Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

In another sign that nothing is sacred and no area safe from crime, even the adult undergarment industry has now been marred by fraud. Benjamin Essien, 34, owner and operator of Logic World Medical, a Houston-based durable medical equipment (DME) company, pled guilty to conspiracy to commit healthcare fraud, five counts of healthcare fraud and two counts of aggravated identity theft in the U.S. District Court for the Southern District of Texas, according to a press release by the FBI. Essein was charged with a scheme which began in 2004 of using names, addresses and account numbers of Medicaid beneficiaries to file false claims for adult urinary incontinence supplies many of which were never delivered to the beneficiaries, some of which were never purchased from suppliers, and which were not needed or were never prescribed by a physician. Essein continued to bill Medicaid for the supplies--which included adult diapers, underpads, wipes, and pull-up briefs--even after his delivery contractors were informed by the beneficiaries that they did not need or want the supplies. Essien billed Medicaid for the maximum amount allowable for supplies each month per beneficiary including extra large size diaper briefs, which apparently have the highest Medicaid reimbursement rate, regardless of the actual size needed by the beneficiary. it is alleged that Essein received payments from Medicaid for claims totaling approximately $1,101,865.37. he will be sentenced in May.

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A jury in the U.S. District Court for the Northern District of Georgia convicted Varian Scott of healthcare fraud on Monday, as stated in a press release by the U.S. Attorney's Office.

Between September 2005 and April 2006, Scott and his cousin, Hezron Collie, purchased physicians' prescription pads from individuals at the Winship Cancer Institute at Emory University in Atlanta, and at doctors' offices in Atlanta and in Florida. Scott and Collie then purchased the names, birth dates and Medicaid numbers for dozens of Georgia Medicaid patients. The defendants then forged approximately 164 prescriptions for Neupogen, a chemotherapy drug, and several medications used to treat HIV.

Scott and Collins presented the forged prescriptions toCVS, Publix, Walgreens, Kroger, and Eckerd pharmacies, which billed the medications to the Georgia Medicaid program. The defendants then transported the medications to South Florida, removed the labels, and sold them to a contact for 30% of their wholesale cost. A one month supply of Neupogen costs $10,000.

A pharmacist and a technician with Kroger aided the defendants. A total of $1.1 million in medications were fraudulently billed to Georgia Medicaid. Expert testimony was presented at Scott's trial regarding a multi-billion dollar "gray" market for the stolen drugs.

Acting U.S. Attorney Sally Quillian Yates stated that Scott's case was the first conviction in Georgia for defrauding Medicaid through stolen and forged prescriptions and theft of patient information. Collie pled guilty to one count of conspiracy in June. Scott faces up to 10 years in prison. His sentnecing hearing is scheduled for December.

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We at FCDB read H.R.3200, “America's Affordable Health Choices Act of 2009,” earlier this year (well okay, perhaps we didn’t “read” it all, maybe skimmed is a better description) and were surprised to find that it appeared to add nothing to our nation’s ever-growing corpus of criminal provisions. Well, yesterday, Montana Senator Max Baucus released the long-awaited America’s Healthy Future Act, better known as the “Baucus Bill,” the text of which can be read here, which does contain an alteration of note to existing criminal law . We’ll leave it to others to outline all the proposed changes to the nation’s healthcare industry.
 

The most notable change by the Baucus Bill is amends the Medicare Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b), which makes it illegal to “knowingly and willfully” solicit or receive any remuneration for referring an individual to a person for the purpose of furnishing any item or service for which payment may be made in whole or in part under a Federal health care program; or in return for purchasing, leasing or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program; or to “knowingly and willfully” refer an individual to a person for the furnishing any item or service for which payment may be made in whole or in part under a Federal health care program; or purchase, lease or order any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program. The Bill proposes to “amend the Anti-kickback statute to add language defining “willfully” as “a person acted voluntarily and purposefully to do what the law forbids and the person need not have actual knowledge of the law or specific intent to violate that law.” The Bill does not give the reason for the change, but it is undoubtedly to foreclose some defense or close some loophole which has arisen in practice or actual cases.

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Pharmaceutical giant Pfizer, inc., will pay $2.3 billion to the Federal government and 49 States to settle allegations that it violated federal regulations in promoting several drugs, as reported by the Atlanta Journal-Constitution. The settlement is the largest in U.S. history to date in a healthcare fraud case. 

Georgia will receive $21.7 million as part of the settlement. A spokesperson for the Georgia Attorney General's office told the media that Georgia's portion of the settlement funds would be earmarked for Georgia's Medicaid program.

The U.S. Department of Justice had accused the New York-based pharmaceutical company and its subsidiaries of conducting marketing campaigns to promote drugs including Geodon, Lyrica, Zyvox, and no longer marketed Bextra, for uses not approved by the U.S. Food and Drug Administration. The government also alleged that Pfizer gave kickbacks such as cash, travel and entertainment to members of the healthcare industry in order to persuade them to prescribe these drugs and others, including Lipitor, Zyrtec and Viagra. The only State which did not join in the suit was South Carolina.

Pharmacia & Upjohn Co., a subsidiary of Pfizer, has pled guilty to a felony charge of violating the Food, Drug and Cosmetic Act, and will pay a fine of $1.3 billion.

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     Alain Amador was sentenced yesterday in the U.S. District Court for the Northern District of Georgia for a Medicare fraud ring, as reported by the Atlanta Business Chronicle. Amador pled guilty on March 3 to charges relating to a scheme using fake medical clinics in the Atlanta area. Amador, who had a nursing degree, and his co-conspirators were based in Miami. The conspirators set up corporations and filed corporate documents, leased space in the names of the companies and applied for Medicare billing numbers. However, the entities existed only in name, and conducted no business and had no employees or equipment. Amador and his co-conspirators would obtain information regarding physicians and Medicare recipients and used this information to file $12 million worth of fraudulent Medicare claims for phony services.

      Medicare paid $3 million in claims before it detected the scheme, and investigators managed to seize $2 million in payments. Most of the remaining funds had been transferred to foreign bank accounts. Amador was sentenced to 4 years imprisonment and ordered to pay restitution.
 

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Two National Century Financial Enterprises (NCFE) executives were sentenced to 30 and 25 years in district court in Columbus, Ohio on Friday for their roles in the failed healthcare finance company’s failure. NCFE was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Lance K. Poulsen, 65, former president, owner and chief executive officer of NCFE was sentenced to 30 years in prison and three years of supervised release following the prison term. A federal jury convicted Poulsen on Oct. 31, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Poulsen was also found guilty by a federal jury on March 26, 2008, of conspiring to interfere with a witness who was preparing to testify in the fraud trial against Poulsen and other NCFE executives. He is currently serving a 10-year prison sentence for that conviction. The court ordered Poulsen’s 30-year sentence to be served concurrently with the 10-year sentence for witness tampering.

Rebecca S. Parrett, 60, former vice chairman, secretary, treasurer, director and owner of NCFE was sentenced to 25 years in prison and three years of supervised release following the prison term. A federal jury convicted Parrett on March 13, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Parrett fled after the conviction and remains at large.

U.S. District Court Judge Algenon Marbley ordered Poulsen and Parrett to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.

Gillen, Withers & Lake, LLC, partner, Craig A. Gillen, was lead trial counsel for James K Happ, who was the seventh former NCFE executive to go to trial, and the only defendant found not guilty. Four other NCFE executives entered guilty pleas.

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