Justia White Collar Crime Opinion Summaries

Michael, a licensed pharmacist at Chapmanville's Aracoma Pharmacy, separately co-owns another West Virginia pharmacy and one in Pennsylvania. The government suspected that Michael used the pharmacies to distribute on-demand prescription drugs, worth more than $4 million, over the Internet. A grand jury returned a multi-count indictment. Count 7 charged Michael with fraudulently submitting a claim for payment to Humana for dispensing medication that was never dispensed (18 U.S.C. 1347). Count 8 charged him with committing aggravated identity theft by using the “identifying information” of a doctor and a patient “in relation to the [health care fraud] offense” (18 U.S.C. 1028A(a)(1), (c)(11)). Michael had submitted a claim to Humana indicating that A.S. (doctor) had prescribed Lovaza for P.R., including the doctor’s National Provider Identifier and the patient’s name and birth date. A.S. was not P.R.’s doctor and did not issue the prescription. Section 1028A requires a person to “assume the identity” of someone else; the district court held that the statute covered only “impersonation,” and dismissed Count 8. The Sixth Circuit reversed. To “use” a means of identification is to “convert to one’s service” or “employ” the means of identification. Michael used A.S. and P.R.’s identifying information to fashion a fraudulent submission, making the misuse of these means of identification “during and in relation to” healthcare fraud. View "United States v. Michael" on Justia Law

Kolodesh owned a home-health services company. He approached his employee, Pugman, about starting a home-based hospice care company. Pugman's agreed. Kolodesh funded the new company, Home Care Hospice. Pugman managed the operations. Kolodesh’s wife and Pugman were listed as owning equal shares; Kolodesh was intimately involved in forming and overseeing its management. In 2000 or 2001, Kolodesh, Pugman, and Pugman's wife began giving gifts and cash “kickbacks” to doctors in exchange for patient referrals. At Kolodesh’s suggestion, Pugman placed doctors or their employees on the Hospice payroll with sham job titles and issued paychecks in exchange for patient referrals. About 90% of the revenue generated by Hospice came from Medicare reimbursements. Kolodesh and Pugman had contractors submit fake invoices Hospice would pay; the contractor would give most of the money to Kolodesh and Pugman, keeping a portion. The participants were charged with conspiracy to defraud a health care benefit program, 18 U.S.C. 1349, 21 counts of health-care fraud, 18 U.S.C. 1347, two counts of mail fraud, 18 U.S.C. 1341, and 11 counts of money laundering, 18 U.S.C. 1957. Pugman testified for the government after having pled guilty. The Third Circuit affirmed Kolodesh's sentence of 176 months’ imprisonment and a restitution order of $16.2 million. View "United States v. Kolodesh" on Justia Law

Babaria, a licensed radiologist and medical director and manager of Orange Community MRI, an authorized Medicare and Medicaid provider, pleaded guilty to one count of making illegal payments (kickbacks), 42 U.S.C. 1320a-7b(b)(2)(A). From 2008 through 2011, he paid physicians to refer patients to Orange for diagnostic testing and billed Medicare and Medicaid for testing that was tainted by the corrupt referrals. Orange received $2,014,600.85 in payments that were directly traceable to the kickback scheme. There was no evidence that Babaria falsified patient records, billed Medicare or Medicaid for testing that was not medically necessary, or otherwise compromised patient care. Babaria objected to the PreSentence Investigation Report, which recommended a two-level adjustment for abuse of a position of trust (USSG 3B1.3) and a four-level adjustment for aggravating role (USSG 3B1.1(a)), resulting in a recommended Guidelines range of 70-87 months’ imprisonment. Ultimately, the Guidelines range was 60 months, capped by the statutory maximum for Babaria’s count of conviction. He argued that the correct range was 37 to 46 months. The court applied both adjustments but granted a downward variance and sentenced Babaria to 46 months’ imprisonment, a fine of $25,000, and forfeiture of the $2,014,600.85. The Third Circuit affirmed the sentence. View "United States v. Babaria" on Justia Law

Chhibber, an internist, operated a walk‐in medical office on the south side of Chicago. For patients with insurance or Medicare coverage, Chhibber ordered an unusually high volume of diagnostic tests, including echocardiograms, electrocardiograms, pulmonary function tests, nerve conduction studies, carotid Doppler ultrasound scans and abdominal ultrasound scans. Chhibber owned the equipment and his staff performed the tests. He was charged with eight counts of making false statements relating to health care matters, 18 U.S.C. 1035, and eight counts of health care fraud, 18 U.S.C. 1347. The government presented witnesses who had worked for Chhibber, patients who saw him, and undercover agents who presented themselves to the Clinic as persons needing medical services. Chhibber’s former employees testified that he often ordered tests before he even arrived at the office, based on phone calls with staff. Employees performed the tests themselves with little training, and the results were not reviewed by specialists; normally, the tests were not reviewed at all. Chhibber was convicted of four counts of making false statements and five counts of health care fraud. The Seventh Circuit affirmed, rejecting challenges to evidentiary rulings.View "United States v. Chhibber" on Justia Law

Volkman, an M.D. and a Ph.D. in pharmacology from University of Chicago, was board-certified in emergency medicine and a “diplomat” of the American Academy of Pain Management. Following lawsuits, he had no malpractice insurance and no job. Hired by Tri-State, a cash-only clinic with 18-20 patients per day, he was paid $5,000 to $5,500 per week. After a few months, pharmacies refused to fill his prescriptions, citing improper dosing. Volkman opened a dispensary in the clinic. The Ohio Board of Pharmacy issued a license, although a Glock was found in the safe where the drugs were stored. Follow-up inspections disclosed poorly maintained dispensary logs; that no licensed physician or pharmacist oversaw the actual dispensing process; and lax security of the drug safe. Patients returned unmarked and intermixed medication. The dispensary did a heavy business in oxycodone. A federal investigation revealed a chaotic environment. Cup filled with urine were scattered on the floor. The clinic lacked essential equipment. Pills were strewn throughout the premises. Months later, the owners fired Volkman, so he opened his own shop. Twelve of Volkman’s patients died. Volkman and the Tri-State owners were charged with conspiring to unlawfully distribute a controlled substance, 21 U.S.C. 841(a)(1); maintaining a drug-involved premises, 21 U.S.C. 856(a)(1); unlawful distribution of a controlled substance leading to death, 21 U.S.C. 841(a)(1) and 841(b)(1)(C), and possession of a firearm in furtherance of a drug-trafficking crime, 18 U.S.C. 24(c)(1) and (2). The owners accepted plea agreements and testified against Volkman, leading to his conviction on most counts, and a sentence of four consecutive terms of life imprisonment. The Sixth Circuit affirmed. View "United States v. Volkman" on Justia Law

Orillo, her husband (a doctor), and another owned Chalice, a home health care provider. Chalice was an enrolled provider with Medicare and could seek reimbursement of home health care through that program. Orillo falsified forms by altering the codes and information that had been completed by the Chalice nurses to make the patient’s condition appear worse and the health care needs greater than the actuality. Those alterations caused Medicare software to generate different reimbursement rates Orillo also aided her husband in paying kickbacks to a Chicago doctor in return for referrals of Medicare patients. Orillo pled guilty to healthcare fraud, 18 U.S.C. 1347 and paying kickbacks to physicians for patient referrals under a federal health care program, 42 U.S.C. 1320a-7b and 18 U.S.C. 2, and was sentenced to 20 months’ imprisonment. Orillo conceded that her scheme caused a loss, to Medicare, in excess of $400,000, and agreed to entry of a $500,000 forfeiture judgment.The district court determined that the loss amount for the healthcare fraud count was $744,481 and ordered her to pay that amount in restitution. The Seventh Circuit affirmed, rejecting Orillo’s argument that the loss and restitution amount should be limited to only those stemming from visible alterations. View "United States v. Orillo" on Justia Law

Natale,a vascular surgeon, was compensated by Medicare for repairing a patient’s aortic aneurysm. Another doctor reviewed the post-surgical CT scan, which did not match the procedure Natale described in his operative reports. After an investigation, Natale was indicted for health care fraud related to his Medicare billing, mail fraud, and false statements related to health care. A jury acquitted Natale on the fraud counts but convicted him of making false statements, 18 U.S.C. 1035. The trial court used jury instructions that seemingly permitted conviction for false statements completely unrelated to Medicare reimbursement. The Seventh Circuit affirmed, finding the error harmless, but clarified that under the statute, even conviction for false statements made in connection with items or services still must relate to a “matter involving a health care benefit program.” View "United States v. Natale" on Justia Law

In 2003, Congress created Health Savings Accounts to help people with high-deductible health plans save for health care costs by providing tax-preferred treatment for money saved for future medical expenses, 26 U.S.C. 223. Banas and others started a company that created a suite of software products that allowed savers to manage their Health Savings Accounts online. By 2009, the company had more than 100 employees. Venture capital and private equity firms thought the company was a solid investment and bought stock, but the company had provided counterfeit financial documents and had even “faked” customer calls. The owners started raiding clients’ Health Savings Accounts. By the time Banas and Blackburn were stopped, they had misappropriated more than $18,000,000 in client funds. Banas admitted his guilt, accepted responsibility for his actions, and has worked to secure some degree of restitution. The district judge sentenced Banas to 160 months of imprisonment for wire fraud, 18 U.S.C. 1343, well below the Guidelines range. The Seventh Circuit affirmed, particularly noting the impact of the crime on victims. View "Unted States v. Banas" on Justia Law

A dialysis provider created a wholly-owned subsidiary, RCGSC, which supplied dialysis equipment for home use, to take advantage of the Medicare reimbursement scheme and increase profits. In 2005 former employees filed a qui tam action under the False Claims Act, 31 U.S.C. 3729-33, alleging that RCGSC was not a legitimate and independent durable medical equipment supply company, but a “billing conduit” used to unlawfully inflate Medicare reimbursements. The United States intervened and the relators’ claim was voluntarily dismissed. The government alleged that defendants submitted claims, knowing that RCGSC was a sham corporation created solely for increasing Medicare reimbursements; knowing that RCGSC was not in compliance with Medicare rules and regulations; knowing that RCGSC was misleading patients over their right to choose between Method I and Method II reimbursements; and for facility support charges for services rendered to home dialysis patients who had selected Method II reimbursements. The government also brought common law theories of payment by mistake and unjust enrichment. The district court granted summary judgment in favor of the United States. The Sixth Circuit reversed on all counts and remanded some. Defendants did not act with reckless disregard of the alleged falsity of their submissions to Medicare.View "United States v. Renal Care Grp., Inc." on Justia Law

Tasis and his brother ran a sham medical clinic, recruited homeless Medicare recipients who had tested positive for HIV, hepatitis or asthma, paid the “patients” small sums in exchange for their insurance identification, then billed Medicare for infusion therapies that were never provided. During four months in 2006, the Center billed Medicare $2,855,785 and received $827,000 in return. The scheme lasted 15 months, during which Tasis and his collaborators submitted $9,122,159.35 in Medicare claims. An auditor notified the FBI. After an investigation, prosecutors indicted Tasis on fraud and conspiracy claims. Over Tasis’s objection, co-conspirator Martinez testified that she and Tasis had orchestrated a a similar scam in Florida. The court instructed the jury to consider Martinez’s testimony about the Florida conspiracy only as it related to Tasis’s “intent, plan and knowledge.” The jury found Tasis guilty, and the trial judge sentenced him to 78 months in prison and required him to pay $6,079,445.93 in restitution. The Sixth Circuit affirmed, rejecting various challenges to evidentiary rulings. View "United States v. Tasis" on Justia Law