ALFRED HONGLEUNG CHAN, 63, and JUDY YUAN CHAN, 62, both of Lakewood, Washington, were indicted by the grand jury earlier this year for twenty counts of health care fraud, obstruction of justice and money laundering. ALFRED CHAN is also indicted on two counts of making false statements. The indictment was unsealed this week, and the arraignment in U.S. District Court in Tacoma is scheduled for July 29, 2011. The indictment alleges the CHANs conspired to bill Medicare and other government and private healthcare programs for larger amounts of medicine than were actually delivered to patients. In order to maintain the scheme, which began no later than 2006, the CHANs entered false information into patient records. The conduct first came to light when a whistle blower, a former employee of the CHANs’ Lakewood clinic, brought suit under the qui tam provisions of the False Claims Act. The Act allows private parties to sue alleging fraud against the government. The government joined the civil suit in 2010. If successful, the whistle blower receives a share of monies recovered.

“The conduct alleged in this indictment illustrates the complete disregard for government sponsored healthcare programs, including the Medicare program,” said Ivan Negroni, Special Agent-in-Charge of the San Francisco Region for the United States Department of Health and Human Services, Office of the Inspector General. “HHS-OIG is dedicated to working with our law enforcement partners to pursue and apprehend those who take advantage of Medicare.”
“The Defense Criminal Investigative Service, as the law enforcement arm of the Department of Defense Inspector General, is committed to working with its partners to investigate healthcare providers who steal critical funding meant for the care of those who fight our wars, their families, and military retirees,” said Chris Hendrickson, the Special Agent in Charge for the Western Field Office.
According to the indictment and the civil litigation, ALFRED CHAN would make patient treatment notes on individual slips of paper which were given to his nurse. The notes specified the amount of drugs to be provided to a specific patient. After the nurse had provided the drugs to patients by injection or infusion, the slips of paper were returned to Dr. CHAN who shredded them. The doctor then made entries into a “Superbill” form, ostensibly recording the amount of medications the patients had received. However, evidence in the case indicates CHAN recorded more medication administered than actually received by the patient, and claimed more time spent administering the medication than actually occurred. JUDY CHAN then prepared the bills for Medicare and other government and private health care programs, using the inflated amounts, substantially increasing the amount of money owed to the CHAN clinic for medication. The government alleges the scheme illegally boosted the clinic income by $1.7 million. Dr. CHAN made false entries on patients’ medical records so that they matched the billings. The records indicated that patients had received larger doses of various drugs than they had actually received.

The false statement, obstruction and money laundering charges all relate to steps allegedly taken by the CHANs to hide their assets once they became aware of the government investigation. On a financial disclosure form required by the government, the couple failed to declare bank and brokerage accounts and properties owned by them. They allegedly transferred assets to shield them from the reach of law enforcement.

If convicted of the charges in the indictment, the CHANs may face up to 20 years in prison.

The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the Defense Criminal Investigative Service (DCIS) and the Health and Human Services Office of Inspector General (HHS-OIG).

The criminal case is being prosecuted by Assistant United States Attorneys Matthew Diggs and Mary K. Dimke. The Affirmative Civil Enforcement (ACE) case is being litigated by Assistant United States Attorneys Harold Malkin and David East.

 

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