to be in Mexico.
Why do so many Cuban immigrants become Medicare fraud perpetrators? Andy Gomez, a senior fellow at the University of Miami’s Institute for Cuban and Cuban-American Studies, has a theory.
Gomez said some immigrants came with survival instincts cultivated under the totalitarian regime of Fidel Castro. They distrusted and cheated his communist government as a way of getting around the system, but they did not shed that behavior when they came to Miami simply because they were living in a free country.
‘’They are a product of their element,'’ Gomez said. “It’s a very difficult habit to break.'’
FBI agents not only have a hard time tracking down Medicare fugitives, but also their money.
Law enforcement officials suspect that most Medicare defendants who flee — such as the Benitezes — launder their money offshore.
Prosecutor Eric Bustillo, chief of the economic crimes section at the U.S. attorney’s office in Miami, said that once Medicare money is withdrawn from local banks it’s difficult for federal authorities to follow it.
‘’It’s the opposite of drug trafficking,'’ Bustillo said. “The drug traffickers get paid in cash, so they have to find businesses and other ways to launder it. The Medicare providers must receive all of their payments in checks or wire transfers to a designated bank account. So the money can be tracked down to that bank. But they immediately cash it out. And once they do that, who knows where it goes?'’
Federal authorities and money-laundering experts know some of the Medicare fugitives’ money ends up outside the United States. Case in point: the Benitezes’ assets in the Dominican Republic.
But unless authorities can identify the laundered Medicare millions — bank accounts, real estate, cars, boats — they can’t take legal action to go after the assets.
According to money-laundering experts, it’s easy to move dirty money to certain countries.
For a pittance, Medicare violators can hire lawyers offshore to set up shell companies and assist in the opening of related bank accounts, said Brett Wolf, a U.S. money-laundering analyst with Complinet, a London-based firm that helps financial institutions meet their compliance obligations.
‘’Cash smuggling is almost certainly playing a role,'’ Wolf said. “Considering the heavily state-controlled nature of Cuba’s financial network, it’s very unlikely that these Medicare funds are being moved through the formal banking system.'’
Fugitives, based in a country such as the Bahamas or Mexico where there is regular travel to Cuba, can go back and forth to the island, carrying thousands in cash that can be exchanged for a currency called CUCs (pronounced “kooks'’).
But it would be risky business for fugitives carrying a lot of cash, say $50,000, to attempt to bribe communist government officials unless they have connections.
Still, a Medicare fugitive with hundreds of thousands or even millions of dollars stashed in offshore accounts could live like a tycoon in Cuba, where the monthly salary averages $17.
Source
Tuesday, August 5, 2008
Health Care Fraud and Abuse Control Program ,,,,,,REALLY?
By Jim Kouri
The Department of Justice, in cooperation with the Department of Health and Human Services, has guided the enforcement efforts of the national Health Care Fraud and Abuse Control Program (HCFAC) since its inception in 1997.
The program was designed to coordinate federal, state and local law enforcement on cases of health care fraud and abuse as part of the Health Insurance Portability and Accountability Act (HIPAA).
In 2008, the Department’s efforts to investigate and prosecute the individuals and companies who commit health care fraud are as strong as ever, thanks in large part to the Department’s many components working closely with partners at the Department of Health and Human Services, and state and local law enforcement.
Strengthening Criminal Enforcement:
In recent years, the Department has stepped up its enforcement efforts related to health care fraud, including the following accomplishments in Fiscal Year 2007:
– U.S. Attorneys’ Offices opened 878 new criminal health care fraud investigations involving 1,548 potential defendants.
– Federal prosecutors had 1,612 health care fraud criminal investigations pending, involving 2,603 potential defendants, and filed criminal charges in 434 cases involving 786 defendants.
– A total of 560 defendants were convicted for health care fraud-related crimes during the year.
– In one of the most recent enforcement actions, on May 21, 2008, Jorge Alan Rodriguez Sanchez was indicted in the Eastern District of Pennsylvania for conspiring to distribute Schedule II controlled substances illegally through an Internet pharmacy.
Beginning in 2002, Rodriguez Sanchez allegedly sold via e-mail narcotic prescription drugs, such as Oxycontin, Vicodin and Xanax to customers without prescription or legitimate medical use. Rodriguez Sanchez did not require a prescription or physical examination by a licensed physician from any of his customers. He retrieved the money sent by the customers at a Western Union location in Mexico, but shipped the drugs from Southern California to customers throughout the United States, including the Philadelphia area.
– During FY 2007, the Department opened 776 new civil health care fraud investigations, and had 743 civil health care fraud investigations pending at the end of the fiscal year.
– During FY 2007, the federal government won or negotiated approximately $1.8 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings.
– The Medicare Trust Fund received transfers of approximately $797 million during this period as a result of these efforts, as well as those of preceding years, in addition to $266 million in federal Medicaid money separately transferred to the Treasury as a result of these efforts. Some recent civil enforcement actions include:
(This article is a consolidation of information received by the 14,000-member National Association of Chiefs of Police’s Fraud Investigation Committee.)
Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police and he’s a staff writer for the New Media Alliance (thenma.org). In addition, he’s the new editor for the House Conservatives Fund’s weblog. Kouri also serves as political advisor for Emmy and Golden Globe winning actor Michael Moriarty.
He’s former chief at a New York City housing project in Washington Heights nicknamed “Crack City” by reporters covering the drug war in the 1980s. In addition, he served as director of public safety at a New Jersey university and director of security for several major organizations. He’s also served on the National Drug Task Force and trained police and security officers throughout the country. Kouri writes for many police and security magazines including Chief of Police, Police Times, The Narc Officer and others. He’s a news writer for TheConservativeVoice.Com and PHXnews.com. He’s also a columnist for AmericanDaily.Com, MensNewsDaily.Com, MichNews.Com, and he’s syndicated by AXcessNews.Com. He’s appeared as on-air commentator for over 100 TV and radio news and talk shows including Oprah, McLaughlin Report, CNN Headline News, MTV, Fox News, etc. His book Assume The Position is available at Amazon.Com. Kouri’s own website is located at http://jimkouri.us
The Department of Justice, in cooperation with the Department of Health and Human Services, has guided the enforcement efforts of the national Health Care Fraud and Abuse Control Program (HCFAC) since its inception in 1997.
The program was designed to coordinate federal, state and local law enforcement on cases of health care fraud and abuse as part of the Health Insurance Portability and Accountability Act (HIPAA).
In 2008, the Department’s efforts to investigate and prosecute the individuals and companies who commit health care fraud are as strong as ever, thanks in large part to the Department’s many components working closely with partners at the Department of Health and Human Services, and state and local law enforcement.
Strengthening Criminal Enforcement:
In recent years, the Department has stepped up its enforcement efforts related to health care fraud, including the following accomplishments in Fiscal Year 2007:
– U.S. Attorneys’ Offices opened 878 new criminal health care fraud investigations involving 1,548 potential defendants.
– Federal prosecutors had 1,612 health care fraud criminal investigations pending, involving 2,603 potential defendants, and filed criminal charges in 434 cases involving 786 defendants.
– A total of 560 defendants were convicted for health care fraud-related crimes during the year.
– In one of the most recent enforcement actions, on May 21, 2008, Jorge Alan Rodriguez Sanchez was indicted in the Eastern District of Pennsylvania for conspiring to distribute Schedule II controlled substances illegally through an Internet pharmacy.
Beginning in 2002, Rodriguez Sanchez allegedly sold via e-mail narcotic prescription drugs, such as Oxycontin, Vicodin and Xanax to customers without prescription or legitimate medical use. Rodriguez Sanchez did not require a prescription or physical examination by a licensed physician from any of his customers. He retrieved the money sent by the customers at a Western Union location in Mexico, but shipped the drugs from Southern California to customers throughout the United States, including the Philadelphia area.
– During FY 2007, the Department opened 776 new civil health care fraud investigations, and had 743 civil health care fraud investigations pending at the end of the fiscal year.
– During FY 2007, the federal government won or negotiated approximately $1.8 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings.
– The Medicare Trust Fund received transfers of approximately $797 million during this period as a result of these efforts, as well as those of preceding years, in addition to $266 million in federal Medicaid money separately transferred to the Treasury as a result of these efforts. Some recent civil enforcement actions include:
(This article is a consolidation of information received by the 14,000-member National Association of Chiefs of Police’s Fraud Investigation Committee.)
Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police and he’s a staff writer for the New Media Alliance (thenma.org). In addition, he’s the new editor for the House Conservatives Fund’s weblog. Kouri also serves as political advisor for Emmy and Golden Globe winning actor Michael Moriarty.
He’s former chief at a New York City housing project in Washington Heights nicknamed “Crack City” by reporters covering the drug war in the 1980s. In addition, he served as director of public safety at a New Jersey university and director of security for several major organizations. He’s also served on the National Drug Task Force and trained police and security officers throughout the country. Kouri writes for many police and security magazines including Chief of Police, Police Times, The Narc Officer and others. He’s a news writer for TheConservativeVoice.Com and PHXnews.com. He’s also a columnist for AmericanDaily.Com, MensNewsDaily.Com, MichNews.Com, and he’s syndicated by AXcessNews.Com. He’s appeared as on-air commentator for over 100 TV and radio news and talk shows including Oprah, McLaughlin Report, CNN Headline News, MTV, Fox News, etc. His book Assume The Position is available at Amazon.Com. Kouri’s own website is located at http://jimkouri.us
Saturday, August 2, 2008
Health care fraud comes in many forms
Investigating Chiropractic Fraud
July 31st, 2008
Health care fraud comes in many forms and unfortunately is not limited to any one health care discipline. Chiropractic is not immune from their members engaging in fraudulent activity that violates the laws and rules governing health care. With more than twenty years of experience, including investigating chiropractic fraud and assisting chiropractors on employing compliance programs, I offer the following bullets to refresh and/or develop fraud-fighters (providers, insurers, regulators & law enforcers) insight on chiropractic fraud.
July 31st, 2008
Health care fraud comes in many forms and unfortunately is not limited to any one health care discipline. Chiropractic is not immune from their members engaging in fraudulent activity that violates the laws and rules governing health care. With more than twenty years of experience, including investigating chiropractic fraud and assisting chiropractors on employing compliance programs, I offer the following bullets to refresh and/or develop fraud-fighters (providers, insurers, regulators & law enforcers) insight on chiropractic fraud.
PhyAmerica Physician Group Case connect to NCFE
Judge Warns of Fines in PhyAmerica Physician Group Case.
Publication: Knight Ridder/Tribune Business News
Date: Saturday, January 24 2004
By Jean P. Fisher, The News & Observer, Raleigh, N.C. Knight Ridder/Tribune Business News
Jan. 24--A Maryland judge has warned Dr. Steven M. Scott, former owner of PhyAmerica in Durham, that he will face a $50,000-per-violation fine each time he or his associates seek to lure the company's contract physicians and clients to Scott's new competing business.
Baltimore bankruptcy court Judge E. Stephen Derby, who has presided over PhyAmerica's reorganization under Chapter 11 bankruptcy protection for 14 months, on Wednesday found that Scott had violated a
Publication: Knight Ridder/Tribune Business News
Date: Saturday, January 24 2004
By Jean P. Fisher, The News & Observer, Raleigh, N.C. Knight Ridder/Tribune Business News
Jan. 24--A Maryland judge has warned Dr. Steven M. Scott, former owner of PhyAmerica in Durham, that he will face a $50,000-per-violation fine each time he or his associates seek to lure the company's contract physicians and clients to Scott's new competing business.
Baltimore bankruptcy court Judge E. Stephen Derby, who has presided over PhyAmerica's reorganization under Chapter 11 bankruptcy protection for 14 months, on Wednesday found that Scott had violated a
More Than 500 Backlogged Whistle-Blower Cases Allege Health Care, Drug Company Fraud
Whistle-blower lawsuits alleging that pharmaceutical companies and government contractors defrauded the federal government have created a backlog of more than 900 cases at the Department of Justice, the Washington Post reports. According to the Post, more than 500 of the cases involve the health care and pharmaceutical industries, as well as Medicare and Medicaid.
July 3rd, 2008
July 3rd, 2008
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