Tennesseans can get cash rewards for TennCare fraud tips that lead to convictions

Well this is a start tocombat the fraud, howweverwhat about all the money that was stolen HCA over the years?

Just the money that HCA settled 'out of court' for was a FRACTION, a FRACTION of what they STOLE! And were still allowed to continue UNINTERRUPTED BUSINESS as USUAL!
mentored by Rixchard Rainwater and friends!

How about HCA paying ALL of the money,that was stolen mind you, back to the people, not just the fraction the government settled for, buit ALL OF the LOOT BACK!

Man charged with TennCare fraud
NASHVILLE — A Rutherford County man is charged with using the TennCare medical benefits of another individual in order to get health-care treatment he would otherwise have to pay for.

The Office of Inspector General (OIG) and the Rutherford County Sheriff’s Department today announced the arrest of Steven M. Barrett, 19, of Murfreesboro.


An indictment charges Barrett with one count of TennCare fraud and using someone’s TennCare card in order to obtain treatment at a health-care provider’s office in Rutherford County.

“Health-care benefits are not transferable to another person — even in the private sector — and it’s especially egregious for someone to steal the benefits of a person who legitimately qualifies for TennCare,” Inspector General Deborah Y. Faulkner said.

Illegally obtaining TennCare medical benefits is a Class E felony that carries a maximum penalty of two years in prison per charge. District Attorney William Whitesell Jr. will prosecute.

The OIG, a law enforcement agency separate from TennCare, began full operation in February 2005 and has worked cases leading to the arrest of more than 760 individuals for TennCare fraud, with nearly $1 million paid in restitution to TennCare, and total estimated cost avoidance in TennCare of over $122 million, according to latest figures.

Through the OIG Cash for Tips Program established by the Legislature, Tennesseans can get cash rewards for TennCare fraud tips that lead to convictions. “Anyone can report suspected TennCare fraud by calling 1-800-433-3982 toll-free from anywhere in Tennessee, or log on to www.tncarefraud.tennessee.gov and follow the prompts that read “Report TennCare Fraud.”

"...health care fraud drives up medical costs" Really?

Friday, September 5, 2008
Study suggests health care fraud drives up medical costs
Birmingham Business Journal



While health care companies are spending billions on construction, a recent study has found that health care fraud may be one of the biggest factors driving up health care costs, to the tune of billions of dollars, new research indicates.

Resolved health care fraud cases alone in the previous decade involved $9.3 billion in damages paid to both federal and state government, according to researchers at Brigham and Women’s Hospital.

Results of the study are slated to be published in the Sept. 2 issue of the Annals of Internal Medicine.

But the researchers said the data suggest that there is likely much more unrecognized fraud still going on within the health care system, adding countless inefficiencies that drive up costs.

$9.3 billion recovered between 1996 and 2005...are you kidding?

Trillions have been stolen and this DOJ should be satsified with $9.3 billion recovered...give me a break!


WASHINGTON, D.C.
Whistle-blowers play large role in uncovering healthcare fraud
Insiders helped authorities recover more than $9.3 billion between 1996 and 2005. For their efforts, they get 15% to 25% of the amount reimbursed.
September 2, 2008
Insiders aid in healthcare fraud cases

Whistle-blowers have helped authorities recover at least $9.3 billion from healthcare providers accused of defrauding states and the federal government since 1996, according to an analysis of Justice Department records.


The department intensified efforts in the 1990s to combat healthcare fraud by using private citizens with inside knowledge of wrongdoing. They now initiate more than 90% of the department's lawsuits focusing on healthcare fraud.

Whistle-blowers start cases by filing a sealed complaint in federal court. The department investigates and can intervene, assuming the lead role in the lawsuit.

Whistle-blowers then get 15% to 25% of the amount recovered.


Of the $9.3 billion recovered between 1996 and 2005, whistle-blowers got more than $1 billion, analysts estimated, writing for the Annals of Internal Medicine. The analysts' estimates are conservative.

Banks Are Uniquely Positioned to Prevent Health Care Fraud

How about Banks assist with Health Care Fraud? Perfect example is NCFE missing the Founder and CEO and also an "Executive" James K Happ.....the person who assisted GW Bush's ex-partner Richard Rainwater in the "PONZI SCHEME" as noted by Federal Prosecutors involved in the case they would like to to reference as "an end to an era".

Not so fast.....so much more to KNOW! James K Happ....(Smoking GUN)


Banks Are Uniquely Positioned to Prevent Health Care Fraud
By Matt Squire


Bank compliance professionals are in a prime position to uncover health care fraud if they are aware of the tell-tale signs and report the related suspicious activity to law enforcement, say fraud investigators.

Health care fraud accounts for around 10 percent or $100 billion of the $1 trillion spent annually in the health care industry, according to the U.S. Government Accountability Office.

Healthfirst largest health plan for Medicaid beneficiaries pay $35 million FRAUD

Health plan settles fraud charges with state
A related indictment accuses a former Healthfirst executive of concealing a practice of paying employees based on productivity, which is prohibited to protect consumers from aggressive sales tactics.

Healthfirst, New York state’s largest health plan for Medicaid beneficiaries, agreed to pay $35 million to settle charges by the attorney general that it had submitted false marketing plans.

A former senior executive of Healthfirst was also indicted earlier this year on related charges, the attorney general’s office said.

Last November, the state Department of Health temporarily shut down enrollment in all but Healthfirst’s Medicare plans after the attorney general’s investigation was revealed. The company, which has about $1 billion in annual premium revenues, provides coverage for about 500,000 people in New York and New Jersey.

In the wake of the shutdown, which ended in March, Healthfirst’s chief executive and founder, Paul Dickstein, and chief operating officer James Boothe stepped down.

It was Mr. Boothe who was indicted in May for first degree insurance fraud, a felony.

The indictment alleges that Mr. Boothe caused Healthfirst to submit false marketing plans to the state and to local government agencies, and concealed the information that Healthfirst paid its marketing representatives based on their productivity, which is prohibited. According to the indictment, the payment plan violated the company’s contract with the state from 1999 through 2003. Healthfirst management reported the violations to the state, and the company cooperated with the attorney general’s investigation.

The rules governing the marketing of Medicaid plans are designed to protect people from aggressive sales tactics.

In January, Patricia Wang, then a senior vice president at Greater New York Hospital Association, was named Mr. Dickstein’s successor.

“None of the conduct involved relates to current practices of Healthfirst, and the company is in complete compliance with all relevant regulatory requirements,” said a spokesman for Healthfirst, whose owners include Beth Israel Medical Center, Mount Sinai Medical Center and The New York City Health and Hospitals Corp.

Since Poulsen's trial is now set to begin Oct. 1, it pushes the trial of James K. Happ, another former National Century executive....

Now why is this delay for Happ occurring? After the NOVEMBER election of course. Does any reporter really know where Happ is form or what his job at NCFE really was? If so, no one has yet to connect the dot!
Who does Happ really know? (Hint: Bush Connection)
The former CEO of National Century Financial Enterprises Inc. has successfully put off his trial on fraud-related charges by two months.

A federal judge ruled Friday that Lance Poulsen, the leader of the Dublin-based health-care financing company before it collapsed in 2002, will begin facing charges of securities fraud and conspiracy on Oct. 1 instead of Aug. 4. U.S. District Court Judge Algenon Marbley granted Poulsen's July 7 continuance request after Poulsen's attorneys argued they needed more time to review 40 boxes of documents the government is scheduled to make available between now and August.

"A two-month continuance will ensure that Poulsen has the time to obtain and review the documents that he plausibly claims are central to his theories of defense," Marbley wrote in his July 11 order.

Since Poulsen's trial is now set to begin Oct. 1, it pushes the trial of James K. Happ, another former National Century executive, to Dec. 1. Poulsen and Happ have both pleaded not guilty.

Poulsen, 65, co-founded National Century in 1991, building it into a major health-care financing company. It specialized in buying receivables from medical providers at a discount, which gave the health-care businesses the quick cash they needed. The receivables were then packaged as asset-backed bonds and sold to investors.

But National Century fell into Chapter 11 bankruptcy six years ago. The Justice Department alleged Poulsen and other executives ran a sophisticated Ponzi scheme that bilked investors out of nearly $2 billion. Poulsen pleaded not guilty to charges of conspiracy, securities fraud, wire fraud, money laundering conspiracy and concealment of money laundering.

Five other former National Century executives were found guilty in March of running a multiyear securities fraud at National Century. Poulsen was scheduled to go on trial with them, but his day in court on those charges was delayed because the government also accused him of trying to tamper with a witness.

Shortly after the March convictions of the five executives, Poulsen stood trial on the witness tampering charges. A jury found him and an associate, Karl Demmler, guilty of trying to bribe a government witness who is planning to testify against Poulsen in his securities fraud trial.

MCCAIN BACKS LEAHY AMENDMENT AGAINST CORPORATE AND CRIMINAL FRAUD
For Immediate Release
Wednesday, Jul 10, 2002

Washington, DC – U.S. Senator John McCain (R-AZ) today continued his fight against corporate corruption in the marketplace by supporting the "Corporate and Criminal Fraud Accountability Act of 2002" sponsored by Sen. Patrick Leahy (D-VT). His floor statement follows:

"Our publicly owned companies are an essential component to the economic health of our country. As we have seen over the past few months, the continued lapses of our corporate leaders, whether they are ethical, criminal or just plain ignorant, have a significant, sometimes crippling, effect on the welfare of our nation. We must make some fundamental changes in the current system of corporate oversight to protect Americans from avarice, greed, ignorance and criminal behavior. Now is the time for Congress to restore investor confidence and take the necessary action to protect the interests of the public shareholders and place those interests above the personal interests of those entrusted with managing and advising those companies. The deterioration of the checks and balances that safeguard the public against corporate abuses must be reversed.

"We have to address the shortcomings in federal law and send the message that prosecutors now have the tools to incarcerate persons who defraud investors or alter or destroy evidence in certain Federal investigations. This amendment is a step in the right direction. It creates two new criminal statutes that would clarify current criminal laws relating to the destruction or fabrication of evidence and the preservation of financial and audit records. The Enron debacle clearly indicated that there were gaping holes in the current framework. There will be a 10 year criminal penalty for the destruction or creation of evidence with the intent to obstruct a federal investigation. There will be a new 5 year criminal penalty for the willful failure to preserve, for a minimum of five years, audit papers of companies that issue securities.

"The amendment also provides for the review and enhancement of criminal penalties in cases involving obstruction of justice and serious fraud cases. All of these actions are necessary to deter future criminal action. Until somebody responsible goes to jail for a significant amount of time, I am not sure that these people are going to get the message. Defrauding the shareholder has to carry a penalty of more than a fine. Many corporate decision-makers are making millions of dollars a year. A relatively small fine is not a deterrent; it's a slap on the wrist. The threat of jail is a deterrent that will make people pay attention.

"This amendment also creates a new securities fraud offense. This provision makes it easier, in a limited class of cases, to prove securities fraud. Currently prosecutors are forced to resort to a patchwork of technical offenses and regulations that criminalize particular violations of securities law, or to treat the cases as generic mail or wire fraud that results in a five-year maximum penalty. This new provision would criminalize any scheme or artifice to defraud persons in connection with securities of publicly traded companies or to obtain their money or property. This new ten-year felony is comparable to existing bank and health care fraud statutes. To those who'd say that it's hard to define a scheme or artifice to defraud, I'd say that full and honest disclosure of material dealings and accounting treatments is the best way for the officers who run America's corporations to protect themselves and those who invest in their companies. There are plenty of felony laws on the books that provide long prison terms for crimes that cause less damage than the losses to shareholders in Enron or WorldCom.

"It is important to emphasize that when criminal charges are pursued, it is not necessarily the firm that should be charged but the individuals at the helm of the corporate ship who should be prosecuted. If they are the ones making the decisions out of self-interest, they are the ones that should be held accountable. I also believe that we must protect the "corporate whistleblower" from being punished for having the moral courage to break the corporate code of silence. This amendment does that.

"This amendment also extends the current statute of limitations for matters concerning securities fraud, deceit or manipulation. The current statute of limitations for securities fraud cases is unfairly short given the complexity of many of these matters. Innocent, defrauded investors may be wrongly stopped short in their attempts to recoup their losses under current law. The existing statute of limitations for most securities fraud cases is one year after the fraud was discovered but no more than three years from the date of the fraud regardless of when it was discovered. Because this statute of limitations is so short, the worst offenders may avoid accountability and be rewarded if they can successfully cover up their misconduct for merely three years. The more complex the case, the easier it will be for these wrongdoers to get away with fraud. According to at least one state Attorney General, the current short statute of limitations has forced some states to forgo claims against Enron based on alleged securities fraud in 1997 and 1998.

"This situation essentially encourages offenders to attempt to cover up their misdeeds however they can, including by using questionable accounting procedures and financial shell games. Furthermore, in some cases, the facts of a case simply do not come to light until years after the fraud. If a person does not and cannot know they have been defrauded, it is unfair to bar them from the courthouse.

"These limitations are even more unfair when considered in light of the obstacles that current law can place between a victim and the courthouse in securities fraud cases. By the time a victim learns enough facts to file a complaint, survives a motion to dismiss, begins discovery, and learns that an additional wrongdoer or theory should be added to the case, that claim may be barred and the wrongdoer is able to avoid liability. Thus, current law sets up a perverse incentive for victims to race into court, so as not to be barred by time. Indeed, the short statute of limitations may even encourage frivolous cases, as a plaintiff operating in bad faith would have little trouble meeting the one-year deadline simply by naming every possible defendant and asserting every possible claim. We need to recognize the sophistication and complexity of modern-day schemes designed to defraud investors. It is long past time to give innocent victims a more reasonable chance to recover their losses.

"Finally, this provision amends the federal bankruptcy code to prevent the corporate wrongdoer, the CEO or CFO, from sheltering their assets under the umbrella of bankruptcy and protecting them from judgments and settlements arising from federal and state securities law violations. Too many of these highly paid corporate officers are using bankruptcy laws to protect their assets while maintaining their high-rise penthouses and ski chalets. It is time to force accountability and punish the person, not the institution, who is not willing to abide by the moral and legal codes that accompany leadership and public trust."

Support our Troops???? Oh yea!!!

Man gets 5 years for $100M Tricare fraud

By Ryan J. Foley - The Associated Press
Posted : Thursday Jun 19, 2008 7:33:55 EDT

MADISON, Wis. — A former health care executive was sentenced Tuesday to five years in prison for helping his Philippines-based company swindle nearly $100 million from the U.S. military health insurance program.

Thomas Lutz, 41, said in federal court he took responsibility for the six-year scheme in which Health Visions Corp. bilked $99.9 million from the military’s Tricare program through inflated and fraudulent claims.U.S. District Judge Barbara Crabb said the five-year sentence was modest given the extent of the fraud, but it was the longest she could impose under Lutz’s plea deal.

Health Visions and Lutz were initially charged in a 75-count indictment in 2005. He pleaded guilty in 2006 to a single count of conspiracy to pay kickbacks and agreed to cooperate with prosecutors, a deal Crabb called “a huge break” for Lutz.

“It’s just horrifying that you were able to take as much money as you did,” Crabb told Lutz.

Prosecutors said the company routinely inflated claims by more than 230 percent, operated a phony insurance program and billed for medical services never delivered.

In April, Crabb ordered Health Visions to pay $99.9 million in restitution. Under her order, the company must sell all of its assets, including land, hospitals and office buildings, within 10 months. She said Lutz would be responsible for paying the remainder, including at least 25 percent of his income once he is released from prison.

Crabb gave Lutz until March 18 to report to prison. Prosecutors asked for the nine-month delay so Lutz could help the government recover as much money as possible from the company.

Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers. The company served thousands of U.S. military retirees living in the Philippines, where bases were located until the early 1990s.

The company was reimbursed $163 million by Tricare between 1998 and 2004, and prosecutors believe at least $99.9 million of that was fraudulent.

Lutz, an American citizen, read a brief statement in which he took full responsibility for his company’s actions.

“I would like to apologize to the Department of Defense,” he said. “I am truly sorry for all those who have been affected.”

FBI reports that Health care fraud ranks among the highest priority investigations within the FBI's white collar crime unit, behind only public corrup

FBI releases annual healthcare fraud statistics and information
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Editor: Mike Bothwell
Profession: Qui Tam Attorney


May 28, 2008

By Julie Keeton Bracker

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The FBI recently published its annual Financial Crimes Report to the Public for the Fiscal Year 2007, showing that health care fraud is of continued concern.

The mission of the Financial Crimes Section (FCS) of the FBI is to oversee the investigation of financial fraud and to facilitate the forfeiture of assets from those engaging in federal crimes. The FCS is divided into three units: the Economic Crimes Unit - I, Economic Crimes Unit - II (formerly Financial Institution Fraud and Asset Forfeiture/Money Laundering Units), and the Health Care Fraud Unit. The report, which is published annually, provides an overview of each of these sections showing statistical accomplishments and examples of the identified priority crime problems.

The Healthcare Fraud Unit estimates that fraudulent billing accounts for between 3% and 10% of all healthcare expenditures nationwise. The Centers for Medicare and Medicaid Services (CMS) estimates $2.26 trillion was spent on healthcare in fiscal year 2007, leading to the conclusion that as much as $226 billion per year is fraudulently billed over the course of the year.

The FBI identified the most common types of healthcare fraud as: (1) billing for services not rendered; (2) upcoding (charging a higher value for services than is appropriate); (3) duplicate claims; (4) unbundling; (5) excessive services; (6) medically unnecessary services; and (7) kickbacks. Other areas of concern include durable medical equipment, hospital fraud, physician fraud, home health agencies, beneficiary-sharing, chiropractic, pain management and associated drug diversion, physical therapists, prescription drugs, multi-disciplinary fraud, and identity theft which involve physician identifiers used to fraudulently bill government and private insurance programs.

The report identified two trends for the 2007 fiscal year: an increased willingness to profit at the expense of the patient, and evolving schemes relating to new technologies. The FBI reported that investigations in several of its offices are focusing on subjects who conduct unnecessary surgeries, prescribe dangerous drugs without medical necessity, and engage in abusive or sub-standard care practices. Examples of the increasingly technical schemes being purpetrated involve medical data theft and other fraud schemes facilitated through the use of computers. The report also mentions increasing concerns regarding The Medicare Prescription Drug Program (Part D), which was implemented in 2006 and so is relatively new.

The FBI reports that Health care fraud ranks among the highest priority investigations within the FBI's white collar crime unit, behind only public corruption and corporate fraud. As a result there are a number of national initiatives, including the Internet Pharmacy Fraud Initiative, the Auto Accident Insurance Fraud Initiative, and the Outpatient Surgery Center Initiative. The overall goal of the Internet Pharmacy Fraud Initiative is to identify fraudulent Internet pharmacies and target physicians who are willing to write prescriptions outside of the doctor/patient relationship. This group also heads investigations into the sale of counterfeit and diverted pharmaceuticals on the Internet. The Auto Accident Insurance Fraud Initiative was launched in 2005 in response to increasingly sophisticated staged accident schemes, which present a danger on the road as well as the economic harm of the fraud (which includes the rising cost of private insurance).

Overall, the FBI reported that Fiscal Year 2007 saw it investigating 2,493 cases, resulting in 839 indictments and 635 convictions of health care fraud criminals, with some cases still pending. In the area of health care fraud the report states that FBI investigations resulted in $1.12 billion in restitutions, $4.4 million in recoveries, $34 million in fines, and 308 seizures valued at $61.2 million.

In conclusion, the FBI offered the following tips to protect yourself against Health Care Fraud:

• Protect your health insurance information card like a credit card.
• Beware of free services--is it too good to be true?
• Review your medical bills, such as your "explanation of bill," after receiving healthcare services. Check to ensure the dates and services are correct to ensure you get what you paid for.
• If you suspect Health Care Fraud, call 1-877-327-2583. For more information,
visit the web site at http://www.bcbs.com/antifraud.

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED

--------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
THURSDAY, JUNE 26, 2003
WWW.USDOJ.GOV
CIV
(202) 514-2007
TDD (202) 514-1888


LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED
HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION



WASHINGTON, D.C. - HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company) has agreed to pay the United States $631 million in civil penalties and damages arising from false claims the government alleged it submitted to Medicare and other federal health programs, the Justice Department announced today.

This settlement marks the conclusion of the most comprehensive health care fraud investigation ever undertaken by the Justice Department, working with the Departments of Health and Human Services and Defense, the Office of Personnel Management and the states. The settlement announced today resolves HCA's civil liability for false claims resulting from a variety of allegedly unlawful practices, including cost report fraud and the payment of kickbacks to physicians.

Previously, on December 14, 2000, HCA subsidiaries pled guilty to substantial criminal conduct and paid more than $840 million in criminal fines, civil restitution and penalties. Combined with today's separate administrative settlement with the Centers for Medicare & Medicaid Services (CMS), under which HCA will pay an additional $250 million to resolve overpayment claims arising from certain of its cost reporting practices, the government will have recovered $1.7 billion from HCA, by far the largest recovery ever reached by the government in a health care fraud investigation.

"Health care providers and professionals hold a public trust, and when that trust is violated by fraud and abuse of program funds, and by the payment of kickbacks to the physicians on whom patients and the programs rely for uncompromised medical judgment, health care for all Americans suffers," Robert D. McCallum, Jr., Assistant Attorney General for the Civil Division said. "This settlement brings to a close the largest multi-agency investigation of a health care provider that the United States government has ever undertaken and demonstrates the Department of Justice's ongoing resolve and commitment to pursue all types of fraud on American taxpayers, and health care program beneficiaries."

"Let this case be a continuing reminder to all that in the fight against health care fraud this office will not be deterred," said Acting Principal Deputy Inspector General Dara Corrigan. “Medicare dollars paid to provide ever more expensive health care services to the country's taxpayers should never be fraudulently diverted. This is our job and our trust and we take these duties very seriously," Corrigan concluded.

This latest settlement resolves fraud allegations against HCA and HCA hospitals in nine False Claims Act qui tam or whistleblower lawsuits pending in federal court in the District of Columbia. Under the federal False Claims Act, private individuals may file suit on behalf of the United States and, if the case is successful, may recover a share of the proceeds for their efforts. Under the settlement, the whistleblowers will receive a combined share of $151,591,500, the highest combined qui tam award ever paid out by the government.

"We are grateful for the assistance given by the whistleblowers over the course of the past nine years of investigation and litigation,” McCallum said. “And we are proud of the work of government personnel as well as counsel for the whistleblowers, who together pursued these matters through investigation and strenuous litigation. This result demonstrates the commitment of the Department to the qui tam statute and that the statute works as Congress intended."

Under the first of three agreements announced today, which becomes effective upon the court's dismissal of the lawsuits, HCA will pay nearly $620 million to resolve eight whistleblower lawsuits in which the government had intervened alleging that HCA systematically defrauded Medicare, Medicaid and other federally funded health care programs through schemes dating back to the late 1980s. HCA will pay an additional $11 million to resolve separate allegations of improper HCA billing practices.

The settlement requires HCA to pay:

$356 million to resolve whistleblower lawsuits alleging that HCA engaged in a series of schemes to defraud Medicare, Medicaid and TRICARE, the military’s health care program, through hospital cost reports, the year end claims submitted by hospitals to the government to reconcile payments received throughout the year with amounts they claim are actually owed. In 2001, a subsidiary of Nashville-based HCA, Columbia Management Companies, Inc., pled guilty in the Middle District of Florida to related charges on eight counts of making false statements to the United States and paid $22.6 million in criminal fines. An additional amount of $20 million of the settlement is being paid toward a resolution of cost reporting fraud allegations pursued separately by James Alderson and John Schilling, the relators who filed the lawsuits. In total, the two relators are to receive a total of $100 million as their statutory share of the settlement.
$225.5 million to resolve lawsuits alleging that HCA hospitals and home health agencies unlawfully billed Medicare, Medicaid and TRICARE for claims generated by the payment of kickbacks and other illegal remuneration to physicians in exchange for referral of patients. In 2001, Columbia Management Companies, Inc., pled guilty to one count of conspiracy to pay kickbacks and other monetary benefits to doctors in violation of the Medicare Antikickback Statute and paid a $30 million criminal fine. Dr. James Thompson, a doctor who filed suit against the company in 1995, will receive $41.5 million as his statutory share of the settlement. Gary King, a former HCA employee, will receive $5 million and Ann Mroz, a former HCA nurse, will receive a share of $837,500.
$17 million to resolve allegations that certain company-owned hospitals billed Medicare for unallowable costs incurred by a contractor that operated HCA wound care centers, and for a non-covered drug that the contractor manufactured and sold to hospital patients. The 2001 Columbia Management Companies' guilty plea concerning cost report fraud included a charge related to wound care center costs. HCA's wound care center management contractor, Curative Healthcare Services, Inc., previously paid $16.5 million to resolve related allegations pending at one time in these same lawsuits. Joseph "Mickey" Parslow, a former HCA financial officer, will receive $2,990,000 and Francesco Lanni, a former Reimbursement Manager at the Wound Care Center at New York Methodist Hospital in Brooklyn, New York, will receive a share of $680,000.
$5 million to resolve allegations concerning the transfer of patients from HCA facilities to other facilities and the claiming of excessive costs for those transfers.
$5 million to resolve allegations that HCA's Lawnwood Regional Medical Center in Fort Pierce, Florida submitted false claims in Medicare cost reports by inflating its entitlement to funds to treat indigent patients and by shifting employee salary costs in order to increase its reimbursement from the federal health care program.
$950,000 to settle allegations made by Michael Marine that HCA improperly shifted its home office costs to hospitals. Marine will receive a share of $116,500.
Today's settlement agreement incorporates the terms of a Corporate Integrity Agreement executed by HCA and the Office of the Inspector General, Department of Health and Human Services in December 2000 that obligated the company to engage in significant and comprehensive compliance efforts into 2009.

In a separate agreement, HCA agreed to pay $1.5 million to resolve allegations that an Atlanta, Georgia hospital, West Paces Medical Center, paid kickbacks for the referral of diabetes patients. Those allegations had been pursued since 1996 by a whistleblower in a case in which the United States had declined to intervene, captioned U.S. ex rel. Pogue v. American Healthcorp, Inc. et al.. Pogue, a former employee of a co-defendant in the case, Diabetes Treatment Centers of America, will receive a share of $405,000 from the HCA settlement. Pogue continues to litigate claims against his former employer and a group of Atlanta physicians.

Additionally, a state negotiating team appointed by the National Association of Medicaid Fraud Control Units has reached agreement with HCA to resolve related issues with affected state Medicaid plans for $17.5 million, representing direct state losses. The terms of that agreement are being finalized by the parties and are not part of today's settlement.

Today's administrative agreement between HCA and CMS will require HCA to pay CMS $250 million in order to resolve claims they maintained against each other arising from HCA's hospital cost reports and home office cost statements for cost reporting periods ending July 31, 2001. These claims resulted from HCA cost reports that were not processed since 1997 as a result of the government's investigation.

three years' probation ...no jail time???

A federal judge sentenced a Murrysville dentist Friday to three years' probation for health care fraud. Roberto Michienzi, 37, submitted fraudulent reimbursement claims to insurance companies for dental work never performed, prosecutors said. The Tribune-Review has more details.

60 miles northwest of Pittsburgh....fraud is everywhere

Clearwater chiropractor sentenced to three years in fraud case
The Associated Press
2:38 pm, April 12, 2008
PITTSBURGH - A former Mercer County chiropractor will spend three years in prison for defrauding an insurance company.

Thirty-eight-year-old Brent J. Detelich, of Clearwater, Fla., was sentenced Friday in U.S. District Court in Pittsburgh. A jury convicted him of health care and mail fraud in March 2007.

Prosecutors say Detelich submitted fraudulent claims to Highmark Blue Cross/Blue Shield for services not rendered. He then split the payments from those claims with some patients.

Detelich did business as Detelich Chiropractic, and Advanced Medical and Holistic of Hermitage, about 60 miles northwest of Pittsburgh.

He must also pay $91,025 in restitution to Highmark. And he'll be on supervised release for two years after his release from prison.

standouts
In the fall, if Chris Rainey produces a big play in the clutch, or Carlos Dunlap makes a game-changing sack, or Caleb
Moody blues
As he dove for the end zone, Southern Cal transfer running back Emmanuel Moody was one yard away from making a big first
Spring stage produces gridiron standouts
More from Gainesville.com

Health Care Fraud kickback scheme.

About time this 'puppet' does something useful. But I really want to know weher is the money? Is he smart enought to get that?




U.S. Department of Justice
U.S. Attorney’s Office
Western District of Texas
Johnny Sutton, U.S. Attorney


--------------------------------------------------------------------------------



April 9, 2008


Shana Jones, Special Assistant
Daryl Fields, Public Information Officer
(210) 384-7440 May 18, 2007


SAN ANTONIO BUSINESS OWNER SENTENCED TO FEDERAL PRISON
AND ORDERED TO PAY OVER $4 MILLION RESTITUTION
United States Attorney Johnny Sutton announced that in San Antonio this afternoon, Mary Lou Hernandez, owner of Angel Care Medical Supply, was sentenced to 24 months in federal prison and ordered to pay $4,409,518 in restitution for her role in a Health Care Fraud kickback scheme.
In addition to the prison term, United States District Judge W. Royal Furgeson ordered that Hernandez be placed under supervised release for a period of three years after completing her prison term. Today, Hernandez forfeited nearly $428,000 in assets toward satisfying the agreed $4 million monetary judgement ordered by the Court on April 12, 2007.

On November 16, 2006, Hernandez pleaded guilty to a 3-count Information charging her with conspiracy to commit Health Care Fraud, Health Care Fraud and violation of the Anti-kickback statute.

A Certificate of Medical Necessity (CMN) documents a beneficiary’s physician’s conclusion that durable medical equipment (DME) such as wheel chairs, hospital beds, ventilators and oxygen equipment is medically necessary and reasonable for the treatment of an illness or injury. Hernandez admitted that beginning in 2000, she paid between $800 and $1,000 in kickbacks to five San Antonio area physicians for each CMN. Hernandez also admitted to submitting false Medicare and Medicaid reimbursement claims for DME. The factual basis alleges that from January 13, 2001, to September 30, 2004, ACMS was overpaid $3,032,404.94 by Medicare and $1,377,114 by Medicaid.

The defendant’s fraudulent scheme was revealed during an investigation conducted by the Federal Bureau of Investigation. Assistant United States Attorney Tom McHugh prosecuted this case on behalf of the Government.

Can Anyone even begin to figure this out?

Labor of Love
By Mike Vogel - 11/1/2005


Among the predictable trappings in the Coral Gables office of Stephen Dresnick -- family photos, a picture with Jeb Bush, a few mementos -- are a pair of bright reddish-orange boxing gloves that a friend gave him.

They were a prescient gift for a doctor who's ended up with a big fight on his hands. Sterling Healthcare, which supplies emergency room docs to hospitals, has survived the bankruptcies of two parent companies and is back in the hands of Dresnick, its founder. "I built the company. I sold it. It didn't quite work out the way I had hoped. Very few people get a second chance. I consider myself very, very fortunate to, first, get my company back and, secondly, to have a second go at creating value."

But to rebuild Sterling -- and rejoin the club of major doctor-management companies making money in Florida -- Dresnick has had to brawl with another doctor-entrepreneur who lost ownership of it but refuses to throw in the towel.

Dresnick, 54, is a veteran of Florida's medical entrepreneur scene. A Miami native, he graduated Phi Beta Kappa in premed from the University of North Carolina at Chapel Hill, graduated from the University of Miami med school and completed his residency at UCLA in 1980 en route to becoming one of the first board-certified emergency specialists. He founded the emergency medicine doctor training residency program at Orlando Regional Medical Center.

Dr. Stephen Dresnick founded Sterling in 1987 to help hospitals staff and manage emergency rooms. He sold the successful company in 1996, but the company that bought it foundered.He retains a certain ER, straight-to-the-point manner when talking about his field of expertise, whether it's finances or medical practice. For example, he says flatly, "In our experience, the No. 1 reason for malpractice suits is malpractice. After 20 to 30 years, we know not to do certain things that the young people coming out of residency still have to learn."

Tired of commuting from Miami to Orlando, Dresnick founded Sterling in Coral Gables in 1987 to help hospitals staff and manage their ERs -- for a profit. He recruited doctors, paid them, scheduled them and handled their billings. He did well enough at clinical outsourcing to take Sterling public in 1994.

A similar, separate company to handle billing, collections, cash management and payroll processing for 26 orthodontics practices flopped, but Sterling continued to prosper. From 1990 to 1995, it grew from $15.7 million in revenue to $115.7 million and from break-even to a $2.8-million profit. Sterling numbered 1,000 doctors, 101 ERs and 1.3 million patients annually. In 1996, Dresnick was named Ernst & Young's Florida Healthcare Entrepreneur of the Year.

That same year, San Diego-based FPA Medical Management, a fast-growing managed care company, bought Sterling for roughly double its stock price. Dresnick says he thought FPA's "value proposition was faulty from the very beginning. Nobody really had had a lot of experience in understanding some of these things." But, he asks, "how do you turn down multiples like that for your shareholders?" Dresnick went along in the $220-million stock acquisition as vice chairman of the FPA board. And he continued to run Sterling, getting $1 million to extend his contract and making, on paper,
$20 million in stock gains.

"Today I think managed care is nothing what we thought it would be," Dresnick says. "We thought it was going to take over the world, and it hasn't."

FPA certainly didn't. Fueled by investors, firms like FPA bid up prices -- and overpaid -- for practices and management companies. The hoped-for streamlining and cost-controls didn't materialize. "They had spent too much for the physician practices, and it wasn't enough value added," says longtime healthcare analyst Robert Wasserman, research director at Sky Capital in Boca Raton.

Dresnick, whose stock was worth $78.5 million at the peak, watched it sink. The stock he held on to eventually became worthless. "You live by the sword, you die by the sword," he says. "I think greed and avarice did them in." FPA's chief financial officer was convicted of fraud but, Dresnick says, FPA's biggest problem was that it didn't have the structure and experience to handle its own growth.

As FPA began to fail in 1998, Dresnick was named chief executive and led the firm's decision to file for bankruptcy -- the first by a major physician practice-management firm. The only viable business FPA could sell to pay its debts was Sterling. The best offer, valued at $110 million in cash and assumed liabilities, came from Coastal Physician Group, a Durham, N.C., company run by Steven Scott.

Butting heads
Like Dresnick, Scott was North Carolina-educated (Duke University) and a doctor (Ob-Gyn) who had seen opportunity in ERs. He founded Coastal in 1977 and moved beyond ERs into HMOs.

Dresnick and Scott were at odds once the deal was done. Dresnick says Scott told him he wanted him to stay on to run Sterling, then tried to lock him out of his office after the sale closed. "That's the first time I got an inkling of who the real Steve Scott was," Dresnick says.

Dr. Steven Scott bought Dresnick's company, Sterling, when its parent company ran into financial trouble. From the beginning, he and Dresnick were at odds.Scott says he never told Dresnick he would stay on and gave him four weeks to clear out. It would not be the last time they sparred over the facts. "It was a very sensitive time," Scott says. "We were trying to be compassionate."

Dresnick, bound by a three-year non-compete agreement, stayed out of the ER staffing ring and spent a lot of time fishing and learning about technology. He also started a medical billings company. Meanwhile, Scott looked to Sterling to make his money-losing Coastal profitable. In ER contracts, they were similar in size -- 151 contracts at Coastal to Sterling's 129. Scott assumed he could cut Sterling's overhead -- eliminating its executive staff, for one -- and get more production from the doctors.

He was right about the staff, wrong about the doctors. The company, renamed PhyAmerica Physician Group, later claimed that Sterling doctors, accustomed to a flat hourly wage with Sterling, resisted being moved to a productivity-pay system. The Sterling acquisition proved as unprofitable as the rest of PhyAmerica. (Dresnick says he's baffled by PhyAmerica's reported history. He says Sterling always was profitable.)

To keep afloat, PhyAmerica sold its receivables to Dublin, Ohio-based National Century Financial Enterprises. But the money from the sales didn't cover PhyAmerica's cash needs, so PhyAmerica also sold receivables for business it had performed, but not billed for, and for business it hoped to do -- to the tune of $186.5 million by 2001. The company lost $328.2 million over five years, investors fled and Scott took the company private in 2002, buying the shares he didn't own for 15 cents apiece.

National Century failed in November 2002, and PhyAmerica followed it into bankruptcy court. A PhyAmerica creditors attorney, Joel Sher of Baltimore, says creditors will recover just "pennies on the dollar."

Some of those pennies were to come from the sale of Sterling. Scott wanted it back. Dresnick did too.

Dresnick says the entrepreneur in him drove the decision: "We do what we do because we love what we do." After a 17-hour court proceeding in 2003, Dresnick, backed by a New York investment firm, won the decision with a bid valued at $90.5 million. He says he expected to rebuild the company "in what I thought was a relatively painless way, but it didn't work out that way."

Uproar
Indeed, Dresnick took a punch right away -- a low blow, as he sees it. One of Sterling's biggest profit centers was its three contracts with the Fort Lauderdale-based North Broward Hospital District, a government body that runs four major hospitals and styles itself one of the five largest public healthcare systems in the nation. The contracts represented $8 million in annual profit, according to Dres-nick. He says that Scott, although bound by a non-compete agreement, set up new corporate entities, cut a deal with the district to replace Sterling on the contracts and lured Sterling's doctors away with promises to indemnify them from legal action for breaking their non-competes with Sterling. "We've always competed, and up until this time we always competed on a fair basis," Dresnick says.

The deal created a tempest in Broward. Local newspapers noted that Scott is a prominent contributor to Republican causes and that Gov. Jeb Bush had appointed all the district board members. Also, a Scott attorney, Bill Scherer in Fort Lauderdale, happened to be the district's general counsel. J. Luis Rodriguez, the board chairman at the time, now says Scherer had an "obvious" conflict of interest and that Scott shouldn't have the contract.

Scherer's firm lost the district's business in August. Scherer's spokesman, Kevin Boyd, says Scherer had no conflict because he didn't make a recommendation on the contracts and because he didn't represent Scott or the district -- Scherer brought in another firm for the district -- on the contracts.

A bankruptcy court judge found Scott in contempt of an injunction barring him from meeting with Sterling employees and interfering with its contracts. Lawyers for PhyAmerica's creditors sued Scott, his companies and the district in bankruptcy court in Baltimore; Dresnick sued earlier this year in Broward Circuit Court. Scott "and I certainly don't share the same value system," Dresnick says. "I don't think Steve Scott believes the rules are made for him."

Scott denies doing wrong. One of his attorneys, Scott Baena, says the district made it clear before Dresnick won Sterling back that it wouldn't extend Sterling's contract and that the contempt order dealt not with the lost contracts but with meetings Scott had with a few Sterling doctors.

With his baby back, Dresnick moved to get it healthy. With the North Broward chunk of Sterling's revenue and profit gone, Dresnick quickly laid off 200 Sterling employees in its former North Carolina headquarters. Learning from FPA and Coastal, he plans to avoid debt and intimates a public offering may come. He has expanded Sterling into pediatricians, hospitalists -- doctors who specialize in hospital care -- radiologists and anesthesiologists. He projects $275 million to $300 million in revenue this year and says the company became profitable in the second half of last year. It has nearly 2,000 doctors, 215 ERs and a way to go before it can contend against clinical outsourcing heavyweight Team Health, based in Knoxville, Tenn., which posted $1.6 billion in revenue last year and has 450 hospital contracts nationally and contracts to run 23 ERs in Florida.

Guidance
A selling point in winning new contracts will be bringing technology to a field where much is still tracked on grease boards. Dresnick says Sterling is developing software that enables doctors to write prescriptions and discharge instructions, keep medical records and provide correct insurance-coded billing information to billing offices -- all electronically.

The software also provides guidance from lessons learned from two decades of malpractice complaints. For instance, ER doctors seeing a 50-year-old man complaining of back pain will be instructed to check for a ruptured aortic aneurysm.

"I've always been enamored with technology," says Dresnick. "That's what turns me on. I can sit here all day long and think of these things, but if I don't have an organization to implement them, they're just thoughts."

Why not start anew rather than rebuild Sterling? "I'm too old. Once you run a big company, it's very hard to start all over. The things you did when you were in your 30s and 40s aren't so easy anymore -- and you don't have to."

Clinical Outsourcing / Practice Management

PainCare Holdings, Orlando, a 310-employee pain management company, acquires practices and sells services to independent practices. Under CEO and co-founder Randy Lubinsky, it has grown quickly since its start in 2000. The company expects to show a $14-million to $14.5-million profit this year on $59 million to $60 million in revenue.

Pediatrix Medical Group, Sunrise, specializing in neonatal care and high-risk pregnancies, was founded in 1979 as a two-doctor practice in Fort Lauderdale. Under co-founder and CEO Roger J. Medel, an M.D. and MBA, it has grown to staff more than 220 neonatal intensive care units nationally and has 800 doctors (625 neonatal care) in 32 states and Puerto Rico. Describing itself as a "national group practice," the company also does research and claims the world's largest neonatal database. Last year, it turned a $98.3-million profit on $619.6 million in revenue.

AmeriPath, Palm Beach Gardens, a pathology company, last year had $1.5 million in profit on $507.3 million in revenue. Owned by New York private equity investment firm Welsh, Carson, Anderson & Stowe, AmeriPath has 400 pathologists, 15 regional labs, 36 satellite labs and performs in-patient diagnostic and medical director services at more than 200 hospitals.



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$3 billion fraud through a business that bought accounts receivables from health-care providers

The fraud trial of executives at what was once the nation's largest health-care finance company opened Thursday in Columbus with competing claims of what caused the company's multibillion-dollar collapse.

U.S. District Court Judge Algenon L. Marbley began the National Century Financial Enterprises Inc. trial by instructing the 15 seated jurors how they should decide the fates of the five former company executives.

The government is alleging the five executives and two others who will be tried later, including National Century CEO Lance Poulsen, masterminded a $3 billion fraud through a business that bought accounts receivables from health-care providers at a discount and packaged the accounts as bond funds, which were sold to raise money to buy more accounts. The government has accused the executives of diverting $2.84 billion for their benefit.

The Dublin company collapsed into bankruptcy in 2002. The executives were later indicted on conspiracy, securities, fraud and money laundering charges. Poulsen also faces claims he tried to bribe a government witness.

"This case is about promises made, promises broken and a massive cover-up," said Assistant U.S. Attorney Douglas W. Squires, who began the day's opening arguments.

Over the course of 25 minutes, Squires told the jury how National Century's business plan was supposed to work, then he alluded to payments the company allegedly made to health-care providers in which National Century's owners and founders - Poulsen, Donald H. Ayers and Rebecca S. Parrett - had financial interests.

In the end, Squires said the case is a simple one of fraud and cover-up.

Defense lawyers, meanwhile, disputed the government's claims, stressing the complexity of everything surrounding National Century.

Brian Dickerson, attorney for the 71-year-old Ayers, said he expects the government will give jurors just a fraction of the story during the trial.

Dickerson told jurors that evidence will show Ayers, the company's chief operating officer, sunk $2 million of his money into National Century, a company he said helped hospitals and health-care facilities stay in business.

Merck to Pay $670 Million for Medicaid Fraud

The drugmaker failed to pay the appropriate rebates to Medicaid and other goverment health care programs, and also paid kickbacks to doctors and hospitals to induce them to prescribe various meds. The allegations were brought in two separate lawsuits filed by whistleblowers under the False Claims Act. Merck has also agreed to a Corporate Integrity Agreement, which means good behavior is now required for the next five years.“Not only is the combined recovery in these two cases one of the largest healthcare fraud settlements ever achieved by the Justice Department,” says Attorney General Michael Mukasey, in a statement, “it reflects our continuing effort to hold drug companies accountable for devising pricing schemes that deliberately seek to deny federal health care programs the same lower prices for drugs that are available to other commercial customers.” Here is the statement from Merck, which signaled this deal two months ago by discussing a $670 million charge to cover investigations into Medicaid marketing….read rest of story

James Happ is scheduled for trial in October because he wasn't charged in connection with the company's failure until last May.

National Century's indicted Poulsen hires new lawyers
The founder and former chief executive of National Century Financial Enterprises Inc. has hired lawyers from Charlotte, N.C., to represent him in criminal trials stemming from the Dublin health-care finance company's collapse in 2002.

Anderson Terpening PLLC, a white-collar criminal defense law firm that specializes in fraud cases, said Lance K. Poulsen retained its lawyers for an obstruction trial scheduled for March and a securities fraud trial scheduled for August. Poulsen needed new lawyers because his former defense attorneys pulled out of the case last year.

Poulsen, 64, faces 13 counts of securities fraud, concealment of money laundering, conspiracy, wire fraud and money laundering conspiracy in connection with company's financial collapse. The federal government later indicted the former CEO and an associate, alleging they attempted to bribe a government witness.

Five other National Century executives are being tried in a criminal case that began this week in U.S. District Court in Columbus. The government has alleged those five executives, along with Poulsen and another executive were behind a $3 billion fraud at the company.

Poulsen's lawyers, Thomas and James Tyack of Tyack Blackmore & Liston Co. LPA, pulled out of the case last November, telling a judge that Poulsen's Oct. 23 indictment on conspiracy charges created a conflict of interest. According to the indictment, Poulsen and associate Karl A. Demmler allegedly hatched a scheme to give $500,000 to an ex-National Century executive if she would develop "amnesia" when testifying as a government witness about the firm's collapse. A revised indictment in January added a count each of witness tampering and witness tampering by influencing testimony to the conspiracy charges.

Poulsen and Demmler in January pleaded not guilty to the charges.

Anderson Terpening said its attorneys have argued for Poulsen's release from the Ross County Jail in Chillicothe, where he was transferred in January from the Franklin County Jail, saying having him out from behind bars is necessary to allow "direct and daily interaction" with his lawyers and complex documents.

Poulsen isn't the only National Century executive scheduled for a trial apart from the five now in court. James Happ is scheduled for trial in October because he wasn't charged in connection with the company's failure until last May.

NCFE...financially unstable were evident six years before it collapsed.

There is so much more to this story that has yet to be told......and who is really behind this so called Financial Institute related to HEALTHCARE


Feb 08, 2008 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) -- CYFL | news | PowerRating | PR Charts -- Signs that the National Century Financial Enterprises company was financially unstable were evident six years before it collapsed, the government's first witness in a fraud trial for its top executives testified.

William Parizek served as National Century's director of corporate financing from October 1996 until he resigned in January 1997. He said he moved his family from Kansas to Dublin already knowing a lot about the company.

His former employer, Koch Industries, had asked him to investigate National Century before the oil and gas company agreed to invest in the Dublin-based health-care financing company.

But less than a month after starting to work at National Century, Parizek said he realized investors, including his former company, had been duped.

"I felt (National Century) would be unable to survive for more than two or three months" because they were so shaky financially, Parizek testified.

National Century loaned more to small hospitals, clinics and nursing homes than they could repay, he said.

Parizek said he disagreed with National Century's practices so strongly that he quit without having another job. That meant giving up a $75,000 annual salary and a potential $3 million bonus if he raised $50 million in equity capital for the company.

Former National Century executives Rebecca S. Parrett, Donald H. Ayers, James E. Dierker, Roger S. Faulkenberry and Randolph H. Speer are on trial on charges of fraud, securities fraud, wire fraud and money laundering in connection with the company's collapse, which eventually led to the loss of nearly $2 billion by investors.

Parizek's testimony was cut short yesterday afternoon after questioning by defense attorney Brian Dickerson revealed that Parizek still had handwritten notes of his warning company executives about the financial problems.

Prosecutors had not given defense attorneys copies of the notes.

Federal Judge Algenon L. Marbley had the court make copies of Parizek's 34 pages of notes and gave them to defense attorneys.

Marbley said he expects copies of such documents to be given out at least a day in advance and warned prosecutors not to let it happen again.

The testimony came after a morning in which defense and prosecuting attorneys painted vastly different pictures in opening statements as to the reasons behind the company's demise.

"This is a case about promises made, promises broken and a massive coverup," assistant U.S. attorney Doug Squires said.

The company's financial problems stemmed in large part from loaning hundreds of millions more to health-care providers than what the companies qualified for, Squires said.

Dickerson said National Century had problems with communication among its divisions, but that there were always rating agencies, auditors, banks and investors watching everything they did.

"If it's a coverup, there's a lot of people covering up a lot of things," he said.

Other defense attorneys also said the downfall wasn't the result of criminal activity.

"There is a vast difference between bad business decisions and criminal activity," James Ervin Jr. said. "This case is about business decisions, not illegal conduct."

National Century started in 1991 with fewer than 10 employees and grew to 357. It loaned money to more than 2,000 health-care providers, helping them to stay in business.

"You cannot be the backbone to so many health-care providers across the country if you are not making good decisions," defense attorney Javier Armengau said.

Before the trial started yesterday, one juror asked to be dismissed.

Marbley said he excused a man because of work and family conflicts. The jury is now made up of eight women and four men, with three women serving as alternates.

jandes@dispatch.com

In a surprise, NCFE trial kickoff draws in the publicOhio media pays attention to arcane fraud case that's likely to drag on for quite a while


By: Cinda Becker

Story posted: February 13, 2008 - 1:34 pm EDT


One might think that the embarrassing if not ignoble collapse of what was once described as “the country’s largest provider of healthcare accounts-receivable financing” would only be of interest to some affected healthcare providers, accounting nerds and burned Wall Street investors. But the criminal trial of five former executives of National Century Financial Enterprises is actually front-page news in Columbus, Ohio, where the trial got under way last week in a U.S. District courtroom.

In fact, based on a story that ran on the front page of the Columbus Dispatch the Sunday before the trial, defense attorneys motioned last week to conduct individualized and comprehensive voir dire of the dozens if not hundreds of prospective jurors. Without one-on-one questioning to determine otherwise, the attorneys said they were concerned that the prominent media coverage might have contaminated the pool.

For those of you who did not work for one of the 275 healthcare providers that supposedly went bankrupt after NCFE’s collapse, or are not accountants, burned investors or Columbus-area residents, here’s the back story: NCFE purchased medical accounts receivable from providers typically in dire financial straits, raising capital by selling AAA-rated asset-backed bonds or notes to investors. Prosecutors are alleging that it was all a sham that eventually led to the November 2002 collapse of NCFE days after FBI agents raided its Dublin, Ohio, headquarters. They claim that the fraud cost investors more than $1.9 billion.

Fortunately for the court calendar, Judge Algenon Marbley, a folksy man both pragmatic and aware of the legal rules, found a way around the voir dire motion that was amenable to both sides. Even with that, jury selection took three full days, putting the trial, which is expected to last four to six weeks, behind by a full day before it even got started.

The irony here is that jury selection traditionally gives lawyers an opportunity to taint the jury pool by their line of questioning, and this was very much apparent on the third day of questioning. The pool had already been whittled down to a mere courtroom-size group with prospective jurors sitting in every available seat, including the jury box. Marbley started things off that day by asking if a six-week trial would be a hardship for anyone. Several people raised their hands, including a waitress who said she would not get any pay and a young man who informed the judge that he worked for his family’s plumbing business.

“I was informed yesterday by my father that he would not pay me,” the young man said, lightening the mood in the courtroom.

Defense attorneys’ questions to the prospective jurors grew progressively rhetorical in nature after the jurors were first screened on direct questions like whether they had been victims of bankruptcy or whether they had ever been involved in any whistle-blower complaints. (One prospective juror had been employed by WorldCom and another by the now defunct Dublin Securities.)

Questions then seemed to get broader and more tangential as the pool was quizzed on their knowledge of financial concepts; auditors, specifically Deloitte & Touche; credit-rating agencies; trustees; and whether anyone had ever bothered to read their credit-card agreements. They also were asked how they felt about executive compensation—is $500,000 a year too much?—and whether they knew what a “144A offering” was. The pool was casually surveyed as to how many of them held job titles that had anything to do with what they actually did for a living and whether anyone had ever heard of the term “healthcare securitizations.” (No one had, or at least no one admitted they had.) During the course of this line of questioning, one woman in the back of the courtroom revealed that she is a personal friend of the chief executive officer of Deloitte and her husband had been at one time chief financial officer of Ford and Battelle. She was not selected.

Another prospective juror who was not selected was a man who works for Cardinal Health, also headquartered in Dublin, who said he reported directly to a vice president. On the other hand, one of the few people who raised their hands when asked if they actually wanted to serve on this jury was selected. When asked why he wanted to serve, he replied, “I think it’s a duty, and if anyone didn’t know anything (about this case) when they came in, I was him.”

No one connected with the trial has any inflated hopes of swift justice. Each of the five defendants had at least two defense lawyers sitting with him, and there were four lawyers sitting at the U.S. attorney’s table so that whenever there was a request for a sidebar—and there were many—there was a sea of dark suits huddling to the side of the courtroom while Musak played over the courtroom speakers. Yet for all of the dissension in the reams of motions and trial briefs that are accumulating with the case, the prosecutors and defense attorneys actually seemed to get along very well.

But missing from the defense side of the courtroom is perhaps the most contentious principal involved with NCFE: Lance Poulsen, one of NCFE’s founders and its former president, chairman and chief executive officer. Poulsen’s case was severed from the trial earlier this year; he will be tried in August. In the meantime, considered a flight risk, he is sitting in jail outside Columbus, facing separate charges of witness tampering at a trial expected to take place this spring.

Poulsen has fallen far. NCFE and Poulsen were once held in high enough regard in the Columbus area that the Dispatch profiled him in its business section in May 2000. Poulsen noted in the profile that marketing had been his primary focus over the previous 32 years of his career. His first professional position was with Hamm’s Brewery in St. Paul, Minn., according to the profile. He also said that as a result of his first job as a teenager working as a box wrapper and part-time salesman at the Robert Hall clothing store, he had learned, “Selling and marketing is more lucrative than packaging.”

As for his biggest mistake (up until that point in time), he recalled a boating accident that, in hindsight, might have been prophetic. He said: “Once while cruising in the coastal waters of Florida, I inadvertently turned the chart upside down and ran my vessel hard aground at a high speed.” How did he resolve the mistake? “I now make sure I always have the chart right-side up. Much like life, some things appear different than they actually are, and we must take time to examine the facts.

Multi Billion $$$ Fraud and a $250,000 fine

National Century exec says colleagues lied to investorsFebruary 11, 2008 5:37 PM ET
The final hours of testimony by former National Century Financial Enterprises Inc. executive Jon Beacham became heated Monday afternoon in U.S. District Court.

The former director of securitizations at Dublin-based National Century argued with a defense lawyer over whether he believed he had engaged in a criminal act. Leonard Yelsky, an attorney for defendant James Dierker, who is standing trial with four other former National Century executives on criminal charges, implied Beacham didn't have all the facts about the company to know whether anything illegal took place.

"Sir, I don't need all the facts. I have enough," Beacham said, adding he knew all the defendants made a material omission when providing information to investors, which he said was the same as lying.

Under questioning by government attorneys Friday, Beacham testified he and other executives at the company, then the nation's largest health-care financing company, lied to investors and ratings agencies when the business issued its NPF XII fund.

"There was definitely material omissions at (investor) presentations," Beacham told jurors Friday.

Beacham, 41, headed the department that sold asset-backed bonds to investors.

When defense attorneys got their chance to question Beacham Monday, they tried to show he was an unreliable witness because he changed his earlier not guilty plea after agreeing to be a government witness. Now a stay-at-home father in Gross Pointe, Mich., Beacham pleaded guilty in July to a count each of securities fraud and conspiracy to commit securities fraud and wire fraud. He also agreed to forfeit $330,000.

He faces up to five years in prison with three years of supervised release, plus a $250,000 fine. He has yet to be sentenced, and as of January the government had not recommended his sentence be reduced.

Under later questioning by defense attorneys, Beacham testified he found out in October 2002 that National Century CEO Lance Poulsen had used all of NPF XII's reserve fund to buy additional accounts receivables. Beacham recounted how he alerted investors to the problem.

But Beacham qualified that even though the problem was disclosed in late 2002, he said there was still underlying conspiracy because no one told investors about potential problems earlier.

During Beacham's time on the witness stand Monday morning, defense lawyers spent their time asking him about his plea agreement with the government, implying he made a deal with the Justice Department not because he thought he was guilty, but because he wanted to reduce time away from his wife and four children.

Beacham was indicted in 2006 with the five executives now on trial -- National Century's chief operating officer, Donald Ayers, 71; the company's vice chairwoman, Rebecca Parrett, 58; Randolph Speer, 57, its chief financial officer; Roger Faulkenberry, 46, an executive vice president; and Dierker, 39, a vice president. The five are facing criminal charges they were behind a $3 billion fraud at the privately held company, which went bankrupt in 2002.

National Century financed health-care businesses by purchasing accounts receivables from medical providers at a discount and then packaging the accounts as bond funds. The government has accused the executives of diverting $2.84 billion for their benefit.

All have pleaded not guilty to charges that include conspiracy, securities, fraud and money laundering charges.

Poulsen, 64, is set for trial in August, five months after he is scheduled to be tried on allegations he and an associate attempted to bribe a government witness.

If found guilty, the defendants face 30 years to life in prison.