U.S. Recovers $400,000 in Settlement of Civil Health Care Fraud Lawsuit Against The Floating Hospital (U.S. Attorney for the Southern District of New York)
New York - Preet Bharara, the United States Attorney for the Southern District of New York, announced on June 2, 1010, that the United States has filed, and simultaneously settled, a civil health care fraud lawsuit against The Floating Hospital for allegedly submitting false claims to Medicaid for reimbursement in connection with physical, occupational, and speech therapy services. The settlement, approved yesterday in federal court in Manhattan by United States District Judge Leonard B. Sand requires The Floating Hospital to pay $400,000 in civil damages under the False Claims Act.
According to the documents filed in Manhattan federal court:
The Floating Hospital is a New York non-profit organization, licensed under Article 28 of the New York State Public Health Law as a diagnostic and treatment center, that provides primary, dental, and mental healthcare to indigent New Yorkers. Under Medicaid rules, Article 28 facilities are permitted, in certain circumstances, to open part-time clinics. Medicaid rules further provide that such part-time clinics may not provide services unavailable at the Article 28 facility’s primary site.
From 1997 to 2004, The Floating Hospital opened as many as 100 part-time clinics through which it provided physical, occupation, and speech therapy services, which were not provided at TFH’s primary site. The Floating Hospital violated the False
Claims Act by submitting Medicaid claims for those therapy services even though none of them were properly reimbursable under Medicaid.
Until September 2001, the Floating Hospital’s primary clinic was located on a ship anchored in the East River near Wall Street. Today, the Floating Hospital’s main clinic and administrative offices are located in Long Island City, New York.
The case is being handled by the Office’s newly-formed Civil Frauds Unit. Assistant United States Attorney Rebecca C. Martin is in charge of the case.
Former Program Director of Medicaid-Funded Nonprofit Pleads Guilty in Manhattan Federal Court to Stealing Nearly a Million Dollars (U.S. Attorney for the Southern District of New York)
New York - Preet Bharara, the United States Attorney for the Southern District of New York, and Rose Gill Hearn, the Commissioner of the New York City Department of Investigation ("DOI"), announced today that O'Dell Holland, the former Program Director of Tremont Community Council Home Attendant Program, Inc. ("Tremont"), a nonprofit home attendant program servicing elderly and disabled individuals in the Bronx, New York, pleaded Guilty in Manhattan federal court before United States Magistrate Judge Ronald L. Ellis to stealing more than $900,000 from Tremont.
As alleged in the indictment to which Holland pleaded Guilty:
From January 2004 through June 2008, Tremont contracted with the New York City Human Resources Administration ("HRA") to provide home attendant services to Medicaid-eligible, elderly, and disabled individuals in the Bronx. Holland served as the Program Director of Tremont from approximately 2002 through mid-2008, and was paid approximately $76,000 by Tremont in 2007.
As Program Director, Holland caused over $900,000 belonging to Tremont to be diverted for his personal benefit. Holland made multiple unauthorized wire transfers from a Tremont account to a personal account in his name, and wrote multiple checks payable to himself on the Tremont account. These wire transfers and checks totaled in excess of $570,000. Holland also Made unauthorized wire transfers totaling approximately $135,000 from the Tremont account to an architect to pay for renovations and other architectural work at a nightclub in the Bronx and at a Residence in Pomona, New York, both of which Holland owned.
Finally, Holland had hundreds of thousands of dollars transferred from the Tremont account to accounts held by a Manhattan law firm and one of its principals; approximately $258,000 of that money was later transferred to Holland, or to third parties on Holland's behalf, through checks drawn on an escrow account in the law firm's name.
Holland, 39, of New York, New York, pleaded guilty to a One-count Indictment charging him with embezzlement from an organization that receives funds under a federal program. He faces a maximum sentence of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. Holland is scheduled to be sentenced by United States District Judge Robert W. Sweet at a later date.
U.S. Attorney Preet Bharara stated:
"Instead of carrying out his duties as program director of a federally-funded nonprofit, O'Dell Holland abused his position by diverting close to one million dollars to himself and his Bronx nightclub. Today, Holland admitted to stealing money that he pledged to faithfully administer for the well-being of the elderly and disabled. Together with our partners at DOI, our Office will continue to hold accountable those who misuse publicly-funded organizations intended to help those in need by helping themselves to the nonprofits' scarce resources."
DOI Commissioner Rose Gill Hearn stated: "This corrupt insider methodically drained nearly a million dollars from his own nonprofit at the expense of its elderly and disabled clients. His eye-popping theft captures the outsized damage done when an unworthy individual gains control of a program entrusted with public funds. Today's guilty plea confirms that DOI and the U.S. Attorney's Office for the Southern District of New York continue to seek justice in these cases and end the abuse."
Mr. Bharara praised the investigative work of DOI. The prosecution is being handled by the Office's Public Corruption Unit. Assistant United States Attorney Brent Wible is in charge of the prosecution.
Rochester Podiatrist Pleads Guilty to Health Care and Mail Fraud (U.S. Attorney for the Eastern District of New York)
Rochester, New York - United States Attorney William J. Hochul, Jr. announced on March 23, 2010 that Michael Akyuz, 44, of Rochester, NY, plead guilty before U.S. District Judge Charles J. Siragusa to a felony information charging him with Health Care Fraud and Mail Fraud. Health Care Fraud carries a maximum penalty of 10 years in prison, while Mail Fraud carries a maximum penalty of 20 years in prison. Both counts are also punishable by a fine of up to $250,000.
Assistant U.S. Attorney Craig R. Gestring, who handled the prosecution of the case, stated that the defendant, a Podiatrist, knowingly submitted false and fraudulent Insurance Claim Forms to Medicare and Excellus which certified that he performed approved medical services when, in fact, he had not. As a result of this, he received inflated reimbursement checks, which were mailed to his Rochester Office via the United States Postal Service. Over the course of this scheme to defraud, he received over $750,000 in health care reimbursements that he would not otherwise have been entitled to.
The plea was the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge James H. Robertson, Special Agents of the Department of Health and Human Services - Office of Inspector General, under Special Agent in Charge Thomas F. O'Donnell, and Investigators from the New York State Insurance Department – Frauds Bureau, under the direction of Frank Orlando.
Sentencing is scheduled for July 7, 2010, in Rochester, NY, in front of U.S. District Judge Charles J. Siragusa.
Manhattan U.S. Attorney Charges two Doctors and Three Others With Running Fraudulent AIDS/HIV Clinics That Cheated Medicare of Approximately $8.5 Million (U.S. Attorney for the Southern District of New York)
PREET BHARARA, the United States Attorney for the Southern District of New York, JOSEPH DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), and THOMAS F. O'DONNELL, the Special Agent-in-Charge of the Department of Health and Human Services, Office of Inspector General, New York Region. ("HHSOIG"), announced that Dr. ROBERTO AYMAT, Dr. JORGE RIVERO, ASMED BARRERA, AUGUSTO GUZMAN, and OSVALDO SOTOLONGO were charged today for defrauding the Medicare system out of $8.5 million using three AIDS/HIV clinics in Manhattan and Brooklyn.
According to a Complaint unsealed in Manhattan federal Court today: From January 2007 to April 2009, the defendants operated three medical clinics located on Wadsworth Avenue in Manhattan, Second Avenue in Manhattan, and Rockaway Parkway in Brooklyn that purported to provide drug treatments to Medicareeligible AIDS/HIV patients. In fact, the clinics were healthcare fraud mills, which routinely billed Medicare for treatments that were either never provided, or which were unnecessary. The defendants executed the scheme by recruiting AIDS/HIV positive patients eligible for Medicare, and paying them a kickback of $50 each in exchange for their Medicare beneficiary numbers. The defendants then used the numbers to submit claims to Medicare for reimbursement for drugs that had either never been purchased, never been administered, or were medically unnecessary. From January 2007 to April 2009, the defendants billed Medicare for over ten times the number of units of prescription drugs as they actually purchased, defrauding the Medicare system out of at nleast approximately $8.5 million.
AYMAT, 44, of Manhattan, New York, and RIVERO, 82, of East Brunswick, New Jersey, both medical doctors, as well as SOTOLONGO, 38, of Miami, the general manager of the Wadsworth Avenue, Manhattan clinic, and GUZMAN, 42, of Miami, and BARRERA, 38, of East New York, New Jersey, who worked at the clinics administering unnecessary drugs, are each charged with conspiring to commit fraud in connection with a health care benefits program. Each of the defendants faces a maximum penalty of 20 years in prison.
AYMAT and BARRERA were arrested this morning in New York and New Jersey, respectively, and SOTOLONGO and GUZMAN were arrested in the Southern District of Florida. RIVERO is expected to surrender at a later date.
U.S. Attorney PREET BHARARA stated: "The doctors and managers of these alleged fraud mills used their professional positions to cheat the Medicare system out of $8.5 million, taking away millions meant for elderly Americans in need of medical care. Today's arrests demonstrate this Office's continuing commitment to work with our partners at the FBI and HHS-OIG to investigate and prosecute criminals who steal from Medicare."
JOSEPH DEMAREST, Assistant Director-in-Charge for FBI, stated: "Fraud is a major burden on Medicare, a program created to provide coverage and manage costs for older Americans. The FBI is committed to policing Medicare fraud, because fraud threatens the financial viability of a program ultimately paid for by the American taxpayer. These defendants weren't just manipulating the system; they were stealing our money."
THOMAS F. O'DONNELL, Special Agent-in-Charge for HHSOIG stated, "Infusion fraud is a serious and increasingly alarming problem affecting both patients and taxpayers. We will continue to aggressively pursue all those taking advantage of Medicare."
Mr. BHARARA praised the investigative work of the FBI and HHS-OIG, and stated that the investigation is ongoing.
The prosecution is being handled by the Office's Complex Frauds Unit. Assistant United States Attorney KAN M. NAWADAY is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty
Doctor And Acupuncturist Sentenced In Manhattan Federal Court For Operating Medical Fraud Mill (U.S. Attorney for the Southern District of New York)
PREET BHARARA, the United States Attorney for the Southern District of New York, announced that ROMILLA ANWAR and ANATOLY SUNIK were sentenced on Friday, January 29, 2010, to 30 months and 12 months in prison, respectively, in Manhattan federal court by United States District Judge LEWIS A. KAPLAN on health care fraud charges. SUNIK and ANWAR each pleaded guilty in April of 2009, stemming from their operation of a medical fraud mill operating as the Avenue K Medical Clinic (the "Clinic").
According to the Criminal complaint, Indictment, guilty pleas and court filings:
From May 2006 to June 2008, the Clinic routinely billed automobile insurance companies under the no-fault program for medical "treatments" which were either never provided or unnecessary, because the person being "treated" did not medically need the treatments. Under New York State Law, no-fault insurance enables the driver and passengers of a vehicle registered and insured in New York to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault.
The Clinic billed automobile insurance companies under the no-fault program for unnecessary medical treatments that were provided to patients who were in car accidents. In the first two years of its operation, the Clinic billed insurance companies a total of approximately $3.6 million for no-fault medical services on behalf of more than 500 patients and, as of June 2008, had received approximately $1.2 million from these insurance companies.
ANWAR served as the Clinic's nominal owner and treating physician, and, in that role, she performed perfunctory examinations of patients and recommended treatments she knew to be unnecessary. At her guilty plea, Anwar stated: "On many occasions individuals were prescribed DME [Durable Medical Equipment] which were unnecessary because the individuals were either slightly injured or not injured at all. I also ordered MRIs which were unnecessary due to the fact that the individuals were either slightly injured or not injured at all." SUNIK, the Clinic's acupuncturist, routinely billed insurance companies for 30 minutes of acupuncture even though he often provided only a few minutes treatment.
ANWAR, SUNIK and ten others associated with the Clinic were arrested in July 2008, including two of the Clinic's owners, SVIATOSLAV JADAN and SAMUEL VILSHANETSKI. JADAN was previously sentenced to 30 months in prison and VILSHANETSKI is scheduled to be sentenced on March 19, 2010.
In addition to the prison term, ANWAR, 48, of New Providence, New Jersey, and SUNIK, 62, of Rego Park, New York, were each sentenced to three years of supervised release and also ordered to pay restitution in an amount to be set at a later date.
Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation. Mr. BHARARA also extended his thanks to the National Insurance Crime Bureau for their assistance in the investigation. Assistant United States Attorneys ARLO DEVLIN-BROWN and ARIANNA R. BERG are in charge of the prosecution.
Pharmacy Owner Sentenced in Manhattan Federal Court to 78 Months in Prison for Multimillion-Dollar Medicaid Fraud (U.S. Attorney for the Southern District of New York)
Preet Bharara, the United States Attorney for the Southern District of New York, announced on Sept. 22 that Yefry Burgos, the former owner of a Manhattan pharmacy, was sentenced today in Manhattan federal court to 78 months in prison. The sentence was imposed by United States District Judge William H. Pauley III, who also ordered the defendant to pay $3,024,822 in restitution to the New York State Medicaid Program ("Medicaid"). Burgos pleaded guilty on March 23, 2009, to health care fraud for orchestrating a scheme to bill Medicaid for millions of dollars in medications that were not actually dispensed to Medicaid beneficiaries.
According to documents filed in this case and statements made during court proceedings: Burgos, 33, of Bronx, New York, owned Coral Pharmacy, a now-defunct pharmacy located at 4126 Broadway in Manhattan. Between December 2006 and January 2008, Burgos was involved in a fraudulent scheme to bill Medicaid for prescription medications that were never dispensed. Burgos and Coral Pharmacy's manager, Lourdes Bastardo, purchased drug prescriptions from Medicaid beneficiaries for a fraction of the amount the Medicaid Program would reimburse to the pharmacy. To execute the scheme, Burgos visited banks where Coral Pharmacy maintained its accounts to withdraw, on approximately a daily basis, thousands of dollars in cash -- delivering a substantial portion to Bastardo to buy the prescriptions. The pharmacy then submitted reimbursement claims to Medicaid for the full value of the drugs it falsely claimed were provided to Medicaid beneficiaries. Through this scheme, Burgos and Coral Pharmacy obtained the full value of the Medicaid reimbursement for the drug prescriptions, pocketing the difference between the reimbursement and the cash that they paid to the beneficiaries.
In sentencing Burgos, Judge Pauley stated that the defendant was "a poster child for part of the problem with the health care system," and "a predator who needed to be curbed."
In addition to the prison term and forfeiture, the Judge sentenced Burgos to three years' supervised release. The defendant was remanded to the custody of the United States Marshals.
Bastardo, 55, of Galloway City, New Jersey, pleaded guilty to health care fraud on September 11, 2009, before Magistrate Judge Kevin Nathaniel Fox, and is awaiting sentencing by Judge Pauley.
United States Attorney Bharara thanked the Federal Bureau of Investigation, the New York City Human Resources Administration's Bureau of Fraud Investigation, and the Office of the Medicaid Inspector General of New York State for their work in this investigation.
Assistant United States Attorney William Stellmach is in charge of the case, which was conducted by the Office's Major Crimes Unit.
Medical Doctor Sentenced in Manhattan Federal Court to 21 Months in Prison for Illegal Medicaid Kickback Scheme (U.S. Attorney for the Southern District of New York)
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Muhammad Ejaz Ahmad was sentenced on Sept. 17 to 21 months in prison and ordered to forfeit over $1.7 million for his role in a scheme to pay illegal kickbacks to Medicaid recipients. The sentence was imposed in Manhattan federal court by United States District Judge John G. Koeltl, who also presided over Ahmad’s guilty plea proceeding on May 22, 2008.
According to documents filed in this case and statements made during court proceedings:
Muhammad Ejaz Ahmad was a physician, with an office in Brooklyn, who specialized in infectious diseases -- including the treatment of HIV-positive patients. From January 2004 to August 29, 2006, Ejaz Ahmad attracted HIV-positive Medicaid recipients by paying an illegal kickback of $40 to patients at every visit, even though New York State only paid him $30. The defendant then referred these patients to one of three pharmacies that he owned and controlled through his wife: Staywell Pharmacy doing business as Nash Pharmacy located in Bayside, New York; Stay Slim Pharmacy in Brooklyn, New York; and ASA Drugs doing business as Script Depot, in Rego Park, New York. Each of these pharmacies was also affiliated with one of his co-conspirators -- either his brother, Muhammad Nawaz Ahmad, or brother-in-law, Mohammad Tanveer. Like Ejaz Ahmad, Nawaz Ahmad and Tanveer also paid $40 kickbacks to the Medicaid patients in order to retain the patients' business.
Between January 2002 and September 2006, the New York State Medicaid program paid the pharmacies at least $2.5 million for services purportedly provided to patients to whom the defendant and his co-conspirators had paid illegal kickbacks. Most of these billings were for medications that were never ordered from legitimate wholesalers. Instead, the pharmacies provided these Medicaid patients with lower-priced, diverted, and black-market medications or, in some cases, billed Medicaid for drugs that were never dispensed. For example, in 2005 alone, the pharmacies billed Medicaid over $1 million in excess of what the pharmacies had ordered from their legitimate wholesale drug distributors for three costly medications. The excess profits obtained from the Medicaid program paid for the kickbacks to patients.
Judge Koeltl ordered Muhammad Ejaz Ahmad, 52, of Albertson, New York, to pay $1,783,020.06 -- the amount held in his pharmacies' bank accounts at the time of his arrest -- to the Medicaid program in restitution. The monies held in the bank accounts had been forfeited in a parallel civil action. Muhammad Nawaz Ahmad, 41, of Floral Park, New York, pleaded guilty on May 22, 2008, to conspiring to pay illegal kickbacks to Medicaid recipients, and was sentenced by Judge KOELTL to 18 months in prison on December 14, 2008.
Mohammad Tanveer, 52, of Floral Park, New York, pleaded guilty on June 10, 2008 before Judge KOELTL. His sentencing is scheduled for September 25, 2009, at 4:00 pm.
United States Attorney Bharara thanked the Federal Bureau of Investigation for its work in the investigation and prosecution of this case, as well as the Office of the Medicaid Inspector General and the City of New York Human Resources Administration Bureau of Fraud Investigation.
Assistant United States Attorneys William J. Harrington And Anna E. Arreola are in charge of the prosecution.
Former Manhattan Cosmetic Surgery Clinic Owner Extradited From Canada Pleads Guilty in Manhattan Federal Court to Defrauding Health Insurance Companies Of More Than $900,000 (U.S. Attorney for the Southern District of New York)
PREET BHARARA, the United States Attorney for the Southern District of New York, announced that ARTHUR KISSEL, a/k/a "Arthur Froom," a former cosmetic surgery clinic owner, pleaded guilty on Sept. 4, in Manhattan federal court to a scheme to defraud health insurance companies of more than $900,000.
According to the Indictment to which KISSEL pleaded guilty; the evidence at the 2000 trial of KISSEL's wife, SONIA LAFONTAINE, in the case; and statements made during KISSEL's September 2008 bail hearing and today's guilty plea proceeding before United States District Judge DENNY CHIN: KISSEL and LAFONTAINE owned and operated LaFontaine Rish Medical Associates, a cosmetic surgery clinic located at 315 West 57th Street in Manhattan. LAFONTAINE -- who had no medical license and was not acting under a physician's supervision -- performed procedures which were billed as having been performed by licensed physicians. KISSEL and LAFONTAINE's clinic also billed cosmetic procedures, such as "tummy-tucks" and liposuction, in the guise of medically necessary procedures, such as hernia repairs and lesion removals. They also submitted claims to insurance companies for procedures that were never performed, and exaggerated insurance claims by increasing the number and complexity of procedures that were actually performed.
KISSEL and LAFONTAINE were originally indicted in March 1998. At that time, KISSEL was in Canada where he and his wife ran another cosmetic surgery clinic. LAFONTAINE was arrested in the United States in 1998 and was found guilty on all charges on July 12, 2000, following a six-week jury trial. She was ultimately sentenced to ten years in prison. The United States initiated extradition proceedings against KISSEL in 2000, which resulted in his August 2008 return from Canada on these charges.
KISSEL, 55, pleaded guilty today to one count of conspiracy to commit mail fraud and health care fraud, and one count of mail fraud. He faces a maximum sentence of 5 years in prison on each count; a maximum fine of the greater of $250,000 or twice the gross gain or loss resulting from the crime on each count; and forfeiture of the proceeds of his crimes. KISSEL is scheduled to be sentenced by Judge CHIN on Dec. 15, 2009 at 2:30 p.m.
Mr. BHARARA praised the outstanding investigative work of the U.S. Postal Inspection Service and the FBI in this case. This case is being handled by the Office's Major Crimes Unit. Assistant U.S. Attorney ROBIN W. MOREY is in charge of the prosecution.
Tulare Health Agencies Agree to Pay Over $2.4 Million to Settle Civil Lawsuit Alleging False Medicare Claims (U.S. Attorney for the Western District of New York)
Tulare Local Healthcare District, Tulare District Healthcare System and Tulare District Hospital (collectively, Tulare Healthcare) have agreed to pay more than $2.4 million to settle allegations that they submitted claims to the Medicare system as part of a scheme to illegally reimburse doctors who referred patients to Tulare Healthcare.
The settlement, under which Tulare Healthcare is expected to pay the government $2,411,030.14 tomorrow, was announced on July 27, 2009, when the United States Attorney’s Office learned that U.S. District Judge Christina Snyder had unsealed a “whistleblower” lawsuit filed last year by Maria Lucy Reimche, Tulare Healthcare’s former chief financial officer. Reimche’s lawsuit alleged that Tulare Healthcare made prohibited remuneration to physicians who referred Medicare patients to Tulare Healthcare. The doctors who allegedly received prohibited remuneration from 2001 through 2007 were given rental arrangements at below-market rates, were able to purchase commercial real estate lots at below-market value, and had debts forgiven. The lawsuit alleges that when Tulare Healthcare made claims to Medicare for reimbursement for services provided to the patients that had been referred, it violated the federal False Claims Act, as well as the federal Anti-Kickback Statute and an anti-referral law known as “the Stark law.” The Anti-Kickback Statute prohibits anyone from offering, paying, soliciting or receiving anything of value to generate referrals for items or services payable by any federal health care program. The Stark law provides that, subject to certain exceptions, a physician may not refer patients for specified Medicare-covered health services to a hospital or other entity with which the physician or an immediate family member has a financial relationship. The law also prohibits hospitals from billing for any services provided as a result of a prohibited referral.
The alleged acts in the lawsuit occurred under prior Tulare Healthcare management, and the current management has cooperated fully with the government’s investigation.
Tulare Healthcare agreed to pay the settlement without admitting any wrongdoing.
While Tulare County is located in Central California, Reimche filed her lawsuit in United States District Court in Los Angeles because Tulare Healthcare’s Medicare claims were paid by Medicare’s fiscal intermediary in Camarillo.
This case was investigated by the Department of Health and Human Services, Office of Inspector General and the United States Attorney’s Office.
Allegany Man Sentenced to Jail for Health Care Fraud (U.S. Attorney for the Western District of New York)
BUFFALO, N.Y. - Konstantinos Arabatzis, 47, of Allegany, N.Y., who was convicted of health care fraud on March 3, 2009, was sentenced to 24 months imprisonment by U.S. District Judge William M. Skretny, Acting U.S. Attorney Kathleen M. Mehltretter of the Western District of New York announced today.
Assistant U.S. Attorney John E. Rogowski, who handled the case, stated that between January, 2003, and March, 2008, the defendant, who operated C&K Preventative Health, contracted with Health Now, a medical health care insurance company, to provided wellness classes, such as nutrition instruction and stress management, to individuals covered by health insurance provided by Health Now. During that time period, Arabatzis routinely submitted invoices to Health Now in which he claimed to have provided wellness classes which never took place. As a result of the fraudulent invoices, HealthNow paid Arabatzis approximately $288,000 for classes that were never held. When he pled guilty, Arabatzis also admitted that he wrongfully overstated the number of attendees for the classes that were given, resulting in Health Now paying him an additional $512,000 he was not entitled to receive. As part of his sentence, Arabatzis was ordered to make restitution to HealthNow in amount of $800,060. At sentencing, Assistant U.S. Attorney Rogowski noted that the type of fraudulent scheme engaged in by the defendant has severe consequences to public health care system by driving up the price of health care insurance and limiting the services covered by health insurance. In imposing a sentence at the highest point of the applicable Federal Sentencing Guideline range, Judge Skretny stated that the sentence imposed was an appropriate punishment to the defendant and a sentence that would deter others from similar conduct.
The plea was the culmination of an investigation on the part of Special Agents of the Western New York Health Care Fraud Task Force, consisting of agents from the Federal Bureau of Investigation, U.S. Department of Labor - Office of Labor Racketeering, United States Department of Health and Human Services - Office of Inspector General, Internal Revenue Service - Criminal Investigation Division, U.S. Postal Inspection Service, United Postal Service Office of Inspector General, United States Department of Defense - Criminal Investigation Service, U.S. Food and Drug Administration - Office of Criminal Investigation, and the New York State Insurance Fraud Bureau.
Nine Podiatrists Sentenced In Manhattan Federal Court To Prison Terms For Participation In Massive Medicare And Health Care Fraud Scheme (U.S. Attorney for the Southern District of New York)
PREET BHARARA, the United States Attorney for the Southern District of New York, RONALD J. VERROCHIO, Inspector-in-Charge of the New York Division of the United States Postal Inspection Service ("USPIS"), and TOM O'DONNELL, the Special Agent-in-Charge of the New York Regional Office of the United States Department of Health and Human Services Office of Inspector General ("HHS-OIG") announced on Jan. 6, 2010, the prison sentences of nine doctors of podiatry for their participation in a large-scale Medicare and health care fraud scheme at podiatry clinics located throughout New York City.
United States District Judge KIMBA M. WOOD of Manhattan Federal Court sentenced HENRY BORRELLI, Doctor of Podiatric Medicine, to a term of 18 months in prison on charges of conspiracy to commit mail fraud, health care fraud, and false statements; health care fraud; and conspiring to violate the Medicare statute. BORRELLI pleaded guilty to the charges on April 9, 2002. After a jury trial before Judge WOOD, BORRELLI's co-defendants ALBERT KALAJIAN and NICOLAS ERRICO were found guilty of all charges on June 27, 2002. KALAJIAN was sentenced on October 1, 2009, to a term of 37 months in prison, and ERRICO was sentenced by Judge Wood on October 15, 2009 to a term of 30 months in prison.
Judge WOOD previously sentenced six other podiatrists to prison terms, ranging from six months to just over five years, for their participation in the same scheme. The dates and terms of the sentences are set forth below:
Date Defendant Term
January 12, 2007 MICHAEL BRUMER, DPM, 63 months
January 12, 2007 LAWRENCE KLEIN, DPM 63 months
February 27, 2004 ALAN KATZ, DPM 12 months
December 17, 2008 ARTHUR MINKOFF, DPM 10 months
April 27, 2005 PAUL ROHE, DPM 8 ½ months
April 22, 2004 MITCHELL PEARCE, DPM 6 months
According to the Indictment, other documents filed in the case, and statements made during court proceedings including the trial of ERRICO and KALAJIAN: At various times during the course of the scheme, BRUMER and KLEIN, who were themselves doctors of podiatric medicine, employed BORRELLI and ten other podiatrists at a number of affiliated foot-care clinics located in Manhattan, the Bronx, Queens, and Brooklyn (the "Citywide Clinics"). Through the Citywide Clinics, the defendants orchestrated a scheme to cheat Medicare and private insurance companies by several means, including soliciting patients off the street with flyers offering "free treatment," when in fact the treatment was "free" only because the defendants purposely ignored Medicare's requirement that patients be responsible for the 20 percent co-payment; falsifying the nature of their patients' medical conditions in order to obtain reimbursement from Medicare and private health care insurance companies for routine foot care services which otherwise would have been non-reimbursable; falsifying the nature of the services provided, i.e., "up-coding," in order to obtain reimbursement from Medicare and private health care insurance companies for otherwise non-reimbursable services; directing the podiatrists at the Citywide Clinics to perform unnecessary medical procedures on their elderly patients; and falsely representing in Medicare claims that procedures were performed in Manhattan, which enabled the defendants to receive higher reimbursements from Medicare.
To date, 17 former employees of the Citywide Clinics have been convicted of charges relating to the scheme, including four other podiatrists -- IRA BELL, of Jericho, New York; DARRICKA CARTER, of Virginia; WILLIAM GRUBESSI, of Westbury, New York; and DOUGLAS HERZLICH, of Manhattan -- and four employees of the Citywide Clinics' billing or administrative staff.
In sentencing BORRELLI, 51, of Little Falls, New Jersey, Judge WOOD stated: "Dr. Borelli spent at least four years lying to Medicare about the services being billed for his patients and during that time he took no steps to report or stop the crimes."
Previously, in imposing ERRICO's sentence, Judge WOOD stated that "Medicare fraud is a blight on our society and increases costs to the point where some people may not be able to receive the services they need."
PREET BHARARA, United States Attorney for the Southern District of New York stated: "The defendants in this case are medical professionals who abused their patients' trust and stole taxpayer money from the Medicare program. This was money that could have been used to treat patients actually in need of medical care, but instead the defendants used it to line their pockets. We will continue to work vigorously with our law enforcement partners at the USPIS and HHS-OIG to investigate and prosecute health care and Medicare fraud cases, one of the top priorities of the Department of Justice."
"With the cost of medical care rising for all Americans, the Postal Inspectors will identify those who defraud the system for their riches and bring them to justice," said RONALD J. VERROCHIO, the Inspector-In-Charge of the New York Division of the USPIS.
"Today's action sends a message to those who corruptly take advantage of the Medicare system. The Office of Inspector General, New York Regional Office, will continue to aggressively protect the Medicare system and the taxpayers from fraud and abuse," said TOM O'DONNELL, the Special Agent-in-Charge of the New York Regional Office of the HHS-OIG.
Mr. BHARARA praised the investigative work of the USPIS and the HHS-OIG.
This case is being prosecuted by the Office's Complex Frauds Unit. Assistant United States Attorney ROBIN W. MOREY is in charge of the prosecution.