Twenty-Five Individuals Indicted In “Ground Zero” For Medicare Fraud

By: Douglas E. Roberts

The United States indicted twenty-five defendants in three Medicare Fraud cases, recently filed in the U.S. District Court for the Southern District of Florida.  William Maddalena, Assistant Special Agent in Charge of the FBI’s Miami Division, dubbed South Florida “ground zero” for health care scams.

These indictments detail two purported schemes involving Medicare Part D, the voluntary prescription drug benefit. In the first, alleged in U.S. v. Hevia et al. (Case No. :16-cr-20267) and U.S. v. Fernandez (Case No. :16-cr-20268), the government claims that two defendants hired co-conspirators to run pharmacies and employed other co-conspirators as “patient recruiters.” The recruiters referred Part D beneficiaries to the pharmacies, which filled prescriptions that were not medically necessary and submitted false and fraudulent claims for the prescriptions to Medicare.  Twenty-two defendants are charged with various offenses, including Conspiracy to Commit Health Care and Wire Fraud, in violation of 18 U.S.C. § 1349; Health Care Fraud, in violation of 18 U.S.C. § 1347; Conspiracy to Pay and Receive Kickbacks, in violation of 18 U.S.C. § 371; and Receipt of Kickbacks from a Health Care Provider, in violation of 18 U.S.C. § 1320a-7(b)(1)(A). In addition to the criminal charges, the government filed notices of forfeiture seeking in excess of $16 million from the defendants. The government claims that figure represents the total loss to the Medicare program resulting from the conspiracy, and it seeks to hold the defendants jointly and severally liable for the sum.

The second scheme, alleged in U.S. v. Diaz (Case No. 1:16-cv-20251), involves similar, though unrelated, claims that a pharmacy owner and co-conspirators bilked Medicare for beneficiaries’ medically unnecessary prescriptions. Three defendants are charged with Conspiracy to Commit Health Care and Wire Fraud;  Health Care Fraud; and Money Laundering, in violation of 18 U.S.C. § 1957. The government seeks forfeiture of approximately $10.5 million.

The government has identified Part D, the fastest-growing component of the Medicare program, as a vulnerable target for fraud.  According to the Government Accountability Office, of the $120 billon that the government spent on Part D in Fiscal Year 2015, up to $10 billion was for fraudulent claims.  Because of the money expended on Part D and its susceptibility to fraud, the Department of Justice and the Office of the Inspector General, Department of Health and Human Services have signaled efforts to ramp up Part D prosecutions through various press releases and policy statements, as well as the 2016 OIG-HHS Work Plan.

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