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NYC Doctor Gets Prison Term for Posing as Clinic Owner in $30 Million Fraud Scheme

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On August 22, 2018, a doctor received a sentence of one year and a day in prison from a New York federal court for his part in a $30 million scheme to defraud Medicare and the state Medicaid program. The doctor admitted to posing as the owner of a medical clinic and falsely claiming to have seen hundreds of patients. He pled guilty on January 11, 2018, to health care fraud and conspiracy to commit health care fraud, mail fraud and wire fraud, the U.S. Attorney’s Office said.

Lies and Cover-ups.

The New York City doctor accepted responsibility for falsely posing as the owner of two medical clinics that were actually owned by a corrupt businessman, according to the U.S. Attorney’s Office for the Southern District of New York. Under New York state law, medical clinics must be owned and operated by a medical professional. The businessman was able to evade the requirements of the law by hiring doctors to pose as the owners of each clinic.

The corrupt businessman owned and operated six medical clinics in Brooklyn between 2007 and 2013 that fraudulently billed Medicare and Medicaid. Approximately $30 million was billed for services and supplies that were not provided, according to the indictment and other documents filed in federal court, as well as statements made during the doctor’s plea proceeding and sentencing.

Additionally, the doctor fabricated false medical records to support the fraudulent reimbursement claims and wrote prescriptions and referrals for medically unnecessary tests and supplies, the U.S. attorney’s office said.

The Punishment.

U.S. District Judge Lorna G. Schofield sentenced the doctor to three years of supervised release in addition to the prison term for his role in the scheme. He was also ordered to pay restitution of approximately $1.83 million and to forfeit $269,412 in unlawful gains. The three other defendants involved in this case, a doctor, a physical therapist and an occupational therapist, are scheduled to go to trial at a later date. Click here to learn more.

“The Medicare and Medicaid programs are intended to provide essential medical services to the elderly and the needy, not to enrich corrupt doctors and other fraudsters,” U.S. Attorney Geoffrey S. Berman said in a statement. “Today’s sentence sends a strong message that those who cheat Medicare and Medicaid, including physicians who abuse their licenses and professional oaths, will be held accountable.” You can view the U.S. Attorney’s press release here.

To read about a similar case of fraud, click here to read one of my prior blogs.

This is a Dangerous Pitfall of Which all Doctors and Dentists Must Be Aware.

This is the type of situation we often see in which a doctor or dentist is victimized by dishonest and corrupt scofflaws, especially here in Florida. Most often an older physician who is retired or semi-retired is asked to become the “medical director” or “dental director” of a clinic that is owned in whole or in part by someone else. The physician may not even know who its true owners are. Later the physician or dentist is asked to serve as the “president” or as a “director” of the company and his/her name is placed on all the corporate papers. The trouble really begins, however, when the true owner(s) places the physician’s or dentist’s name on corporate papers and licensing papers as an “owner,” “shareholder” or “member” of the business, when the physician has paid nothing for the business and is not truly the owner.

If a physician or dentist becomes aware of such a scheme and gets out of it as soon as she or her finds out, the physician or dentist may be able to avoid prosecution or liability. However, if the physician or dentist continues to do business with the true owners as an “owner on paper,” “shell owner,” or “sham owner,” (they all mean the same thing, “fraudulent owner”) then he or she can be in for some serious civil and criminal liability.

There can be serious criminal penalties, such as the one reported on in this blog. For example, in Florida, it is a felony for a non-dentist (meaning a dentist not licensed in Florida) to own or control a dental clinic in Florida. It is also a criminal offense for a layperson (or a business entity owned by lay persons), to own or control a medical clinic, unless it goes through the strict health care clinic license requirements that Florida law requires. If the clinic is owned or operated illegally (even if it’s “just on paper”), then all of the bills it issue are also illegal.

Contact Health Law Attorneys Experienced in Handling Medicare and Medicaid Fraud Cases.

The Health Law Firm’s attorneys routinely represent physicians, medical groups, clinics, pharmacies, durable medical equipment (DME) suppliers, home health agencies, nursing homes and other healthcare providers in Medicare and Medicaid investigations, audits and recovery actions. They also represent them in preparing and submitting corrective action plans (CAPs), requests for reconsideration, and appeal hearings, including Medicare administrative hearings before an administrative law judge.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.

Sources:

Hanson, Joyce. “Doc Gets Year In Prison For Role In $30M Medicare Fraud.” Law360. (August 22, 2018). Web.

“NYC Doctor Gets Prison Term for Role in $30M Fraud Scam.” Bloomberg Law. (August 22, 2018). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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“The Health Law Firm” is a registered fictitious business name of and a registered service mark of The Health Law Firm, P.A., a Florida professional service corporation, since 1999.
Copyright © 2018 The Health Law Firm. All rights reserved.

 

Whistleblower Lawsuit Alleging Medicare Fraud Against Blackstone Medical, Inc., Dismissed

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

A whistleblower lawsuit against Blackstone Medical, Inc., alleging Medicare fraud against Parrish Medical Center, was dismissed by a U.S. District Judge in Tampa, Florida, on August 15, 2012. According to Orthopedics This Week, the case was unsealed on August 8, 2012, but dismissed without prejudice, all pending motions were denied as moot, and the clerk was directed to close the case, just one week after.

To see a copy of the order of dismissal, click here.

Whistleblower Originally Filed False Claims and Kickback Complaint.

According to the lawsuit, the whistleblower was asked to bid on a contract with the Parrish Medical Center in Florida, to provide intraoperative neurophysiological monitoring services. The whistleblower alleges he discovered that a Blackstone Medical, Inc., sales representative and two doctors were using outdated technology that did not allow doctors to actually monitor patients’ neurological activity during procedures.

The plaintiff alleged this discovery uncovered thousands of dollars in Medicare claims being made as part of a kickback scheme, beginning as early as 2002.

To see the original false claims complaint, click here.

Whistleblower Requested Order of Dismissal.

According to an article in Orthopedics This Week, the order of dismissal was in response to the whistleblower’s request for voluntary dismissal without prejudice. This request means that the man keeps his right to come back before the court in the future.

To see the full article from Orthopedics This Week, click here.

Contact Health Law Attorneys Experienced with Medicaid and Medicare Qui Tam or Whistleblower Cases.

In addition to our other experience in Medicare, Medicaid and Tricare cases, attorneys with The Health Law Firm also represent health care professionals and health facilities in qui tam or whistleblowers cases. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding, and other services that assist us in such matters.

To learn more on our experience with Medicaid and Medicare quit tam or whistleblower cases, visit our website.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.

Sources:

Eisner, Walter. “Blackstone Florida Whistleblower Lawsuit Dismissed.” Orthopedics This Week. (August 22, 2012). From: http://ryortho.com/companyNews.php?news=2168_Blackstone-Florida-Whistleblower-Lawsuit-Dismissed

Jon Schiff v. Blackstone Medical, Inc., Case Number 8:11-cv-02430-JSM-TBM United States District Court for the Middle District of Florida Tampa Division (October 26, 2011), available at, http://www.thehealthlawfirm.com/uploads/Blackstone%20case.pdf.

Jon Schiff v. Blackstone Medical, Inc., et al., Case No: 8:11-cv-2430-T-30TBM United States District Court Middle District of Florida Tampa Division (August 15, 2012), available at, http://www.thehealthlawfirm.com/uploads/Blackstone%20dismissal.pdf.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  www.TheHealthLawFirm.com  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

Copyright © 1996-2012 The Health Law Firm. All rights reserved.