Government Intervenes in Lawsuits Against Health Management Associates Inc. Hospital Chain Alleging Unnecessary Inpatient Admissions and Payment of Kickbacks

The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals, the Justice Department announced today. The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington, and West Virginia.
“Unlawful financial relationships between hospitals and physicians solely to increase referrals are, unfortunately, a common practice that corrupts the health care system,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The system also suffers a direct financial hit when hospitals fraudulently increase admissions where they are not indicated, solely to benefit hospitals’ bottom line. We will not relent in our efforts to combat these kinds of fraudulent schemes and recover funds for the Medicare program.”
“The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”
The lawsuits allege that HMA’s corporate officers, at the direction of Newsome, exerted significant pressure on doctors in the emergency department to admit patients who could have been placed in observation, treated as outpatients or discharged, and that this resulted in the submission of inflated or false claims to federal health care programs. One lawsuit also alleges that patients were improperly admitted for scheduled surgical procedures that should have been done on an outpatient basis. The complaints further allege that HMA paid kickbacks, either in the form of bonuses or awarded contracts, to physician groups staffing HMA emergency rooms to induce the physicians to admit patients unnecessarily.
In addition, the lawsuits allege that HMA paid kickbacks to other physician groups to induce referrals. For example, HMA allegedly provided improper remuneration, both through the provision of free office space and staffing and through direct payments, to Primary Care Associates, a physician practice group in Port Charlotte, Florida, in exchange for referrals to two HMA hospitals in Florida. HMA also allegedly paid kickbacks to physicians in Lancaster, Pennsylvania, by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Statute and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“This intervention decision marks the culmination of a lengthy and comprehensive investigation into a variety of serious fraud allegations against one of our district’s largest health care providers,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “We hope that this case will serve as a reminder to our provider community that this office is fully engaged in the struggle against misconduct of this kind.”
“Improper hospital admissions cost the government millions of dollars in unnecessary fees and subject patients to excessive treatment and needless risk, driving up the cost of health care,” said U.S. Attorney for the Western District of North Carolina Anne M. Tompkins. “The government will pursue aggressively providers that boost their profits at the expense of Medicare and other government programs.”
“HMA’s submission of claims to Medicare, Medicaid, and TRICARE for unnecessary inpatient stays is a serious matter that threatens the integrity of our entire health care system, and the end result is that those who need health care cannot afford it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore. “The Middle District of Georgia is committed to fighting health care fraud.”
“Investigations such as these are a very high priority for the FBI because of the potential impact to the nation’s health care system and to the public,” said FBI Assistant Director Ron Hosko. “Because of the priority nature of these cases as well as their complexity, we have created a centralized team to provide nationwide support to our field offices called the Major Provider Response Team. The FBI is committed to working with our partners in these types of investigations and appreciates the public’s involvement in the process.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases. The eight lawsuits are pending in the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania, and District of South Carolina.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Offices for the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Middle and Eastern Districts of Pennsylvania, and District of South Carolina; the Department of Health and Human Services Office of Inspector General; and the Federal Bureau of Investigation.
The cases are captioned United States ex rel. Paul Meyer v. Health Mgmt. Assocs. Inc., et al.,11-62445 cv-Williams (S.D. Fla.); United States ex rel. Brummer v. Health Mgmt. Assocs. Inc., et al.,3-09-cv-135 (CDL)(M.D. Ga.); United States ex rel. Williams v. Health Mgmt. Assocs. Inc. et al., 3:12-cv-151 (M.D. Ga.); United States ex rel. Plantz v. Health Mgmt. Assocs. Inc., et al., 13C-1212 (N.D. Ill.); United States ex rel. Miller v. Health Mgmt. Assocs. Inc., et al., 10-3007 (E.D. Pa.); United States ex rel. Mason v. Health Mgmt. Assocs. Inc., et al., 3:10-CV-472-GCM (W.D.N.C.); United States ex rel. Nurkin v. Health Mgmt. Assocs. Inc., et al., 2:11-cv-14-FtM-29DNF (M.D. Fla.); United States ex rel. Jacqueline Meyer & Cowling v. Health Mgmt. Assocs. Inc., et al.; 0:11-cv-01713-JFA (D.S.C.).
The claims asserted against HMA and Newsome are allegations only, and there has been no determination of liability.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Freeport Physician Sentenced to 30 Years for Illegally Prescribing Controlled Substances

PENSACOLA, FL—Freeport physician Robert L. Ignasiak, Jr., 58, was sentenced to 30 years in prison yesterday for health care fraud, illegally distributing controlled substances, and failing to appear for trial. The sentence imposed by the court was announced by Pamela C. Marsh, United States Attorney for the Northern District of Florida.
Between 2001 and 2005, while operating the Freeport Medical Clinic, Ignasiak developed a reputation as a physician who freely prescribed highly addictive controlled substances. During that time, Ignasiak prescribed drugs such as hydrocodone, oxycodone, morphine, diazepam, and alprazolam in dosages and combinations that caused his patients to abuse and become addicted to the drugs. Ignasiak continued to prescribe these substances even after becoming aware that his patients were abusing them. He did this in spite of indications that his patients were not taking the medicines as prescribed, were stealing drugs, were “doctor shopping,” were taking the medicines with alcohol, were suffering overdoses, or were exhibiting other out-of-control behaviors. Ignasiak’s illegal prescribing practices resulted in the deaths of several of his patients.
Ignasiak was initially indicted on these charges in 2008. Following a jury trial in the fall of that year, Ignasiak was convicted of 12 counts of health care fraud and 31 counts of illegally distributing controlled substances. In 2012, Ignasiak’s convictions were reversed on appeal, and he was released from custody pending a retrial. On October 31, 2012, Ignasiak faked his own suicide and fled. A warrant was issued for his arrest. He was arrested in Coral Springs, Florida, in September 2013, and his retrial had been scheduled for December 2, 2013.
In October 2013, Ignasiak pled guilty to 12 counts of health care fraud, 29 counts of illegally distributing controlled substances, and one count of failing to appear for trial.
The charges were the result of a four-year joint investigation by the North Florida Health Care Fraud Task Force, composed of the Federal Bureau of Investigation-Jacksonville Division, the Florida Department of Financial Services, the Florida Department of Law Enforcement, the Florida Attorney General’s Office, the Drug Enforcement Administration-Miami Division, the National Drug Intelligence Center Document Exploitation Division, the Defense Criminal Investigative Service, the Walton County Sheriff’s Office, and the State Surgeon General-Florida Department of Health.
Assistant U.S. Attorneys Karen Rhew-Miller and Alicia Kim prosecuted this case.

Brotherly Love Ambulance EMT Charged in Health Care Fraud Scheme

PHILADELPHIA—Neel Jackson, 35, of Philadelphia, Pennsylvania, was charged today by information with health care fraud and aiding and abetting health care fraud, announced United States Attorney Zane David Memeger.
In July 2010, Feda Kuran, who is charged elsewhere and has pleaded guilty, began operating Brotherly Love Ambulance Inc. with a co-schemer. According to the information, Jackson, an Emergency Medical Technician (EMT) employed by Brotherly Love, transported patients by ambulance when those patients could have been transported safely by other means and were, therefore, not eligible for ambulance service under Medicare and Medicaid requirements. It is further alleged that Jackson and others completed paperwork, including “run sheets,” representing that patients needed ambulance services, when he knew that they were able to walk or to be transported by public transportation or para-transit van. In addition, it is alleged that Jackson gave envelopes he understood to contain cash or other payments to induce patients to allow Brotherly Love to transport them and/or to induce them to remain with Brotherly Love. Finally, it is alleged that Jackson received payments for referring patients to Feda Kuran and/or Brotherly Love. According to the information, as a result of Jackson’s actions, the Medicare program paid more than $200,000 in inappropriate bills. As a result of the overall scheme at Brotherly Love, it is alleged that the Medicare program paid more than $2 million in inappropriate bills.
If convicted, the defendant faces a maximum possible sentence of 10 years of in prison, three years of supervised release, a $250,000 fine, a $100 special assessment, and an order of restitution and forfeiture.
The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Matthew J.D. Hogan and Paul W. Kaufman.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.

Southern California Doctor Sentenced to More Than Three Years in Prison for Role in Medicare Fraud Scheme

SACRAMENTO, CA—Dr. Emilio Louis Cruz, III, 61, of Carson, California, was sentenced today by United States District Judge Morrison C. England, Jr. to three years and two months in prison and ordered to pay $601,581 in restitution for his role in a conspiracy to commit Medicare fraud, United States Attorney Benjamin B. Wagner announced.
According to court documents, Cruz earned an undergraduate degree from Johns Hopkins University and his medical degree from Yale University. He held medical licenses in three states and was board certified in neurology. According to his plea agreement and the testimony heard at the trial of Cruz’s co-defendants, doctors Ramanathan Prakash, Alexander Popov, and Lana LeChabrier, and a man named Vardges Egiazarian owned and controlled three health care clinics in Sacramento, Richmond, and Carmichael from February 2006 through August 2008. Over this time period, Cruz ran the practice at the Carmichael clinic on 3609 Mission Avenue. He established a Medicare provider number for the clinic and established a bank account into which Medicare funds were deposited. Hundreds of claims were submitted to Medicare seeking reimbursement for services allegedly performed at the Carmichael clinic under Cruz’s care. Cruz, however, never treated a single patient. Indeed, during the majority of the time that the Carmichael clinic operated, he was living and practicing in North Dakota. A similar pattern was followed at the other two clinics operated by Egiazarian, and not one of the physicians submitting bills to Medicare ever treated a single patient.
According to evidence at trial, the clinic’s patients were primarily elderly and non-English speaking. They were recruited and transported to the clinics by individuals who were paid according to the number of patients they brought to the facilities. Rather than being charged a co-payment, the patients were paid for their time and the use of their Medicare eligibility, generally $100 per visit. False charts were created stating that each patient received comprehensive exams and a broad array of diagnostic tests. Few of these tests were ever performed, none were performed based on any medical need, and clinic employees filled out other portions of the charts using preprinted templates. Some clinic employees admitted to performing various tests on themselves, and placing the results in patient files.
In all, the three clinics submitted more than $5 million worth of fraudulent claims to Medicare, $1.7 million of which was actually paid. With respect to claims submitted for services purportedly provided by Cruz at the Carmichael clinic, Medicare paid $601,581.
The only defendants to go to trial, doctors Prakash, Popov, and LeChabrier, were found guilty by a jury on July 8, 2011, of conspiracy to commit healthcare fraud and various counts of health care fraud.
This case is the product of an investigation by the Office of the Inspector General for the Department of Health and Human Services and the Federal Bureau of Investigation. Assistant United States Attorneys Philip Ferrari and Jean M. Hobler are prosecuting the case.
Others who were charged in this matter include:

• Ramanathan Prakash, a doctor involved with the Sacramento clinic, is currently serving 10 years in prison.
• Lana LeChabrier, a doctor involved with the Richmond clinic, is currently serving six and a half years in prison.
• Vardges Egiazarian pleaded guilty early in the case and has served his six-and-a-half years' sentence.
• Alexander Popov, a doctor involved with the Sacramento clinic, is currently serving eight years and one month in prison.
• Nazaret Salmanyan, an unlicensed ultrasound technician who worked at all three clinics, pleaded guilty and on November 14, 2013, was sentenced to 20 months in prison.
• Derrick Johnson, a doctor involved with the Richmond clinic, pleaded guilty and is awaiting sentencing.
• Zoya Belov, a nurse licensed in Russia but not the United States who worked at all three clinics, pleaded guilty and is awaiting sentencing.
• Liw Jiaw Saechao, aka Jenny Saechao, recruited patients, pleaded guilty and is awaiting sentencing.
• Migran Petrosyan, a co-owner of the Richmond clinic, pleaded guilty, and on December 5, 2013, was sentenced to 27 months in prison.
• Shushanik Martirosyan, a medical biller who submitted claims to Medicare for all three clinics, pleaded guilty and on October 24, 2013, was sentenced to 18 months in prison.

Suspect Allegedly Caught Coaching How to Fake Depression

Court documents released today include a transcript of a suspect in an alleged multi-million dollar fraud coaching a New York City employee on how to fake depression and anxiety.

The call allegedly recorded Joseph Esposito, 70, advising the person to "pretend" to have "panic attacks."

He also "coaches" the employee on how to behave when faced with a medical panel considering the application for disability benefits:

"Okay. When you get there, usually the first question they ask you is "How did you get here?" You're gonna say "My sister drove me." The next question they generally ask is "Who does the cooking, cleaning, shopping in your house?" You're gonna say "My mother" and your sister. They, they drove [U/I] for you. When you get to see the doctor, he's gonna ask you questions. He's not trying to trick you. He, uh, they ask these questions, different variations for everybody. They just want to see if you can concentrate. They'll say to you, "But what do you do with yourself all day? How do you spend your day?" You're gonna tell 'em "I don't sleep well at night. I'm up three, four times. Usually, I, I nap on and off during the day. I put the television on, you know, I keep changing channels 'cause I, I can't concentrate on the television. Just, just to hear a voice in the house." And they're liable to say, "From the word—spell the word "world," so you go "W-R-L-D." Then they're gonna say "Spell it backwards." You think about it, and you can't spell it backwards. Then they're liable to say "From a hundred, subtract seven." You know, a hundred, ninety-three, and then you're trying to concentrate, and make it to eighty-six or eighty-five, you know. You're not too sure. Then they might tell you, uh—"I'm going to tell you three things to remember. A spoon, a fork, and a dish," and they're going to ask you later on in the conversation to remember them. You remember one of them. No jewelry, no cellphone – uh, when you're talking to the guy, don't look directly at him. You know, put your head down now and then, don't answer right away. You know, pause for a second. You're just trying to show that, you know, you're depressed. You, you can't, you, you don't have any desire for anything, and if can, you pretend you have panic attacks?

More than 100 current, former NYC employees to be charged with disability scam

A law enforcement official says more than 100 current and former city workers, including dozens of police officers and firefighters, are being charged with faking psychiatric problems in order to get federal disability benefits.

Arrests in the sweeping case began early Tuesday morning. An afternoon news conference is planned at Manhattan District Attorney Cyrus R. Vance Jr.'s office. Arraignments are expected to begin Tuesday.

The official says the scam stretched back more than two decades, with the ex-officers and other workers claiming mental health problems so severe that they couldn't work at all.

The official wasn't authorized to discuss the case and spoke on condition of anonymity.

Huge 9/11 Fraud Case Accuses Retired New York Cops, Firefighters

Scores of retired New York City police, fire and corrections officers were arrested today in a crackdown on disability fraud stemming from the Sept. 11 terror attacks. The fraud cost taxpayers millions of dollars, prosecutors claim.

The Manhattan district attorney's office accuses the retired workers, along with their lawyers and doctors, of faking work-related stress, including feigned psychiatric disorders related to 9/11.

Among those busted today was John Minerva, the disability consultant for the Detectives Endowment Association, officials said.

Today's arrests cap a two year investigation, aided by federal investigators, the city's Department of Investigation and the NYPD's Internal Affairs Bureau.

The alleged fraud cost taxpayers hundreds of millions of dollars in improper Social Security benefits.

None of the accused actually suffered from debilitating stress, officials claim. Many were caught working after retirement, a violation of disability benefits.

And some of the retired officers retained their gun permits. Retired officers cannot possess guns if they are being treated for stress.

The 9/11 attacks took a heavy toll on the city's cops, called "New York's Finest," and firefighters, dubbed "New York's Bravest." The casualty count from the terror attacks included 23 police officers and 343 firefighters.

Most of the arrests in the fraud sweep took place in the city, with others being busted in Florida and elsewhere in New York State.

It was the second 9/11 scam to be revealed this week. On Monday, two New Jersey men pleaded guilty to raising and keeping $50,000 for a Sept. 11 charity that was supposed to help families who lost loved one in the catastrophe.

Thomas Scalgione and Mark Niemczyk never gave any of the more than $50,000 in proceeds to the victims' families or to charities as promised, they told the court.