Nearly two dozen individuals charged in health care fraud

(Los Angeles, CA – Insurance News and Markets) –  late June, 22 individuals were named as defendants in healthcare fraud cases involving more than $161 million in fraudulent billing to government healthcare programs.  These individuals were charged in 13 federal cases, as part of a national health care fraud sweep.

Several medical professionals were charged as part of the sweep, including five physicians, a psychiatrist, one pharmacist and an occupational therapist. The cases announced today allege various schemes that led to more than $161 million in fraudulent bills being submitted to publicly funded health care programs such as Medicare and TRICARE.

The cases filed in federal court in Los Angeles and Santa Ana are part of a nationwide sweep announced in late June, in Washington by Attorney General Loretta Lynch, who said criminal and civil charges have been filed against 301 individuals who allegedly participated in health care fraud schemes involving approximately $900 million in false billings. The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department’s Medicare Fraud Strike Force.

“Health care fraud is a serious offense that costs Americans billions of dollars, and the cases announced today here in Los Angeles alone cost taxpayers more than $100 million,” said United States Attorney Eileen M. Decker. “These crimes affect real people and erode the trust that should exist between a patient and their health care provider. The entire Justice Department and our law enforcement partners are committed and determined to doing everything it takes to ensure the health care system works for the American public – and not those, whether health care providers or others, who seek to abuse the system.”

The cases filed in the Southland involve actual losses of more than $125 million, with the bulk of those losses associated with five cases related to schemes involving compounding pharmacies. In schemes orchestrated by marketers (sometimes called “cappers”), compounding pharmacies were provided with large numbers of prescriptions, generally for pain medications, that carried huge reimbursements, often more than $15,000 for each prescription. The prescriptions were written by doctors who received kickbacks from marketers or from “telemedicine” websites that had little or no contact with patients. The individuals whose names the  prescriptions were under had not met the doctors, didn’t know why they were getting the medication and did not want the prescriptions. Often, the person’s information was being used without their knowledge, until they received the medication at home.

TRICARE, the military’s managed care program, was the primary victim of schemes involving the compounding pharmacies. The program paid hundreds of millions of dollars for medications, like creams to treat pain, scars, erectile dysfunction or “general wellness”  Five of the cases announced today relate to compounding pharmacies and allege losses of more than $100 million, most of which was paid by TRICARE over the course of just a few months.

In one case, John Garbino, a Dana Point resident was charged with receiving illegal kickbacks after referring prescriptions to compounding pharmacies that filled the prescriptions and billed TRICARE.  Several pharmacies were involved including a pharmacy in Palmdale, which received more than $46 million from TRICARE in only six months. Another in Corona received nearly $6 million over the same six-month period. Garbino allegedly received illegal kickbacks of as much as 65 percent for referring prescriptions to the compounding pharmacies.

In another scheme, the Florida-based operator of a “telemedicine” website was charged with health care fraud for allegedly misusing the identity and medical credentials of a physician to submit prescriptions to a compounding pharmacy. The criminal complaint in this case alleges that two local pharmacies received more than $6.5 million in payments from TRICARE in 2015.

In a third case, the owner of a La Mirada pharmacy, two marketers and a doctor were indicted on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy, Valley View Drugs, more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers.

“The Defense Criminal Investigative Service, in partnership with our fellow federal investigative agencies, will continue to uncompromisingly investigate and bring to justice the people who perpetrate these criminal acts,” said Special Agent in Charge Chris Hendrickson, DCIS Western Field Office. “Their actions threaten to cripple our vital national health care industry, and place our citizenry at risk. Over $100 million in Department of Defense health care funds that should have been used to treat the military and their families was instead allegedly stolen by swindlers. We will remain vigilant.”

In other cases announced today, a doctor who had offices in Temecula and Mira Loma allegedly submitted nearly $12 million in fraudulent bills to Medicare for unnecessary “vein ablation” surgery. Another doctor was charged for helping the owner of a Granada Hills medical clinic, who recruited Medicare patients with promises of free equipment and used their beneficiary information to bill for services that simply were never provided.

“Medical professionals who seek to enrich themselves through Medicare fraud – such as exchanging illegal kickbacks or billing for medically unnecessary procedures – undermine this taxpayer-funded program and drive up health care costs for everyone,” said Special Agent in Charge Chris Schrank, of the U.S. Department of Health and Human Services, Office of Inspector General. “Today’s announcement shows our commitment to working with our state and federal law enforcement partners to swiftly investigate such allegations of fraud.”

Source: California Department of Insurance.