A California man was sentenced on January 30, 2024, to 10 years in prison for conspiring to conceal his involvement in operating a laboratory and billing Medicare approximately $234 million for various lab tests, including COVID-19 and respiratory pathogen panel tests, despite his decades-long exclusion from the Medicare program.
According to court documents, the defendant, 65, was convicted of Medicare and Medicaid fraud in separate 1990 and 2001 cases in New York and California, respectively. After each conviction, he was excluded from participation in Medicare and all federal healthcare programs, and advised by the Department of Health and Human Services Office of Inspector General (HHS-OIG) that he had to submit a written application to be considered for reinstatement in federal healthcare programs. He never sought reinstatement, but continued to operate healthcare clinics in New York that billed federal healthcare programs. In November 2017, he pleaded guilty to conspiracy to pay and receive healthcare kickbacks and other charges in the Eastern District of New York related to his operation of these clinics.
By 2018, the defendant was an owner, operator, and manager of a Baldwin Park, California-based clinical testing laboratory that billed Medicare and other federal healthcare programs. In order to maintain the lab’s status as a Medicare provider and enable it to receive payments from Medicare for its testing services, the defendant and a co-conspirator fraudulently concealed the defendant’s role from Medicare, including failing to submit required enrollment documentation identifying his ownership, management position, and prior convictions. They submitted false documentation to Medicare identifying another person as the lab’s sole owner and managing officer, submitted false documentation concerning the lab’s ownership and management to the California Department of Public Health, and made false statements to the US Probation Office and Pretrial Services Agency while the defendant was on federal court supervision following his 2017 conviction.
Between August 2018 and April 2022, when the grand jury returned the indictment in this case and the defendant was arrested and ordered detained without bond, the lab fraudulently billed Medicare approximately $234 million. Medicare paid the lab approximately $31.7 million based on these fraudulent claims.
In addition to the term of imprisonment, the defendant was ordered to forfeit $31,761,286.21, including $4,513,106.30 in funds that the government previously seized from two bank accounts, as well as his interest in two residential properties and one business property in the Los Angeles area. He was also ordered to pay $31,761,286.21 in restitution.
“The integrity of the federal healthcare system rests, in part, on providers’ proper, lawful billing of Medicare and other HHS programs,” said Inspector General Christi A. Grimm of HHS-OIG. “Providers who violate federal healthcare law and defy measures intended to protect programs and patients from fraud will be held accountable. We remain steadfast and persistent in our efforts to investigate schemes targeting federal healthcare programs.”
Compliance Perspective
Issue
HHS-OIG has the authority to exclude individuals and entities from federally funded healthcare programs for a variety of reasons, including a conviction for Medicare or Medicaid fraud. Those that are excluded can receive no payment from federal healthcare programs for any items or services they furnish, order, or prescribe. OIG maintains a list of all currently excluded individuals and entities called the List of Excluded Individuals/Entities (LEIE). Anyone who hires an individual or entity on the LEIE may be subject to civil monetary penalties (CMP). To avoid CMP liability, healthcare entities should routinely check the list to ensure that new hires and current employees are not on it.
Discussion Points
- Review your policies and procedures for screening of potential employees to confirm that they are not included on a state or OIG Exclusion List. In addition, review your policies and procedures for frequency of checking the OIG Exclusion List for all current employees and vendors. Update policies as necessary.
- Train all appropriate staff on the requirement for checking the OIG LEIE link for all new potential hires, current employees, and vendors, and the frequency for repeating the checks. Document that the trainings occurred and file the signed document in each employee’s education file.
- Periodically audit to ensure that all new employees have been confirmed as not being on the OIG LEIE. Also, determine that routine checks are being conducted for current employees to ensure that they have not been added to the OIG Exclusion List in the period since the last LEIE check. Ensure that a copy of the OIG LEIE screening confirmation is included in each employee or vendor file.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
