Despite the astonishing pervasiveness of Medicare fraud, it’s not a topic that frequently comes up in our national discourse. You rarely find it on popular crime dramas or true-crime narratives, nor is it an especially common fixture in the news. This lack of exposure, in conjunction with the vulnerability of Medicare’s beneficiaries and the billions of dollars invested in the program annually, may be exactly why it is such an enticing opportunity for fraudsters.
As is often the case with highly prevalent crimes, we do ourselves a disservice as a nation in assuming that only career criminals commit fraud. Anyone who has inside access to the Medicare system is capable of committing it, which means that any healthcare provider, employee in a healthcare facility or healthcare corporation can be culpable.
Medicare fraud is also not always premeditated, but a recent high-profile case in Miami demonstrated the damage that it can cause when it is.
In June 2015, a federal enforcement team called the Medicare Fraud Strike Force led a nationwide takedown and caught 243 individuals involved in an estimated $712 million in false Medicare claims, collectively.
The crimes ranged from aggravated identity theft to money laundering and conspiracy to commit healthcare fraud. The defendants charged included doctors, healthcare company owners and other healthcare service providers.
In Miami, the Strike Force found particular success in halting a multimillion-dollar fraud scheme that involved three healthcare professionals and the owner of a transportation company.
Patient recruitment scheme
On Friday, January 8th, the fourth and final defendant in that case was convicted for coordinating illegal patient referral kickbacks. The other three defendants faced convictions in October 2015 and were all issued prison sentences starting in December 2015.
Damian Mayol was the owner and operator of Transportation Services Company, and also worked as an office worker at R&S Community Mental Health Inc. and St. Theresa Community Mental Health Inc., two mental healthcare providers contracted with Medicare. Mayol was alleged to have used his transportation services company to facilitate kickback payments to co-conspirators who helped secure patient referrals to R&S, St. Theresa and New Day Community Mental Health Center LLC.
The referred patients were in certain instances unqualified for partial hospitalization program treatment in these facilities. Their information was used to submit fraudulent Medicare claims and receive reimbursement. The reimbursement, which reached approximately $28 million, was then diverted by Mayol’s three co-defendants and used for personal financial gain.
Some Medicare fraud cases are complicated by ambiguous intent, but in this instance the evidence revealed a deliberate conspiracy to defraud the government.
2015 Medicare fraud convictions
The three defendants convicted in October were Santiago Borges, owner of R&S and St. Theresa and an investor in New Day, Erik Alonso, clinical director of these mental health facilities, and Cristina Alonso, a therapist at R&S and St. Theresa. They were sentenced in October to serve 10 years, 5 years and 28 months respectively. The allegations that led to their conviction, to which they pled guilty, included approximately $70 million in false Medicare claims resulting in $28 million in Medicare reimbursements.
The individual False Claims Act violations were part of a larger scheme involving patient referral kickbacks, the use of unqualified Medicare patients as a means to secure greater reimbursements, and the submission of Medicare claims that involved unnecessary or nonexistent treatments, fraudulent patient records, as well as false group therapy notes. Mayol’s transportation company served as a means to distribute kickbacks to individuals issuing patient referrals to the three implicated health centers.
This scheme was alleged to have taken place between January 2008 and December 2010. The evidence presented in the cases included checks paid to kickback recipients through the corporate account of Transportation Services Providers.
Anti-kickback regulations
In many industries, it is legal to provide financial incentives or rewards for the referral of clients or customers. In the case of any healthcare provider or facility contracted with Medicare and Medicaid, however, such financial arrangements are illegal as per the Anti-Kickback Statute. The prohibited remuneration types include cash and equivalent rewards such as trips and meals of excessive cost.
Even though Mayol’s involvement in the scheme was not alleged to include direct submissions of false claims to Medicare, he was found guilty of paying for referrals to the facilities in question. His actions also facilitated the greater operations of the scheme, because they enabled Medicare patient information to be submitted as part of the fraudulent claims. Enforcement for Anti-Kickback violations can be applied both to the provider of kickbacks and to anyone who solicits or receives them; both parties are considered guilty.
False Claims Act enforcement
In addition to the Anti-Kickback Statute violation committed, this Medicare scheme constituted a broader violation of the False Claims Act. Because Medicare is covered by the federal government, which utilizes taxpayer money, any claim submitted that relates to Medicare services must be accurate. Anyone who knowingly submits invoices based on false information is committing False Claims Act fraud.
A false claim may entail an invoice detailing Medicaid services that were never performed, services that were unnecessary and only performed for financial gain, or even the unauthorized waiving of copays. Learn more about common types of healthcare Medicare and Medicaid Fraud here.