Health Care CEO and Four Physicians Charged in Superseding Indictment in Connection with $200 Million Health Care Fraud Scheme Involving Unnecessary Prescription of Controlled Substances and Harmful Injections

A CEO and four physicians were charged today in a superseding indictment as part of an investigation into a $200 million health care fraud scheme that involved a network of Michigan and Ohio pain clinics, laboratories and other medical providers.  The superseding indictment returned yesterday charges an additional wire fraud conspiracy, adds an additional count of money laundering, and contains new allegations regarding the distribution of over 4.2 million medically unnecessary dosage units of controlled substances and the administration of medically unnecessary injections that resulted in patient harm.    

Attorney General Jeff Sessions, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Division, 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 and Chief Don Fort of IRS Criminal Investigation (IRS CI) made the announcement.

Mashiyat Rashid, 37, of West Bloomfield, Michigan; Spilios Pappas, 61, of Monclova, Ohio; Joseph Betro, 57, of Novi, Michigan; Tariq Omar, 61, of West Bloomfield, Michigan; and Mohammed Zahoor, 51, also of Novi, were each charged with one count of conspiracy to commit health care fraud and wire fraud.  Rashid was additionally charged with four counts of health care fraud, one count of conspiracy to defraud the United States and pay and receive health care kickbacks, one count of payment of kickbacks, one count of receipt of kickbacks and two counts of money laundering.  Pappas, Betro, Omar, and Zahoor were each additionally charged with one count of health care fraud.  All of the defendants were previously charged in an original indictment on July 6, 2017, which charged health care fraud and kickback conspiracies, substantive counts of health care fraud and payment or receipt of kickbacks, and one count of money laundering.  The case is pending before U.S. District Judge Denise Page Hood of the Eastern District of Michigan.  Trial has been scheduled to begin on July 31 before Judge Hood. 

“We are facing the deadliest drug crisis in American history,” said Attorney General Sessions. “Sadly, some corporate executives and medical professionals continue to exploit vulnerable patients and the American taxpayer for profit.  With one American dying of a drug overdose every nine minutes, this superseding indictment reflects the Department of Justice’s determination to prosecute those who engage in opioid-related fraud.  These cases are extremely important. Since 2017, the Department charged more than 150 doctors for opioid-related crimes. Today’s indictment reflects our continued dedication to these important cases.  I want to thank our FBI, HHS-OIG and IRS-CI agents, DOJ attorneys, and everyone else who helped investigate and prosecute this case.”

“This multi-agency investigation has led to one of the largest healthcare fraud and illegal distribution of prescription drugs indictments this district has ever seen,” said U. S. Attorney Schneider.  “I commend the hard work and dedication of the Health Care Fraud Strike Force and law enforcement agencies for shutting down this network of individuals whose greed resulted in millions of dosages of opioids to be sold on the streets of our communities and millions of dollars in loss to Medicare.”

“It is a sad day when a physician allows greed to drive their moral compass and willfully violate their Hippocratic Oath to protect and treat their patients,” said IRS CI Chief Fort.  “The conduct described in this indictment, particularly the 4.2 million medically unnecessary dosages and administered injections, provides alarming insight into the growing opioid epidemic our nation is facing.  IRS CI will continue to provide resources and financial expertise to work with our law enforcement partners to fight this crisis, disrupting any financial benefit received from the sale of dangerous prescription drugs that plague our communities.”

The superseding indictment alleges that Rashid was the CEO of Tri-County Wellness, and owned, controlled and operated numerous pain clinics, laboratories and other providers in Michigan and Ohio.  As set forth in the superseding indictment, from 2008 until their arrest in 2017, Rashid, Pappas, Betro, Omar, Zahoor and other physicians working in Rashid’s clinics conspired to obtain patients by prescribing over 4.2 million dosage units of medically unnecessary controlled substances, including oxycodone, hydrocodone and oxymorphone, to Medicare beneficiaries, some of whom were addicted to narcotics.  Some of these opioids were resold on the street, the superseding indictment alleges. 

The superseding indictment further alleges that Rashid, Pappas, Betro, Omar, Zahoor and others required Medicare beneficiaries who wished to obtain controlled substances to submit to expensive, medically unnecessary and painful injections.  Rashid paid Pappas, Betro, Omar, Zahoor and other physicians based on the number of injections that Medicare paid for, regardless of the medical necessity of the injections.  In turn, Pappas, Betro, Omar and Zahoor conducted these repetitive and unnecessary injections on patients in order to increase revenue for Rashid, themselves and their co-conspirators.

When Medicare conducted a medical review of the injection claims, it determined that 100 percent of the claims were not eligible for Medicare reimbursement and summarily suspended the medical billing privileges of one of the pain clinics involved in the scheme.  In order to conceal the continued billing of these fraudulent claims to Medicare, the superseding indictment alleges, Rashid, Pappas, Betro, Omar, Zahoor and others created new shell companies that they enrolled in Medicare to keep billing the same fraudulent claims, often changing only the name of the company on the door to the medical practice and/or inventing new suite numbers to conceal the continuation of the fraudulent practices at the same location. 

Rashid also owned a diagnostic laboratory and caused Pappas, Betro, Omar and Zahoor to order medically unnecessary urine drug testing from the laboratory, the superseding indictment alleges.  When Medicare conducted a medical review of claims submitted by the laboratory, it determined that 95 percent of the claims were not eligible for Medicare reimbursement and ordered the diagnostic laboratory to repay in excess of $6.9 million to Medicare, court documents submitted in connection with Rashid’s detention hearing show.  In order to conceal the continued billing of these fraudulent urine drug testing claims to Medicare, the superseding indictment alleges, Rashid and others created a new corporate entity that they enrolled in Medicare so that Pappas, Betro, Omar, Zahoor and others could keep ordering the same fraudulent urine drug testing claims through this new entity. 

In addition, the superseding indictment alleges that Rashid paid illegal health care kickbacks to obtain patients and solicited illegal kickbacks and bribes for Pappas, Betro, Omar, Zahoor and others to refer Medicare beneficiaries to specific third-party home health agencies, laboratories and diagnostic providers even though those referrals were medically unnecessary. 

Finally, the superseding indictment alleges Rashid committed two counts of money laundering in connection with a $6.6 million wire transfer on April 13, 2016, and the withdrawal of $500,000 in cash on July 10, 2017.  The superseding indictment alleges that Rashid transferred the proceeds derived from the conspiracy to live an extravagant lifestyle and spend millions of dollars on luxury clothes from retailers like Hermes, rare Richard Mille watches, and exotic automobiles such as a Lamborghini and Rolls Royce Ghost; a mansion and other real estate in the Detroit, Michigan area; and to sit courtside or in the first row of NBA basketball games, including the NBA Finals.  Evidence submitted in connection with Rashid’s detention hearing further showed that Rashid attempted to conceal the proceeds of the fraud by withdrawing $500,000 in cash on July 10, 2017 and hiding the cash in plastic bags and handbags in the closet of his house. 

Rashid, Pappas, Betro, Omar and Zahoor were charged along with Yasser Mozeb, 35, of Oakland County, Michigan and Abdul Haq, 72, of Ypsilanti, Michigan, in an indictment unsealed on July 6, 2017.  Mozeb and Haq have pleaded guilty, along with three other defendants. 

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.     

This case was investigated by the FBI, HHS-OIG and IRS CI.  Trial Attorney Jacob Foster of the Criminal Division’s Fraud Section is prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.