Docs behind bars: 11 accused in $650M fraud

March 7, 2012

The feds closed two fraud investigations as part of a crackdown on healthcare crime. Find out what tipped them off, and see if your colleagues are among the accused.

Two high-profile insurance fraud indictments unsealed last week indicate that the government is cracking down on healthcare crime.

The Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) charged 11 physicians and other providers last week in two unrelated insurance fraud investigations-one involving Medicare, the other involving automobile insurance companies. Officials allege the providers and employees collected more than $650 million from the crimes.

The first case involved Jacques Roy, MD, of Dallas, Texas. Federal officials allege that Roy, his practice’s office manager, and five owners of home health agencies participated in a $374 million fraud scheme involving false claims for home health services, according to announcements from the Centers for Medicare and Medicaid Services (CMS) and the DOJ.

Roy owned and operated Medistat Group Associates in Dallas. Medistat provided home health certifications and performed patient home visits. Between January 2006 and November 2011, Medistat allegedly recruited thousands of Medicare patients for unnecessary home health services and billed more than $350 million to Medicare and more than $24 million to Medicaid for the services, according to investigators.

“Thanks to our new fraud detection tools, we have greater abilities to identify the kind of sophisticated fraud scheme that previously could have escaped scrutiny,” Department of Health and Human Services Deputy Secretary Bill Corr said in a statement.

Roy’s alleged crimes were likely easy to spot. CMS analysts discovered that in 2010, 99% of physicians who certified patients for home health signed up no more than 104 people each. Roy certified more than 5,000.

Roy faces a maximum penalty of 10 years in prison and a $250,000 fine for each of the 10 criminal charges against him. Officials also intend to seize Roy’s bank accounts, a sailboat, vehicles, and multiple properties.

Federal investigators are tackling commercial insurance fraud, too. Ten physicians and two chiropractors in the New York City area were arrested February 29 and accused of defrauding private insurance companies out of more than $279 million by exploiting New York’s no-fault automobile insurance law, according to the FBI.

Under New York state law, every vehicle registered in the state is required to have no-fault automobile insurance, which provides the driver and passengers with benefits of up to $50,000 per person for auto accident injuries, regardless of fault. The FBI alleges that from at least 2007 through 2012, a ring of physicians and owners ran medical clinics that provided unnecessary and excessive medical treatments to take advantage of the law.

The owners paid physicians and chiropractors to use their medical licenses to incorporate the clinics, through which they billed private insurers for the bogus medical treatments. These doctors operated as “straw owners” of the clinics, according to the FBI.

The treatments included physical therapy, acupuncture, and chiropractic treatments-as many as five times per week for each-and treatments for psychology, neurology, orthopedics, and audiology. Clinic doctors also are alleged to have prescribed unnecessary magnetic resonance imaging, x-rays, orthopedic devices, and medical supplies.

“As alleged, the scheme relied on a cadre of corrupt doctors who essentially peddled their medical licenses like a corner fraudster might sell fake IDs, except those medical licenses allowed unlawful entry not to a club or a bar, but to a multi-billion-dollar pool of insurance proceeds,” Manhattan U.S. Attorney Preet Bharara said in a statement.

Each New York physician charged faces a maximum penalty of 30 years in prison.

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