West Des Moines Man Sentenced to More than Three Years in Federal Prison after Providing False Document to the United States Attorney during a Civil False Claims Act Investigation

A durable medical equipment store owner who provided false documents to the United States Attorney’s Office during a civil False Claims Act investigation was sentenced on Friday to more than three years in federal prison.  James O’Connor, from West Des Moines, Iowa, received the prison term after a June 19, 2017, guilty plea to one count of Making and Using False Documents, in violation of 18 U.S.C. § 1001(a)(3).

In a plea agreement, O’Connor, who operated O’Connor Medical Supply, Inc., in Clive, Iowa, agreed that he provided a false document to the United States Attorney’s Office in response to a Civil Investigative Demand the office issued in conjunction with a civil False Claims Act investigation.  Specifically, O’Connor admitted to providing a false Letter of Medical Necessity intended to conceal the fact that he previously submitted a claim to Medicare for a more complex and more expensive orthotic device than what he actually provided to a Medicare beneficiary.  O’Connor further admitted that he caused nearly $350,000 in loss to the government.

O’Connor also entered into a settlement agreement to resolve the United States’ civil False Claims Act investigation.  As part of that investigation, the United States alleged that O’Connor submitted claims to Medicare and Medicaid for four more expensive models of durable medical equipment than what he actually provided to beneficiaries: ankle foot orthoses, walking boots, knee braces, and wrist finger orthoses.  O’Connor agreed to pay $898,523.08 to resolve these allegations. O’Connor paid Medicare full reimbursement in the amount of $177,321.58 and Medicaid full reimbursement in the amount of $172,631.70.  Separately, O’Connor agreed to exclude himself as a provider of services in all federal health care programs. 

Because a private citizen, known as a relator, filed a qui tam, or whistleblower, lawsuit raising the civil allegations, O’Connor paid the relator’s law firm an additional $51,476.92 in fees.  The relator also received $224,630.77 (25%) of the nearly $900,000 recovery pursuant to the qui tam provisions of the False Claims Act.  Those provisions permit private individuals with knowledge of wrongdoing to bring suit on behalf of the government for false claims and share in any recovery.

O’Connor was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.  O’Connor was sentenced to 37 months’ imprisonment.  A special assessment of $100 was imposed, and he was ordered to make $349,953.28 in restitution to the Medicare and Medicaid programs.  He must also serve a three-year term of supervised release after the prison term.  There is no parole in the federal system.

Judge Reade found the crime involved at least 3,375 upcoded claims for durable medical equipment between 2011 and 2015.  Judge Reade found O’Connor’s criminal conduct was sophisticated, and he in fact passed a 2013 audit.  Judge Reade observed “cheating the government is serious,” and found the crime was one of “greed,” “deception,” and “lying.”  In denying O’Connor’s request for a sentence of one-day Judge Reade noted it was a substantial aggravating factor in the case that O’Connor had cut, copied, and forged signatures of doctors.

United States Attorney Peter E. Deegan stated, “The result in this case makes clear that health care fraud does not pay.  Our Office continues to encourage citizens to report fraud in government health care programs, including Medicare and Medicaid.  This conviction and sentence demonstrate that citizen complaints are taken seriously, and absolute honesty is required during our Office’s investigation of those complaints of fraud.”

“This sentencing is an indication to others who engage in these types of illicit activities that they will be caught and they will face justice,” FBI Omaha Field Office Special Agent in Charge Randall Thysse said. “We are proud of the diligent efforts of our team that worked on this case and the close partnership and collaboration we have with the U.S. Attorney’s Office in the Northern District of Iowa and all who assisted with this successful outcome.”

Steve Hanson, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of Inspector General, Kansas City Region, stated, “We will continue to work with our law enforcement partners to identify, and bring to justice, healthcare providers who submit false claims for reimbursement to HHS programs.”

O’Connor was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.

The criminal case was prosecuted by Assistant United States Attorney Timothy Vavricek, and the civil matter was handled by Assistant United States Attorney Jacob Schunk.  The case was investigated by the United States Department of Health and Human Services, the Federal Bureau of Investigation, and the State of Iowa’s Medicaid Fraud Control Unit.   

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The criminal case file number is 17-CR-39.  The civil case file number is 15-CV-3170-LTS.

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