Three Miami-Area Residents Plead Guilty to Participating
in $200 Million Medicare Fraud Scheme

WASHINGTON – Three Miami-area residents pleaded guilty today in U.S. District Court in Miami for their roles in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced.

Joseph Valdes, 30; James Edwards, 65; and Adriana Mejia, 40, each admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC), its management company, Medlink Professional Management Group Inc., and the American Sleep Institute (ASI).  ATC, Medlink and ASI were all Florida corporations headquartered in Miami.  ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando, Fla.  A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.

Valdes and Edwards each pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.  Mejia pleaded guilty to one count of conspiracy to commit money laundering.  All three defendants were charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida. 

According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI.  In some cases, the patients received a portion of those kickbacks.  Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.  According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.

In pleading guilty, Valdes admitted to serving as a marketer for ATC and Medlink and paying kickbacks to patient brokers and owners and operators of assisted living facilities and halfway houses in exchange for providing patients to attend ATC’s facilities.  Edwards admitted to serving as a patient broker and providing patients to ATC in exchange for kickbacks in the form of checks and cash based on how many days each patient attended ATC.  Mejia admitted to serving as a money launderer and creating fictitious entities and bank accounts in order to convert millions of dollars of Medicare payments into cash.

According to the plea agreements, Valdes’s and Edwards’s participation in the scheme resulted, respectively, in $9.9 million and $8.16 million in fraudulent billings to the Medicare program.  Mejia’s money laundering resulted in $2.25 million in laundered funds. 

Edwards and Mejia are scheduled to be sentenced on Jan. 18, 2011 and Valdes is scheduled to be sentenced on Jan. 19, 2011.  Valdes and Edwards each face a maximum penalty of 15 years in prison and a $250,000 fine.  Mejia faces a maximum penalty of 20 years in prison and a $4.5 million fine. 

ATC, Medlink and the owners and the lead manager of ATC, Medlink and ASI were each charged with multiple health care fraud-related and money laundering counts in a superseding indictment unsealed on Feb. 15, 2011.  Lawrence Duran and Marianella Valera, two of the three owners; Margarita Acevedo, the lead manager; ATC; and Medlink have each pleaded guilty for their roles in the scheme.  They are scheduled to be sentenced on Sept. 14, 2011, by U.S. District Judge James Lawrence King.  Trial against the third owner charged in the superseding indictment, Judith Negron, is scheduled to begin Aug. 15, 2011.

The indictment charging Valdes, Edwards and Mejia also charges 15 other individuals for their roles in the fraud scheme.  Co-defendant Alan Gumer, MD, pleaded guilty on June 30, 2011.  Trial against the remaining 14 co-defendants is scheduled for Nov. 7, 2011 before Judge Patricia A. Seitz.

Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office. 

The criminal case is being prosecuted by Trial Attorney Jennifer L. Saulino of the Criminal Division’s Fraud Section.  A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion.  In addition, HHS's Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to:  www.stopmedicarefraud.gov .