Healthcare Compliance Perspective:
Under federal law, directors, officers, and physicians who participate in transactions involving unreasonable or excessive compensation will be subject to penalty taxes. Anyone with concerns in connection with any transaction or agreement involving physicians should report concerns to the Compliance Officer.
Two men, one a South Korean citizen and the other from Virginia, have been charged in an indictment filed in the Eastern District of Virginia with one count of conspiracy to commit health care fraud and wire fraud, six counts of health care fraud, and one count of conspiracy to defraud the United States. The man from South Korea was also charged with one count of filing a false tax return.
The indictment alleges that from 2005 through 2014, various corporations were owned, operated and controlled by the South Korean man and included a diagnostic sleep center and a medical center. These two centers provided sleep studies and sleep-related treatment at clinics located throughout Northern Virginia and Maryland. The man from Virginia helped control, manage and oversee the other man’s various corporations.
According to the allegations, the two directed a scheme causing an estimated $200 million in health insurance claims to be submitted for reimbursement partly based on false statements to health care benefit programs. Specifically, the indictment alleges that the men fraudulently incentivized individuals to undergo repeat and medically unnecessary sleep studies, falsified insurance claims, and used the identities of physicians without their authorization to bill health care benefit programs for sleep studies.
The indictment also alleges that the pair created various shell companies to acquire, hold and move proceeds derived from the scheme. The men used the proceeds from the scheme to purchase expensive vehicles, luxury clothing, exotic vacations and exclusive real estate in Hawaii, Chicago and Great Falls, Virginia.
The men are accused of falsifying the financial books and records of the sleep diagnostic center by misclassifying various personal expenses as business expenses in order to reduce taxable income. The men also allegedly provided the falsified records to an independent tax preparer, who relied on those records to prepare and file corporate and individual tax returns.
