Michigan Physician Charged in Alleged Role in Health Care Fraud and Money Laundering Conspiracy

DOJ News & Litigation Updates

Michigan Physician Charged in Health Care Fraud and Money Laundering Conspiracy

On February 26, 2020, the Department of Justice announced charges against a Michigan physician for his alleged role in an over $120 million health care fraud and money laundering conspiracy, which allegedly distributed over 2.2 million dosage units of medically unnecessary controlled substances and allegedly administered medically unnecessary injections.

The physician, who was the top prescriber of oxycodone 30 mg in Michigan from 2016-2017, now faces one count of conspiracy to commit health care fraud and wire fraud, one count of conspiracy to commit money laundering, one count of money laundering, two counts of health care fraud, and one count of conspiracy to defraud the United States and pay and receive health care kickbacks. The superseding indictment alleges that the physician, who owned, controlled, and operated a number of pain clinics and laboratories in Michigan, induced Medicare beneficiaries to come to his clinics by offering medically unnecessary prescriptions for opioids, including fentanyl, oxycodone, and oxymorphone, some of which were later resold on the street.

The DOJ further alleges that the physician required patients to receive unnecessary and sometimes painful back injections in exchange for these prescriptions, even after being advised that the injections violated Medicare rules. The DOJ also alleges that the physician ordered unnecessary drug testing in exchange for illegal kickbacks.

According to the DOJ, the physician was also aware that his ownership structure and kickbacks violated the False Claims Act, even citing an e-mail authored by the physician where he acknowledged that the ownership “constituted a violation of the Stark and Anti-Kickback laws.” The superseding indictment alleges that the physician conspired to commit and committed money laundering by paying for the authorship and publication of a diet plan book and paying hundreds of thousands of dollars to falsely portray himself as a medical expert and media personality, in order to disguise his health care fraud.

The case is pending before US District Judge Denise Page Hood of the Eastern District of Michigan. The trial is currently scheduled to begin on April 7, 2020.

See here for the DOJ press release.

Pharmacy Owners Sentenced to 144 Months in Prison for Multimillion-Dollar Medicare Fraud Scheme

On February 26, 2020, the co-owners and co-operators of Royal Care Pharmacy in Hollywood, California were each sentenced to 144 months of prison in connection with their role in a health care fraud scheme whereby Medicare and CIGNA were billed over $11.8 million in fraudulent prescription drug claims. After an 11-day jury trial in August, the defendants had been found guilty of conspiracy to commit health care fraud and conspiracy to commit money laundering.

According to evidence presented at trial, from 2012 to 2015, the defendants fraudulently billed Medicare and CIGNA for prescriptions that Royal Care did not actually purchase or dispense by obtaining fake drug invoices from co-conspirators to make it seem as if Royal Care had purchased the prescriptions. The evidence further demonstrated that the defendants used the fake invoices to launder the proceeds through a co-conspirator.

US District Judge S. James Otero of the Central District of California also ordered that the two defendants each pay $11,826,444.65 in restitution to Medicare and that each of the two defendants make an immediate partial payment of $500,000 in restitution.

See here for the DOJ press release.

Former Executive Ordered to Forfeit $10.4M in Connection with Role in Medicare Fraud Scheme

On February 24, 2020, US District Judge Beth Bloom of the Southern District of Florida issued a judgment ordering a former executive of home health care companies Willsand Home Health Agency, JEM Home Health Care LLC and Healthy Choice Home Services Inc. to forfeit $10.4 million in connection with his role in a multi-million dollar Medicare fraud scheme.

The defendant was convicted in January 2016 of one count of conspiracy to commit health care and wire fraud, and one count of conspiracy to defraud the United States and pay health care-related kickbacks after the DOJ presented evidence that he and his co-conspirators used the home health care companies to submit $57 million in false claims to Medicare. The DOJ alleged that these claims were based on services that were either not medically necessary or not actually provided and that the patients were procured through the payment of kickbacks. The defendant is currently serving a 20-year prison sentence.

In August 2018, the Eleventh Circuit upheld the former home health executive’s conviction but vacated the originally-ordered $36.4M forfeiture order. The Eleventh Circuit instructed the District Court to revisit the forfeiture order in light of the decision in Honeycutt v. US, 137 S. Ct. 1626 (2017), where the US Supreme Court ruled that a criminal defendant cannot be held liable for proceeds obtained by a co-conspirator.

Judge Bloom’s order, requiring the defendant to pay approximately one-third of the original forfeiture order, rejected the defendant’s argument that the government’s calculation of $10.4 million could not all be attributed to the health care fraud count on which the defendant was convicted, and further rejected additional fact-finding on that issue.

See here for the Law360 article.