Farmington Hills, Mich., physician Jose Castro-Ramirez was convicted today by a Detroit federal jury on all 13 charged counts in connection with his role in an $18.3 million Medicare fraud scheme, announced Assistant Attorney General Lanny Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG), Chicago Regional Office.
After a three-week trial, the jury convicted Castro-Ramirez of one count of conspiracy to commit health care fraud, 11 substantive counts of health care fraud, and one count of conspiracy to launder the proceeds of the fraudulent scheme.
Evidence at trial established that beginning in late 2003, the defendant, a physician licensed in the state of Michigan, entered into an agreement with co-conspirator Suresh Chand to defraud the Medicare program. Chand owned and controlled several companies operating in Warren, Mich., including Continental Rehab Services Inc. (CRS) and Pacific Management Services Inc. (PM), which purported to provide physical and occupational therapy services to Medicare beneficiaries. In reality, as the evidence showed, Chand and his associates at CRS and PM created fictitious therapy files, appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had taken place. The fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by Chand and his co-conspirators.
Evidence introduced at trial established that in order to create the fictitious files, Chand and his co-conspirators paid cash kickbacks and other inducements to Medicare beneficiaries, in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received therapy services. Evidence also showed that Chand paid licensed physical and occupational therapists to sign fictitious "progress notes" and other documents that appeared to reflect that physical and occupational therapy services had been provided to the beneficiaries, when in fact they had not. Castro-Ramirez signed therapy prescriptions and other documents in the files falsely indicating that he had evaluated the Medicare beneficiaries and certified the need for physical and occupational therapy services. In fact, the evidence at trial established that Castro-Ramirez had not overseen any treatment provided to the patients and was fully aware that his signatures were part of a fraudulent scheme. According to evidence presented at trial, in many instances Castro-Ramirez had never seen the beneficiaries.
One of the inducements that Chand and his co-conspirators used to recruit Medicare beneficiaries into the scheme was the provision of prescriptions for controlled substances and other drugs, including Vicodin and Xanax. Evidence presented at trial showed that Chand provided Castro-Ramirez with lists of the controlled substances or drugs the beneficiaries preferred, and that Castro-Ramirez wrote prescriptions for the substances without ever seeing the patients. The evidence established that between January 2003 and March 2007, Castro-Ramirez wrote thousands of prescriptions for a variety of drugs for patients that he had never seen. The evidence also showed that Castro-Ramirez was fully aware that the purpose of the prescriptions was to induce beneficiaries into the scheme.
Evidence introduced at trial demonstrated that Castro-Ramirez profited from his participation in the scheme in several ways. Castro-Ramirez’s largest source of fraudulent proceeds came from his own billings to Medicare for "home visits" that he purportedly made to Medicare beneficiaries whom Chand recruited into the scheme. In fact, Castro-Ramirez never conducted "home visits" with the vast majority of these patients, and never discussed or ordered therapy services for the few he did see. The evidence showed that Chand and other co-conspirators also distributed proceeds of the fraud directly to Castro-Ramirez on occasion, and did so through transactions designed to disguise the nature, source, ownership, control and location of the tainted funds. The evidence showed that Castro-Ramirez knew that the cash and checks he received from Chand were structured so as to conceal the fact that they were proceeds of Medicare fraud.
Between approximately January 2003 and June 2007, Chand and his co-conspirators submitted claims to the Medicare program totaling $18,379,300 for physical and occupational therapy services that were supposedly ordered and supervised by Castro-Ramirez, but were in fact never rendered. Medicare paid $8,562,688 on those claims. In addition, Castro-Ramirez submitted approximately $1.4 million in claims to the Medicare program for "home visits" supposedly provided to beneficiaries recruited into the scheme by Chand and his co-conspirators. Medicare paid approximately $929,000 on those claims.
Chand pleaded guilty on Sept. 28, 2009, before U.S. District Judge Sean F. Cox to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money.
At sentencing, scheduled for June 29, 2010, Castro-Ramirez faces a maximum penalty of 10 years in prison and a $250,000 fine on the health care fraud conspiracy and substantive health care fraud counts. He faces a maximum penalty of 20 years in prison and a $250,000 fine on the money laundering conspiracy count.
The case was prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Thomas W. Beimers of the U.S. Attorney’s Office for the Eastern District of Michigan.
The case was investigated by the FBI and HHS-OIG. The case 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 Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1 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