Healthcare Fraud

October 24, 2016

Los Angeles licensed occupational therapist Keith Canlapan pleaded guilty for his role in a $2.6 million Medicare fraud scheme that involved billing for occupational therapy services not provided.  As part of his guilty plea, Canlapan admitted that through his employer, occupational clinic JH Physical Therapy, he billed Medicare for occupational therapy services never provided.  The patients instead received massage and acupuncture services which are not reimbursable under Medicare.  DOJ

October 24, 2016

Daybreak Partners, LLC, a holding company for a number of subsidiaries that operate and manage skilled nursing facilities throughout Texas, agreed to pay $5.3 million to resolve allegations that they billed Medicare and Medicaid for materially substandard nursing services.  Specifically, the government alleged that skilled nursing services provided at four nursing facilities Daybreak owned and managed (Deerings Nursing and Rehabilitation, L.P., Mansfield Nursing and Rehabilitation, L.P., Marine Creek Nursing and Rehabilitation, L.P. and Mineral Wells Nursing and Rehabilitation, L.P.) were materially substandard and/or worthless because Daybreak: (i) failed to follow appropriate fall protocols; (ii) failed to follow appropriate pressure ulcer and infection control protocols; (iii) failed to properly administer medications; (iv) failed to follow doctors’ orders; (v) failed to provide appropriate mental health treatment; (vi) failed to answer several residents’ call lights promptly; (vii) failed to institute appropriate infection control measures; (viii) failed to provide a habitable living environment, adequate equipment, and needed capital expenditures; and (ix) failed to investigate and report serious incidents to appropriate authorities on several occasions.  DOJ (NDTX)  

November 11, 2016

– New York announced the arrest of attorney Anthony Cornachio, 74, of Garden City and charges against NRI Group, LLC (“NRI”) and Canarsie A.W.A.R.E., Inc. (“Canarsie”), which are Medicaid-enrolled drug treatment programs controlled by Cornachio. The Attorney General’s Medicaid Fraud Control Unit (“MFCU”) also charged three-quarter housing operators Yury Baumblit, 66, and Rimma Baumblit, 60, of Brooklyn, and their company Back on Track Group, Inc. In papers filed in New York City Criminal Court, Kings County and New York State Supreme Court, Kings County, prosecutors allege that Yury Baumblit and Rimma Baumblit, in exchange for payments from Cornachio’s companies, forced residents of their “three-quarter” homes to either face eviction or attend NRI and Canarsie regardless of the residents’ actual need for drug treatment services. During the course of this scheme, which dates back to at least 2013, Cornachio allegedly paid Back on Track Group, Inc. over $900,000.00 in illegal kickbacks. As a result of this kickback scheme, prosecutors allege that Cornachio, through NRI and Canarsie, submitted, and caused to be submitted, at least $1.7 Million in false claims for reimbursement to Medicaid. NY

October 19, 2016

Elaine Davis and Pramela Ganji, the owner and medical director of New Orleans medical service company Christian Home Health Inc., were respectively sentenced to 96 months and 72 months in prison for their involvement in a $34 million Medicare fraud scheme.  According to evidence introduced at trial, Davis directed a massive fraud scheme through her company, using elderly and disabled Medicare recipients in New Orleans and adjacent communities to fraudulently bill Medicare for home health care services these patients did not require.  DOJ

October 7, 2016

Pilar Garcia Lorenzo, the owner of Tampa home health care agency Gold Care Home Health Services Inc., was convicted for her participation in a multimillion-dollar health care fraud and money laundering scheme.  According to evidence presented at trial, Gold Care submitted millions of dollars’ worth of false and fraudulent claims to Medicare for home health services that had never been provided and had not been legitimately prescribed by a physician resulting in $2.5 million in improper Medicare reimbursements.  DOJ

October 6, 2016

Valery Bogomolny, the owner of Los Angeles medical supply company Royal Medical Supply, was sentenced to 60 months in prison for his role in a scheme that fraudulently billed more than $4 million to Medicare.  According to evidence presented at trial, Bogomolny used his company to improperly bill Medicare for power wheelchairs, back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed that Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  DOJ

October 4, 2016

Arizona not-for-profit community health system Yavapai Regional Medical Center agreed to pay $5.85 million to resolve claims that it violated the False Claims Act by misreporting data about the hours worked by its employees on its annual cost reports, which improperly inflated the amount of money it received from the Medicare program.  According to the government, the artificially inflated wage index was used by the Medicare program when it calculated the amount of the payments it made to Yavapai.  The allegations originated in a whistleblower lawsuit filed by Gregory Kuzma under the qui tam provisions of the False Claims Act.  Mr. Kuzma will receive a whistleblower award of $1.17 million from the proceeds of the government's recovery.  DOJ (DAZ)

October 3, 2016

Major hospital chain Tenet Healthcare Corporation and two of its Atlanta-area subsidiaries, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., agreed to pay over $513 million to resolve charges they violated the False Claims Act and Anti-Kickback statute through illegal kickbacks it paid in exchange for patient referrals.  The allegations originated in a whistleblower lawsuit filed by Ralph Williams under the qui tam provisions of the federal and Georgia False Claims Acts.  Mr. Williams will receive a whistleblower award of approximately $84 million from the proceeds of the federal and state civil recoveries.  DOJ

October 3, 2016

California orthopedic clinics Orthopedic Associates of Northern California, San Bernardino Medical Orthopaedic Group Inc. (doing business as Arrowhead Orthopaedics) and Reno Orthopaedic Clinic agreed to pay a combined $2.39 million to resolve federal and state False Claims Act allegations that they improperly billed federal and state health care programs for reimported osteoarthritis medications, known as viscosupplements.  According to the government, the clinics purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when such reimported viscosupplements were not reimbursable by those programs.  The reimported products allegedly included labeling in foreign languages and in English for additional uses not approved in the United States.  The government further alleged there was no manufacturer assurance that the drugs had not been tampered with or that it was stored appropriately.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a Senior Musculoskeletal Specialty Manager in the Biosurgery Division of Sanofi S.A.  The whistleblower will receive a whistleblower award of approximately $430,000 from the proceeds of the government's recovery.  DOJ (EDCA)

September 30, 2016

A $6.15 million judgment was entered against Maryland-based home health care agency Speqtrum Inc. for violating the False Claims Act through a "massive and routine pattern of fraud by high-level employees" including the forging of necessary signatures and the falsification of timesheets.  DOJ (DC)