The Justice Department
released the below information:
One of the largest
health care fraud schemes investigated by the FBI and the U.S. Department of
Health and Human Services Office of the Inspector General (HHS-OIG) and
prosecuted by the Department of Justice resulted in charges against 24
defendants, including the CEOs, COOs and others associated with five
telemedicine companies, the owners of dozens of durable medical equipment (DME)
companies and three licensed medical professionals, for their alleged
participation in health care fraud schemes involving more than $1.2 billion in
loss, as well as the execution of over 80 search warrants in 17 federal
districts. In addition, the Center for Medicare Services, Center for
Program Integrity (CMS/CPI) announced today that it took adverse administrative
action against 130 DME companies that had submitted over $1.7 billion in claims
and were paid over $900 million.
Assistant Attorney
General Brian A. Benczkowski of the Justice Department’s Criminal Division,
U.S. Attorney Sherri A. Lydon of the District of South Carolina, U.S. Attorney
Craig Carpenito of the District of New Jersey, U.S. Attorney Maria Chapa Lopez
of the Middle District of Florida, Assistant Director Robert Johnson of the
FBI’s Criminal Investigative Division, Deputy Inspector General for Investigations
Gary Cantrell of the U.S. Department of Health and Human Services Office of
Inspector General (HHS-OIG), Chief Don Fort of the IRS Criminal Investigation
(CI) and Deputy Administrator and Director of CPI Alec Alexander of the CMS/CPI
made the announcement.
Today’s enforcement
actions were led and coordinated by the Health Care Fraud Unit of the Criminal
Division’s Fraud Section in conjunction with its Medicare Fraud Strike Force
(MFSF), as well as the U.S. Attorney’s Offices for the Districts of South Carolina,
New Jersey and the Middle District of Florida. The MFSF is a partnership
among the Criminal Division, U.S. Attorney’s Offices, the FBI and
HHS-OIG. In addition, IRS-CI and other federal law enforcement agencies
participated in the operation.
The charges announced
today target an alleged scheme involving the payment of illegal kickbacks and
bribes by DME companies in exchange for the referral of Medicare beneficiaries
by medical professionals working with fraudulent telemedicine companies for back,
shoulder, wrist and knee braces that are medically unnecessary. Some
of the defendants allegedly controlled an international telemarketing network
that lured over hundreds of thousands of elderly and/or disabled patients into
a criminal scheme that crossed borders, involving call centers in the
Philippines and throughout Latin America. The defendants allegedly paid
doctors to prescribe DME either without any patient interaction or with only a
brief telephonic conversation with patients they had never met or seen.
The proceeds of the fraudulent scheme were allegedly laundered through
international shell corporations and used to purchase exotic automobiles,
yachts and luxury real estate in the United States and abroad.
“These defendants —
who range from corporate executives to medical professionals — allegedly
participated in an expansive and sophisticated fraud to exploit telemedicine
technology meant for patients otherwise unable to access health care,” said
Assistant Attorney General Benczkowski. “This Department of Justice will
not tolerate medical professionals and executives who look to line their
pockets by cheating our health care programs. I commend the Criminal
Division prosecutors and our partners from U.S. Attorney’s Offices and law enforcement
agencies across the country for their unrelenting efforts to stop this alleged
fraud before more money was stolen from American taxpayers.”
“Simply put, the law
applies equally to all in South Carolina,” said U.S. Attorney Sherri
Lydon. “The same spoon that serves indictments on drug dealers, felons in
possession of firearms, and corrupt officials will also feed those companies
and individuals who engage in Medicare fraud. White collar crime is not
victimless. All taxpayers will endure the rising cost of health care
premiums and out-of-pocket costs as a result of fraud on our Medicare
system. I am honored to stand with our partners at the FBI, HHS-OIG, and
IRS-CI, who led this outstanding and nationally significant investigation from
right here in South Carolina.”
“The indictments we
are unsealing today charge the defendants with running a complex, multilayered
scheme to defraud our Medicare system and avoid detection by government
regulators,” said U.S. Attorney Craig Carpenito. “The defendants took advantage
of unwitting patients who were simply trying to get relief from their health
concerns. Instead, the defendants preyed upon their weakened state and
pushed millions of dollars’ worth of unnecessary medical devices, which
Medicare paid for, and then set up an elaborate system for laundering their
ill-gotten proceeds. We are proud to join our law enforcement partners in New
Jersey and around the country to put a stop to this unscrupulous criminal
activity.”
“Protecting the
integrity of America’s health care programs is necessary to ensure that our
citizens receive the care they have paid for and deserve,” said U.S. Attorney
Chapa Lopez. “The mammoth coordination and cooperation demonstrated among
the various offices, districts, and agencies involved in this case leaves no
doubt. We will leverage the full weight of our resources to combat fraud and
abuse, wherever it is found.”
“Today, one of the
largest health care fraud schemes in U.S. history came to an end thanks to
close collaboration and coordination between the FBI and partners including
HHS-OIG and IRS-CI,” said FBI Assistant Director Robert Johnson. “Health
care fraud causes billions of dollars in losses, it deprives real patients of
the critical health care services they need, and it can endanger the lives of
real patients so individuals like those arrested today can profit from their
criminal activity. Through today’s coordinated national effort, we put an
end to this egregious and costly health care fraud scheme, and the public can rest
assured the FBI will continue to make health care fraud investigations a top
priority.”
“Our law enforcement
officers are focused on preventing and uprooting health care fraud schemes like
those alleged today,” said Deputy Inspector General for Investigations Gary
Cantrell. “These schemes divert money from taxpayer-funded federal health
care programs into the hands of criminals. Working closely with our law
enforcement partners, our agency will continue to investigate and disrupt
attempts to undermine Medicare and target beneficiaries.”
“The breadth of this
nationwide conspiracy should be frightening to all who rely on some form of
healthcare,” said IRS-CI Chief Don Fort. “The conspiracy described in
this indictment was not perpetrated by one individual. Rather, it details
broad corruption, massive amounts of greed, and systemic flaws in our
healthcare system that were exploited by the defendants. We all suffer
when schemes like this go undiscovered and I’m proud of the work our agents did
in working with our partners to uncover this complex scheme.”
“The Centers for
Medicare & Medicaid Services (CMS) Center for Program Integrity
(CPI) is proud to work very closely everyday with our law enforcement
partners to stop exploitation of vulnerable patients and misuse of taxpayer
dollars,” said Deputy Administrator and CPI Director Alec Alexander. “In
this case CMS has taken swift administrative action and has suspended payments
to 130 distinct providers thereby likely preventing billions of additional
dollars in losses. CMS remains committed to protecting the millions of
beneficiaries we are honored to serve and to preventing fraud of all sorts in
the Medicare and Medicaid programs.”
According to
allegations in court documents, some of the defendants obtained patients for
the scheme by using an international call center that advertised to Medicare
beneficiaries and “up-sold” the beneficiaries to get them to accept numerous
“free or low-cost” DME braces, regardless of medical necessity. The
international call center allegedly paid illegal kickbacks and bribes to
telemedicine companies to obtain DME orders for these Medicare
beneficiaries. The telemedicine companies then allegedly paid physicians
to write medically unnecessary DME orders. Finally, the international
call center sold the DME orders that it obtained from the telemedicine
companies to DME companies, which fraudulently billed Medicare.
Collectively, the CEOs, COOs, executives, business owners and medical
professionals involved in the conspiracy are accused of causing over $1 billion
in loss.
The Fraud Section
leads the Medicare Fraud Strike Force. Since its inception in March 2007,
the Medicare Fraud Strike Force, which maintains 14 strike forces operating in
23 districts, has charged nearly 4,000 defendants who have collectively billed
the Medicare program for more than $14 billion. In addition, the HHS
Centers for Medicare & Medicaid Services, working in conjunction with the
HHS-OIG, are taking steps to increase accountability and decrease the presence
of fraudulent providers.
*********
Amongst those charged
by Strike Force attorneys include:
In the District of New
Jersey, charges were brought against Creaghan Harry, 51, of Highland Beach,
Florida; Lester Stockett, 51, of Deefield Beach, Florida; and Elliot
Loewenstern, 56, of Boca Raton, Florida; the owner, CEO and VP of marketing,
respectively, of purported call centers and telemedicine companies, for their
alleged participation in a $454 million illegal health care kickback and
international money laundering scheme related to the solicitation of illegal
kickbacks and bribes in exchange for the referral of DME orders to DME
providers. In addition, Joseph DeCoroso, M.D., 62, of Toms River, New
Jersey, was charged in a $13 million conspiracy to commit health care fraud and
separate charges of health care fraud for writing medically unnecessary orders
for DME, in many instances without ever speaking to the patients, while working
for two telemedicine companies. The cases are being prosecuted by Fraud
Section Acting Assistant Chief Jacob Foster and Trial Attorney Darren
Halverson.
In the Middle District
of Florida, charges were brought against Willie McNeal, 42, of Spring Hill,
Florida, the owner and CEO of two purported telemedicine companies, for his alleged
participation in a $250 million scheme related to the solicitation of illegal
kickbacks and bribes in exchange for the referral of DME orders to DME
providers. The case is being prosecuted by Fraud Section Acting Assistant
Chief Jacob Foster and Trial Attorneys John Michelich, Catherine Wagner and
Sara Clingan.
In the Northern
District of Texas, charges were brought against Leah Hagen, 48, and Michael
Hagen, 51, of Dalworthington Gardens, Texas, owners and operators of two DME
companies, for their alleged participation in a $17 million illegal health care
kickback scheme related to the payment of kickbacks in exchange for the
referral of medically unnecessary DME orders. The case is being
prosecuted by Fraud Section Trial Attorneys Brynn Schiess and Carlos Lopez.
In the Western
District of Texas, Christopher O’Hara, 54, of Kingsbury, Texas, the owner of a
purported telemedicine company, was charged in an $40 million scheme related to
the alleged solicitation of illegal kickbacks and bribes in exchange for the
referral of DME orders to DME providers. The case is being prosecuted by
Fraud Section Trial Attorney Kevin Lowell.
In the Eastern
District of Pennsylvania, Randy Swackhammer, M.D., 60, of Goldsboro, North
Carolina, was charged for an alleged $5 million conspiracy to commit health
care fraud that involved writing medically unnecessary orders for DME while
working for a telemedicine company, in many instances with only a brief
telephonic conversation with the patients. The case is being prosecuted by
Fraud Section Trial Attorney Adam Yoffie.
In the Central
District of California, charges were brought against Darin Flashberg, 41, of
Glendora, California, and Najib Jabbour, 47, of Glendora, California, owners of
seven DME companies, for their alleged participation in a $34 million scheme
related to their payment of kickbacks and bribes in exchange for medically
unnecessary DME orders. The case is being prosecuted by Fraud Section
Trial Attorney Robyn Pullio.
*********
In addition to the
Strike Force prosecutions, other enforcement actions were taken, including the
execution of search warrants to support related investigative efforts in seven
additional U.S. Attorney’s Offices to include in various investigations
conducted by the District of New Jersey, District of South Carolina, Southern
District of California, District of Nebraska, Middle District of Florida,
Eastern District of Missouri and Western District of Washington.
In the District of
South Carolina, charges were brought against Andrew Chmiel, 43, of Mt.
Pleasant, South Carolina, owner of over a dozen companies involved in the
scheme, for his alleged participation in a $200 million scheme related to the
payment of kickbacks and bribes in exchange for medically unnecessary DME
orders. The cases are being prosecuted by Assistant U.S. Attorneys Jim
May and Will Lewis of the District of South Carolina.
In the District of New
Jersey, charges were brought against Neal Williamsky 59, of Marlboro, New
Jersey, and Nadia Levit, 39, of Englishtown, New Jersey, owners of
approximately 25 DME companies, for their alleged participation in a $150
million scheme related to the payment of kickbacks and bribes in exchange for
medically unnecessary DME orders. Albert Davydov, 26, of Rego Park, New
York, was also charged for his alleged participation in a $35 million scheme
related to the payment of kickbacks and bribes in exchange for medically
unnecessary DME orders. The cases are being prosecuted by Assistant U.S.
Attorneys Brian Urbano and Stephen Ferketic of the District of New Jersey.
In the Middle District
of Florida, search and seizure warrants are being executed at 20 different
business locations, including numerous DME companies and a fraudulent
telemarketing company. The search and seizures are being executed by over 100
law-enforcement officers from six federal agencies, including HHS-OIG, FBI,
IRS-CI, VA-OIG, SSA-OIG, and USPS-OIG. In addition to the 20 search
warrants, millions of dollars and other assets tied to the conspiracy are being
seized and/or frozen, including through a civil injunction naming 13 defendants
as authorized under 18 U.S.C. § 1345.
The cases announced
today are being prosecuted and investigated by U.S. Attorney’s Offices
nationwide, along with MFSF teams from the Criminal Division’s Fraud Section
and from the U.S. Attorney’s Offices in the District of New Jersey, District of
South Carolina, Southern District of California, District of Nebraska, Middle
District of Florida, Eastern District of Missouri and Western District of
Washington; and agents from the FBI, HHS-OIG, IRS-CI and other federal law
enforcement agencies.
A complaint, information
or indictment is merely an allegation, and all defendants are presumed innocent
until proven guilty beyond a reasonable doubt in a court of law.
Any doctors or medical
professionals who have been involved with alleged fraudulent telemedicine and DME
marketing schemes – including Video Doctor USA, AffordADoc, Web Doctors Plus,
Integrated Support Plus and First Care MD – should call to report this conduct
to the FBI hotline at 1-800-CALL-FBI.
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