White Collar and Health Care: Former Professional Baseball Player Pleads Guilty to Medicare Fraud Charges

Ihosvany Marquez, a former pitcher in the Baltimore Orioles and Boston Red Sox organizations, pleaded guilty on Monday, April 12, 2010, in federal court in Miami to health care fraud charges. The government charged that Marquez and his partners submitted more than $55 million in false claims to Medicare for HIV and cancer therapy and pain treatment. The government contends that the defendants received more than $22 million in payments from Medicare as a result of the fraud.

Marquez and his co-conspirators operated six fraudulent Miami-Dade clinics and one in Orlando. It was from these clinics that Marquez and others caused fictitious bills to be sent to Medicare. According to the government, Marquez and his group did not provide any services. To operate the scheme Marquez and his group stole the Medicare numbers of some persons covered by the government insurance program and the provider numbers of physicians who participate in Medicare. The co-conspirators then laundered the Medicare proceeds through shell companies that they created for the sole purpose of laundering the proceeds of the fraud. Marquez and others also paid Cuban immigrants to pose as the owners of the clinics. These nominee owners received large fees with the understanding that the straw owners would flee the country if an investigation began.

The government will execute seizure orders on Marquez's property and holdings as he spent the proceeds of the fraud lavishly. Prosecutors contend that Marquez bought a number of luxury automobiles including a Lamborghini for almost half a million dollars, a second Lamborghini, a Ferrari, two Bentleys, and at least eight Mercedes Benzes. The total amount spent on automobiles according the government was $2.7 million. Additionally, the prosecutors allege that Marquez spent over $500,000 on jewelry and approximately $1,000,000 on thoroughbred races horses.

For more about the Marquez plea, please see The Miami Herald, "Former Pitcher: I Made Millions Off Claims," April 13, 2010.

Health Care: DOJ Seeks Funding to Expand Strike Forces

Officials from the U.S. Department of Justice are asking Congress to significantly enhance funding for health care investigation and prosecution in the fiscal 2011 budget. Acting Deputy Attorney General Gary Grindler and acting Deputy Assistant Attorney General for the Criminal Division Greg Andres appeared before a House Appropriations subcommittee. The officials are seeking an increase of $60 million in 2011, from $30 million to $90 million, to finance strike forces to combat health care fraud.

The Department of Justice estimates that for every dollar spent on enforcement since 1996, the Medicare trust fund has realized a return of $4.00. If that ratio were to hold in effect for the proposed increase, the $60 "investment" in enforcement would realize almost a quarter of a billion dollars returned to the trust fund. Moreover, the Justice Department estimates that the country suffers annual loses of billions of dollars due to health care fraud.

There are currently health care strike forces in seven U.S. cities. The Department wants to establish as many as 13 more such strike forces. Investigators and agents assigned to the strike forces come from Department of Justice components, the Department of Health and Human Services, and state and local law enforcement. The attorneys assigned to the strike forces come from the Criminal Division of the Department of Justice and U.S. Attorneys' offices.

The first of the strike forces began in Miami in 2007. That strike force first targeted fraud in the billing for durable medical equipment. In the Miami strike force's first year, submission of durable medical equipment claims fell by $1.74 billion.

For more about the Justice Department's request to expand the strike forces, please see Main Justice, "Justice Officials Push for Expansion of Health Care Strike Forces," March 4, 2010, http://www.mainjustice.com/2010/03/04/justice-officials-push-for-expansion-of-health-care-strike-forces/.

White Collar and Healthcare: Feds Indict Two Doctors for Medicare Fraud

The United States Attorney in Seattle has obtained grand jury indictments of two Seattle area physicians on charges of defrauding the Medicare program. While the indictments do not allege a relationship between the defendants, the two schemes were allegedly identical.

The grand jury charged Dr. Garnik Karapetyan with bilking Medicare of $1.9 million and attempting to receive as much as $3.2 million from the federal health insurance program. The indictment alleges that Karapetyan set up a dummy company called Federal Way Medical Equipments, Inc. Then, using the stolen identities of real Medicare patients, Karapetyan billed Medicare through his shell company for services never rendered.

In a separate indictment the grand jury charged Dr. Iacob Razumnii with stealing $753,000 from Medicare. The indictment alleges that Razumnii created a front company called American Standard Medical Supply. Additionally, he used stolen Medicare identification numbers to submit claims to Medicare for services never provided. The grand jury alleges that Razumnii attempted to defraud Medicare of $2 million.

While the grand jury alleged unrelated schemes against the two defendants, it is noteworthy that the alleged schemes were identical. Most interesting is that both defendants were allegedly able to make large numbers of Medicare claims using valid Medicare identification numbers. This modus operandi has become an indicator of organized crime involvement in Medicare fraud.

The defendants are each charged with six counts of wire fraud, three counts of health care fraud, and four counts of aggravated identity theft.

For more about the charges, please see the Seattle Post-Intelligencer, February 11, 2010, http://www.seattlepi.com/local/415317_Medicare11.html.

Health Care: Pennsylvania Physician Pleads Guilty to Fraud Charges

A Lancaster County physician, Saroj K. Parida, has pleaded guilty in the U.S. District Court for the Middle District of Pennsylvania, located in Harrisburg, to bilking public and private health insurers out of $8 million. Parida pleaded guilty to health care fraud and mail fraud charges. He is awaiting sentencing.

Parida and the federal prosecutors entered into a plea agreement. The terms of the agreement call for the recommendation of a sentence of eight years incarceration. The plea agreement is not binding on the court. As a general rule, if the probation department agrees with the sentencing rationale of the plea agreement, the court will impose the agreed upon plea.

Parida also agreed to the payment of $7.1 million in restitution to several insurers. The insurers included Medicaid and private insurance companies. Thus far, Parida has turned over $959,000. Additionally, the plea agreement called for Parida to forfeit $5.7 million that the government seized from Parida's bank and investment accounts. The forfeiture will count towards the restitution order.

The government alleged that Parida was submitting bills to the insurance companies for work that he was not performing. The government claims that the locations of Parida's fraud scheme were Cumberland and Lancaster counties in Pennsylvania and in the state of South Carolina.

For more information about the case, please see The Reading Eagle, February 2, 2010, http://readingeagle.com/article.aspx?id=192174.

Health Care: Medicare Fraudster Sentenced

A convicted Medicare fraud schemer received a sentence of more than 12 years in federal prison. Daniel Martinez had pleaded guilty in federal court in Miami to charges of health care fraud and money laundering.

Martinez was the leader of a conspiracy that cheated Medicare out of more than $20 million. The defendant had operated a Hialeah, Florida, company named Med-Pro of Miami. The company claimed to be a provider of durable medical equipment to patients in Florida. However, the scheme involved the billing of Medicare for services without actually providing those services. Med-Pro would bill Medicare for providing equipment that was not provided to patients nor even prescribed by physicians. After receiving the Medicare payments, the schemers laundered the checks through individuals whose role was to cash the checks for a portion of the proceeds and return the remaining cash to the schemers.

Martinez received a sentence of 150 months in prison, followed by 18 months of house arrest. For federal crimes the United States employs determinate sentencing without parole. Thus, Martinez must serve at least 85% of his sentence or more than 10 years in prison. In addition, the court ordered the forfeiture of property derived from the crime.

For an article about the sentencing, please see the following article from the South Florida Sun-Sentinel, http://www.sun-sentinel.com/news/local/breakingnews/sfl-medicare-fraud-b092909,0,4607301.story