US agents make arrests in massive Medicare fraud case in Florida

Federal agents in a health-care-fraud strike force moved on Thursday in Miami to shut down a massive Medicare fraud operation that allegedly netted $83 million in illicit proceeds since 2003.

Two South Florida health-care companies and four owners and senior managers were named in a 13-count indictment charging fraud and kickbacks.

The companies, American Therapeutic Corporation and Medlink Professional Management Group, both of Miami, allegedly worked together in a scheme to bill the Medicare system for community-based mental health services that were either unnecessary or were never actually provided.

The ATC case is part of an ongoing push by federal officials to crack down on widespread Medicare and Medicaid fraud. More than 825 individuals have been indicted nationwide by the strike force since its inception in 2007. The Obama administration is gearing up to play an increasingly important role in reforming the nation’s health-care insurance system.

On Thursday, the federal agents arrested Lawrence Duran, Marianella Valera, Judith Negron, and Margarita Acevedo. In addition, a federal judge ordered the defendants’ personal and corporate assets frozen.

Prosecutors admitted in court documents that they have only been able to locate $7 million in assets. The defendants are believed to have purchased property or opened accounts in Switzerland, Cuba, and the Dominican Republic.

The companies submitted Medicare claims totaling $191 million since 2003, and received payments of $83 million, according to court documents.

“Since the strike force began operation, we have rarely seen anything like the illegal conduct in this indictment, both in terms of the nature and size of the scheme,” Assistant Attorney General Lanny Breuer said in a statement. He said it was the largest fraudulent billing scheme ever prosecuted by the strike force.

According to court documents, the Miami companies paid kickbacks to operators of assisted living facilities and halfway houses to provide “patients” to ATC facilities for group mental health sessions. The company had seven clinics ranging from Homestead and Miami to Boca Raton and Orlando.

Some of the patients were paid kickbacks to allow their names to be used in bogus treatment documents, prosecutors say. Others were suffering from Alzheimer’s disease or severe dementia.

Prosecutors say these would-be patients were not eligible for federally-subsidized mental health treatment because their existing mental condition would not allow them to benefit from the type of therapy offered in the program.

According to court documents, ATC employees repeatedly complained to the owners that patients who could not feed themselves and who often defecated on themselves were not eligible for group therapy. “Employees who failed to cooperate or participate in the fraud were terminated,” the documents say.

“One ATC employee was fired after she discharged several beneficiaries she felt were not eligible … due to their mental state.” The records say a senior manager later readmitted those same beneficiaries.

ATC therapists were coached to include false references to insomnia or sleep difficulties in patient progress notes, documents show. The notes were included to justify referring those beneficiaries to a related business, American Sleep Institute, for sleep study tests that could also be reimbursed by Medicare.

Court documents say the defendants falsified medical reports, including documenting fake symptoms, creating bogus psychiatric evaluations, forging physician signatures, and verifying fictious treatments that were never given. The falsified documents were used to justify fraudulent claims submitted to Medicare, prosecutors say.

“Community mental health centers across the country serve a uniquely vulnerable population,” said Daniel Levinson, inspector general of the Department of Health and Human Services. “Those attempting to defraud this critically important program … should expect to pay a heavy price,” he said.

In addition to the charges in the indictment, the four individuals and their corporations are facing criminal forfeiture of various cars, motorcyles, and bank accounts – up to the amount of $83,021,115.54.