Two Individuals Arrested For Health Care Fraud

SAN JUAN, P.R. – On August 22, 2013, a Federal grand jury returned an indictment against two individuals for conspiracy to commit health care fraud, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. The investigation was led by the Department of Health and Human Services, Office of Inspector General (HHS-OIG), with the collaboration of the Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), the Federal Bureau of Investigations (FBI) and the Puerto Rico Police Department.

Carlos I. Rivera-Torres, President of CEM Puerto Rico Health Services, Inc. (CEM) and Alpha-Omega Wound Care (Alpha-Omega) and Pedro Rivera-Rivera, President of New Center Medical Supply, Inc. (New Center), are charged in a 25-count indictment for conspiracy to commit health care fraud and a forfeiture allegation of $1,741,090.08.  The government seeks to forfeit two bank accounts, CEM Office Building in Caguas, PR and a property in Urb. Sabanera in Cidra, PR.

The indictment alleges that from on or about June 18, 2008 through on or about March, 2012, CEM and New Center submitted at least 710 false and fraudulent claims to Medicare totaling approximately $2,457670.00, seeking reimbursement for Durable Medical Equipment (DME) including collagen wound dressings that were misbranded, causing Medicare to disburse approximately $1,741,090.08.

It was part of the scheme and artifice to defraud that Rivera-Torres and other unindicted employees of Alpha-Omega, at their premises, in a room that was used for this activity, removed some of the 8x8 inch Helicoll collagen wound dressings from their primary unlabeled pouches, cut them into pieces of approximately 4x4 inch and 2x2 inch and repacked them in unlabeled plastic and foil material, contrary to the manufacturer's product instructions ("Sterility Guaranteed in Unopened, Undamaged Package.  To Be Used for One Procedure Only").

Those repacked 4x4 inch and 2x2 inch collagen wound dressings, which were cut by using common household scissors, some of them with rust, were provided to patients by representatives of Alpha-Omega or CEM inside unlabeled pouches created in a converted garage located at the premises of Alpha-Omega.
Both defendants also face three counts for soliciting and receiving kickbacks in relation to the Medicare Program.  Defendant Rivera-Torres also faces charges of misbranding and adulterating medical devices with intent to mislead and defraud and money laundering.

“As part of the nation’s health care system, Medicare serves vulnerable populations,” said United States Attorney, Rosa Emilia Rodríguez-Vélez.  “These individuals jeopardized the health of injured people who needed the sterile collagen wound dressings. Today’s arrests by HHS-OIG agents and our law enforcement partners show that we will not tolerate criminals who engage in fraudulent schemes which deplete the Medicare program of funds in order to enrich themselves.”

Thomas O’Donnell, Special Agent in Charge of the Office of Inspector General’s New York Regional Office which also covers Puerto Rico stated: “HHS/OIG works diligently to investigate allegations of Medicare fraud. Today's arrests involving Durable Medical Equipment (DME) fraud demonstrate our resolve to bring these subjects to justice. Our efforts, along with the US Attorney's Office and our Law Enforcement partners, have made a dramatic reduction on the total dollars billed and paid for DME in Puerto Rico.”

HHS-OIG was the lead agency which conducted the investigation, with the collaboration of FDA, FBI, and PRPD.  The case is being prosecuted by Special Assistant U.S. Attorney Wallace A. Bustelo and Assistant U.S. Attorney Héctor Ramírez-Carbó.

If found guilty, the defendants could face a possible sentence of up to 10 years in prison for the Health Care Fraud offense. Indictments contain only charges and are not evidence of guilt.  Defendants are presumed to be innocent unless and until proven guilty.