Federal Jury Convicts Three People in $154 Million Texas-Based Money Laundering and Healthcare Fraud Scheme
Three individuals, including the mayor of a Texas town, were recently found guilty by a federal jury for their involvement in a $154 million healthcare fraud scheme.
Evidence presented in the three-week long trial showed that from 2009 to 2018 the three were engaged in a scheme that involved over $150 million in false and fraudulent claims for hospice and other healthcare services. One of the defendants owned and operated a large healthcare company with dozens of locations throughout Texas, another was the CEO of the company, and the third—a licensed physician—was the medical director. The scheme operated by enrolling patients with long-term incurable diseases, like Alzheimer’s and dementia, who were residing in group homes, nursing homes, and in housing projects by falsely telling them that they had less than six months to live. Chaplains were sent to the patients to lie and discuss last rites and make preparation for their imminent deaths. These patients were not suffering from a terminal illness whose outcome would result in their deaths within six months—a requirement to qualify for hospice services. Evidence at the trial showed that some of these patients were actually still living quite active lives—walking, driving, working, and even coaching athletic sporting events. The defendants kept the residents on hospice services for multiple years to increase revenue. They also fired employees who refused to go along with the fraud.
One way the scheme operated and laundered the proceeds from the fraud was by creating fake companies in order to conceal the distribution of hundreds of thousands of dollars in illegal kickbacks that were given to a physician who provided home health and hospice referrals.
The defendants used the proceeds derived from the scheme to purchase expensive vehicles and jewelry, luxury clothing, exclusive real estate, and season tickets to watch professional sports teams. The trio also hosted lavish parties at nightclubs for physicians in exchange for them falsely certifying that patients were qualified for services when they were not and also to obtain referrals to provide medically unnecessary services.
Sentencing of the three is scheduled for June 17, 2020.
Compliance Perspective
Knowingly submitting false claims for reimbursement from Medicare and Medicaid for hospice care services of patients who do not meet the “six-month death expectancy” requirement, and paying kickbacks or offering other enticements to physicians in exchange for patient referrals and certifications that qualify patients for unnecessary medical services may be considered a violation of federal regulations outlined in the Anti-Kickback Statute, the Stark Law, and the False Claims Act.
Discussion Points:
- Review policies and procedures requiring hospice service recipients to have the expectation of living less than six months, and review the Anti-Kickback Act, the Stark Act, and the False Claims Act.
- Train staff to report any reasonable suspicion that persons receiving hospice care do not qualify for those end-of-life services.
- Periodically audit to ensure that persons receiving hospice care meet the six-month criteria to initially receive and continue receiving those services.
FRAUD MODULE 3: MASTERING LEGAL IMPLICATIONS AND ANTITRUST LAWS
