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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Michigan

Thursday, March 26, 2015

Feds Combating Health Care Fraud On Multiple Fronts

Civil, criminal and administrative sanctions combined with outreach to professionals netting positive results and millions in recoveries.

          GRAND RAPIDS, MICHIGAN –United States Attorney for the Western District of Michigan Patrick Miles, Jr. announced this week that the multi-prong approach to combat health care fraud his office uses has achieved unprecedented results for the Western District. Miles said his office seeks to pursue criminal charges, civil penalties and administrative exclusions in health care fraud cases as well as educate health care providers and the public about detecting and avoiding health care fraud practices. “We made addressing financial frauds, such as a health care fraud, one of our top U.S. Attorney’s Office priorities,” U.S. Attorney Miles said. “We put additional resources into prosecuting health care fraud cases and warning practitioners of our emphasis on pursuing both health care fraud prosecutions and civil remedies. We hold corporations and individuals accountable for wrongdoing. Consequently, we are seeing very positive results.”

          Specifically, U.S. Attorney Miles noted that over the past two years his U.S. Attorney’s Office has obtained 20 criminal convictions in cases involving health care fraud or health care practitioners, negotiated over $5,500,000 in civil health care fraud settlements, caused mandatory or voluntary federal health care program exclusions of doctors and other practitioners totaling over 50 years, and seen a $100,000,000 decrease in Medicare home health care expenditures in the Western District of Michigan largely due to federal investigations, prosecutions, and educational outreach efforts focused on home health care and home health care kickback payments.

          U.S. Attorney Miles praised the collaborative efforts of the federal prosecutors in his office working along with law enforcement investigative partners such as the Drug Enforcement Agency (DEA), Federal Bureau of Investigation (FBI) and U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). In the Western District of Michigan veteran Federal prosecutor Ray Beckering is the U.S. Attorney’s Office Criminal Health Care Fraud Coordinator and the Civil Health Care Fraud Coordinator is Assistant U.S. Attorney Adam Townshend. Miles stated, “AUSA Beckering, AUSA Townshend, and other AUSAs engage various Michigan health care communities through outreach efforts including speaking at annual conference sessions for the Michigan Academy of Physician Assistants, the Michigan Council of Nurse Practitioners, and physician groups to educate practitioners on illegal kickback schemes and diverting prescription drugs.”

          “The partnership between the U.S. Attorney’s Office and the HHS-Office of Inspector General is very strong”, stated Lamont Pugh III, Special Agent in Charge, DHHS-OIG-OI-Chicago Region. “A significant part of the OIG’s mission is to protect the integrity of the Medicare and Medicaid programs and the health and welfare of the people they serve. The OIG continues to work diligently to identify, investigate, and seek the indictment and conviction of those who would attack these programs. We will continue to work in concert with the U.S. Attorney’s Office and other law enforcement agencies to hold wrongdoers accountable”.

          U.S. Attorney Miles said that many health care frauds involve unnecessary procedures and tests. “Law enforcement and our Office continue to focus on unnecessary laboratory testing, including unnecessary blood, urine, and drug testing. We will also address improper relationships between practitioners and laboratory testing companies,” Miles said.

          It is illegal to offer or request, or pay or receive, money or anything of value in exchange for referring Medicare and Medicaid patients for health care services. U.S. Attorney Miles observed that “kickbacks and other suspect arrangements are saturating the Western District of Michigan, particularly in the areas of home health care, diagnostic testing, and laboratory testing. Kickbacks also distort the competitive playing field, taking business away from providers who play by the rules.”

          U.S. Attorney Miles says patients and health care consumers can help stop frauds by looking out for the following “Red Flags”:


          • Benefit Statements:               -- Check for services and procedures not rendered
                                                                       -- Cost of procedures disproportionate with time or complexity

          • Waivers of Co-Payments:     -- Blanket waivers of copays are generally not permitted
                                                                       -- Good indication of fraud schemes because if patients are not paying, they are unlikely to scrutinize insurance billings

          The following are some recent health care fraud case highlights from the U.S. Attorney’s Office in the Western District of Michigan:

          Civil Case Settlements

United States, et al., ex rel. Jahn, et al. v. Agility Health, Inc., et al.

          The U.S. Attorney’s Office recovered $1,000,000 in a whistleblower lawsuit involving allegations of false claims to Medicare for skilled therapy services that were not provided or provided to beneficiaries who were incapable of participating in therapy programs. The whistleblowers recovered more than $200,000.

United States v. Portage Hospital LLC

          The U.S. Attorney’s Office recovered $4,446,392.43 in a voluntary disclosure by Portage Hospital in Hancock, Michigan stemming from billings by the hospital’s home health care agency for physical therapy services -- purportedly performed by a single staff physical therapist -- that were medically unnecessary and/or lacked adequate documentation.

United States ex rel. Morgan v. Advanced Professional Home Health Care

          The U.S. Attorney’s Office recovered $57,000 in an action brought by a whistleblower, and the home health care agency agreed to implement a compliance program to resolve allegations that the agency illegally altered physicians’ signature dates and other information on physician orders in order to bill home health care services to Medicare.

          Criminal Convictions

United States v. Kim Mulder, et al.

          Initiated by reports from former employees, the execution of federal search warrants and a DEA Immediate Suspension Order resulted in the cessation of operations and the subsequent filing of criminal charges against eighteen Kentwood Pharmacy officers and employees related to the dispensing and billing for adulterated and misbranded drugs to nursing homes and adult foster care homes. The convictions included felony charges for six licensed pharmacists and prison sentences of six years for the head pharmacist and fourteen years for the Vice President of Sales. The CEO Kim Mulder and one other pharmacist are pending sentencing. The district court found a Medicare fraud loss of over $80,000,000 stemming from payments for the recycled drugs and ordered over $8,000,000 in restitution.

United States v. Chyawan Bansil, Shannon Wiggins, Mohamad Abduljaber

          Reports concerning the diversion of prescription drugs led to an investigation of the Lansing medical practice of Dr. Shannon Wiggins. Undercover patient visits revealed an illegal kickback scheme where Dr. Wiggins and her husband/ officer manager Mohamad Abduljaber were paid to refer patients for purported EMG and nerve conduction testing that was not necessary and often not performed. Dr. Wiggins also charged cash payments for medical marijuana certifications. The investigation exposed that Dr. Wiggins and Mr. Abduljaber did not report the cash income to the IRS. Global resolutions of civil claims and criminal kickback and tax charges resulted in: felony convictions and prison sentences for all three defendants; collection from Mr. Bansil of $2,250,000 in civil treble damages on behalf of Medicare and $350,000 in restitution paid to BCBSM; $150,000 in forfeiture from Mr. Bansil; and court-ordered restitution from Dr. Wiggins and Mr. Abduljaber of $285,781 to Medicaid and forfeiture of $550,000, including automobiles and real property. The pattern of Dr. Wiggins’ referrals demonstrates the costly impact of unnecessary testing as a result of illegal kickback payments.

United States v. Babubhai Rathod et al.

          In an ongoing civil case and parallel criminal investigation stemming from the filing of a whistleblower lawsuit, the U.S Attorney’s Office has convicted nine individuals on felony kickback and health care fraud charges and reached civil settlements with an additional six practitioners that total over $1,200,000 and involve 25 years of individual exclusions from federal health care programs. To date, the whistleblower has received more than $200,000.

          The lead defendant, Babubhai Rathod of Okemos, Michigan, was sentenced to four years’ imprisonment for coordinating illegal referral payments to physician assistants and doctors to refer patients to his physical therapy clinics and a home health care agency. Rathod lost his physical therapy license as a result of a criminal conviction and allegations of patient assaults, but he was able to open a home health agency based on the fact that there are no licensing or certificate of need requirements to opening a home health company in Michigan. The government collected $900,000 in a related civil False Claims Act settlement.

United States v. Anthony Kirk
United States v. Martin Hoffmeister

          As part of a state-wide initiative, HHS-OIG separately investigated Grand Rapids podiatrists Anthony Kirk and Martin Hoffmeister for the billing of nail avulsions. Dr. Kirk pled guilty to felony health care fraud, was sentenced to six months in prison, and was ordered to pay $65,110 in restitution and a $15,000 fine. Dr. Hoffmeister pled guilty to a misdemeanor charge and was ordered to pay over $50,000. Both podiatrists were excluded from participation with Medicare and Medicaid for at least five years. The prosecution of these cases and others in the Eastern District of Michigan has resulted in an annual reduction of almost 30%, or $3,000,000, in nail avulsion payments by Medicare.

          To report any kind of Health Care Fraud, people are encouraged to contact HHS through their tip line—1-800-HHS-TIPS.


Updated March 27, 2015