50 Years for Medicare Fraud

Pat Salber

First posted 9/19/11 on The Doctor Weighs In

Big dollars attract big fraudsters.  Medicare is no exception.  Medicare fraud is particularly galling, however, because the Medicare trust fund is teetering on the brink of insolvency and many of the proposals to fix the problem seem to focus on cuts and more cuts to the program.  That is why today’s post should make you smile and pound your fist in the air…50 years in jail for Medicare Fraud…way to go!  Here’s the story:

Floridians Lawrence Duran and Marianella Valera (the two on the left in the photo) were co-owners of American Therapeutic Corporation (ATC), the nation’s largest community mental health center chain and some sister companies, including  American Sleep Institute (ASI) and MedLink Professional Management Group, Inc.  Between 2002 and October of 2010 when they were arrested, this duo (and others on their team) orchestrated a $205 million fraud by billing for mental health and other medical services that were not medically necessary or were never delivered.

According to court documents, Duran, Valera and others paid bribes and kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses as well as to patient brokers to recruit Medicare beneficiaries to attend ATC Partial Hospitalization Programs – an treatment for severe mental illness –  and/or ASI clinics.  Sometimes, patients received a portion of the kickbacks.

By preying on the most vulnerable in our society – people with severe mental illness, Alzheimer’s or other dementias, and/or substance abuse, ATC and ASI were able to bill Medicare hundreds of millions of dollars for services they didn’t need or didn’t receive.  According to a story in the Washington Post, “doctors and employees at ATC and its sister companies were instructed to alter diagnoses and medications to make it seem that they were qualified for expensive sleep studies and mental health treatments.  Patients suffering acute mental illness and on the verge of hospitalization were supposed to get intensive counseling, but ATC did not provide any.”

The Medicare payments were “laundered” by funneling them through MedLink, thus providing cash for the kickbacks and bribes and also plenty of dough for the Fraudsters. As if this wasn’t all clever enough, Duran also created an organization to lobby Congress for additional funds for the type of mental health services ATC was supposed to be providing.   What gall!

I couldn’t find the video of Duran visiting US Representative Ileana Ros-Lehtinen to discuss health care reform discussed in the Washington Post article (has it been removed?), but I did find this one of Rep. Ros-Lehtinen discussing Medicare Fraud:

Duran was sentenced to 50 years in prison – the longest prison sentence ever imposed in a Medicare Fraud Strike Force case — after pleading guilty to the charges.  Valera also pleaded guilty and was sentenced to 35 years in prison on September 19.  Two other co-conspirators have also pleaded guilty and are awaiting sentencing.  ATC, ASI, and MedLink are now defunct. The investigation into the fraud was started after an employee alerted authorities.

Why, you may be asking, did it take 8 years to uncover a fraud of these proportions – is this a reflection of lax oversight on the part of CMS.  I think not, remember the Madoff fraud?  Sometimes big fraud is so big it escapes detection.  Second, I have had the chance to review the insurance records of one case of big-time Medicare fraud (the first one mentioned in the Ros-Lehniten video) and I can tell you that these fraudsters do what they do really well….they dot all the usual I’s and crossing the likely T’s in a way that allows them to get away with it.  Third, in this case there was collusion by people across the industry – Assisted Living Facility operators, brokers, Medicare beneficiaries, and health professionals.  Hopefully all of them will pay a penalty for their part in this crime.

In 2009, the Departments of Justice and Health and Human Services created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) to coordinate efforts across government to prevent fraud, waste and abuse in the Medicare and Medicaid programs.  By working together and using “state of the art cutting edge technology to identify and analyze potential fraud with unprecedented speed and efficiency, “ HEAT hopes to save the Medicare/Medicaid programs billions of dollars.  You can read more about this effort on the HEAT website.

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