 |
Department of Justice United States Attorney Julia C. Dudley |
|---|
FOR IMMEDIATE RELEASE Thursday, September 3, 2009 |
CONTACT: Brian McGinn PHONE: 540-857-2974 FAX: 540-857-2179 EMAIL: Brian.McGinn@usdoj.gov www.usdoj.gov/usao/vaw |
OHIO MAN SENTENCED FOR FALSELY MARKETING
WHEELCHAIRS AS POWER SCOOTERS
Michael Cowen Will Serve 92 Months For Misleading Medicare Patients
LYNCHBURG, VIRGINIA – As a result of the marketing strategy of Michael Cowen, and Active Solutions, Medicare patients across the country watched television commercials showing disabled or semi-disabled people just like them enhance their quality of life by zooming around on power scooters. They believed they could call the number on the screen and get their mobility back. Unfortunately, their calls were answered by Cowen-trained telemarketers who would send them nothing more than a bulky two-hundred pound power wheelchair.
“According to Centers for Medicare and Medicaid Services, spending on power wheelchairs has gone up 450% in the last four years, with an estimated $1.2 billion dollars projected to be spent in the coming year,” United States Attorney Julia C. Dudley said today. “This case affirms that the United States Attorney’s Office will do all that is necessary to protect the Medicare trust fund. Those who prey on the elderly, simply to line their own pockets, will be prosecuted to the fullest extent. This case was an example of great inter-agency, as well as interstate, investigative efforts. The industry should now be on notice that fraud of any kind will not be tolerated.”
Cowen, along with his business partner Jan Bliwas and his wife, Bonnie Cowen, were indicted in 2007 on a variety of charges related to their multi-million dollar scam that advertised Power Scooters but delivered more profitable electric wheelchairs.
In February, Michael Cowen pled guilty to one count of conspiring to defraud the United States and one count of health care fraud. Today in District Court, Cowen was sentenced to 92 months of incarceration. The other defendants named in the indictment had previously pled guilty.
Bonnie Cowen was sentenced to two years probation for her role in obstructing a Federal audit. Bliwas was sentenced to two years probation with six months to be served as home detention for his role in the scheme. Michael Cowen has been in Federal custody since his arrest in Boca Raton, Fla. in November 2007.
According to a statement of facts agreed to by the defendant and previously submitted to the court, Cowen, and others, operated CBI, LLC under the name Active Solutions.
Active Solutions was incorporated in 2002 as Durable Medical Equipment company and operated out of Worthington, Ohio, a northern suburb of Columbus, Ohio. Active Solutions limited their sales to mobility products, specifically expensive electric motorized wheel chairs.
(scooter on left, wheelchair on right)
To attract customers, Active Solutions ran television commercials advertising its services in markets throughout the county, including the Western District of Virginia. The commercials showed senior citizens riding lightweight power scooters and making intricate choreographed maneuvers to upbeat square dance music. The ads also highlighted how the scooters (pictured above left) were lightweight and showed one being folded up and placed into the back of a minivan. The commercial concluded with a 1-800 number that led callers to CBI/Active Solutions, informing customers that the company would take care of all the paper work.
Upon calling the 1-800 number, sales personnel answering the calls were instructed by Michael Cowen to screen the callers. First, if the caller did not have Medicare they were told they would not qualify and the call would be terminated. In reality other insurers including Virginia Medicaid required an on-site evaluation of the patient by an occupational or physical therapist, to determine their eligibility. This outside scrutiny would hamper Cowen’s bait and switch scheme. Second, the sales staff were instructed to befriend the caller and coax a medical history out of them that matched a “safe list” of diagnosis codes that Medicare would approve. Throughout the conversation sales staff referred to the product as a “Power Chair Scooter”, a nonsensical term designed by Cowen to confuse the caller as well as the medical professionals that had to approve the patient’s need for the product.
After completing the call, the sales staff would submit a claim to Medicare for the power wheelchair, not the power scooter featured in the company’s commercials because they received $5,000 - $8,000 for the power wheelchair versus approximately $1,900 for the power scooters. In most cases, the power scooters would not have been approved because they are considered a convenience device and not covered by Medicare.
CBI delivery personnel, also referred to as outside salesmen, were trained to overcome the Medicare beneficiary’s reluctance to accept delivery of a product the beneficiary did not want by reselling the motorized wheelchair by telling the beneficiary that: the power scooters tip over easily; their doctor knew their medical condition and felt a power wheelchair was more beneficial for them; their doctor knew best; Medicare did not pay for scooters; and it didn’t cost you anything so you might as well keep it .
The most egregious tactic was intimidating the elderly customers by telling them there was a 10% re-stocking fee and they could only take the product back if they wrote them a check for between $500 and $700. Restocking fees are prohibited by Medicare regulations.
Some customers were forced to accept a wheelchair that could not be used inside small apartments or mobile homes. The weight of the wheelchair (approximately 200lbs) made it impossible for them to transport it anywhere else. Medicare patients were not made aware that their receipt of the motorized wheelchair may have prevented them from receiving a Medicare benefit towards the purchase of other mobility equipment, such a walker or manual wheelchair.
In total, Active Solutions submitted claims to Medicare for approximately 3,100, while selling less than 10 Scooters. CBI submitted no claims for payment based on the sale of scooters.
Proceeds of the scheme were used by Michael Cowen to purchase things like a 1/4 share in a Cessna Citation Jet aircraft, gambling junkets, retirement annuities, and a condo in an exclusive gated community in Boca Raton, FL, as well as other lifestyle enhancements. The investigation resulted in the criminal forfeiture of $1.8 million from the CBI operating and six vehicles
The investigation of the case was conducted by the United States Attorney’s Office, the Department of Health and Human Services - Office of Inspector General, the United States Postal Inspection Service, the Food and Drug Administration - Office of Criminal Investigations , the Federal Bureau of Investigation, the Medicaid Fraud Control Unit of the Virginia Attorney General’s Office, the Internal Revenue Service and the Financial Investigation Unit of Anthem Blue Cross and Blue Shield. Assistant United States Attorneys C. Patrick Hogeboom III and Charlene R. Day are prosecuting the case for the United States.