$116 MILLION DOLLAR MEDICARE FRAUD AND ASSISTANT HOSPITAL ADMINISTRATOR PLEADS GUILTY

The following excerpt is from the Department of Justice website:

Wednesday, February 22, 2012
“Assistant Administrator of Houston Hospital Pleads Guilty to Participating in $116 Million Medicare Fraud Scheme
WASHINGTON – An assistant administrator of a Houston hospital pleaded guilty today for his role in a $116 million Medicare fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).                                                      

Mohammad Khan, 62, of Houston, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to commit health care fraud, one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks, and five counts of paying or offering to pay health care kickbacks.  Khan was arrested on Feb. 8, 2012.   In his plea, Khan admitted that, from January 2008 until the time of his arrest, he caused the submission of $116 million worth of fraudulent claims to Medicare for partial hospitalization program (PHP) services purportedly provided by the hospital.  A PHP is a form of intensive outpatient treatment for severe mental illness.    

“As an assistant administrator at a Houston hospital, Mr. Kahn participated in a $116 million fraud against the government,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  “For years, he operated a scheme to bill Medicare for partial hospitalization services that were medically unnecessary or never provided.  With our Medicare Fraud Strike Force teams in nine cities, we are holding accountable people across the country who have calculated – incorrectly – that they can get away with trying to bilk the Medicare program.”

According to court documents, Khan was the assistant administrator of Riverside General Hospital and controlled the day-to-day operations of Riverside’s PHPs.  Riverside maintained a valid Medicare provider number that was used to submit claims to Medicare for PHP services that were not medically necessary, and in some cases, never provided.  Many of the beneficiaries for whom Riverside submitted claims to Medicare for PHP services did not have severe mental illness and did not need the treatment provided in a PHP.  In his plea, Khan admitted that he paid and caused the payment of kickbacks to patient recruiters and owners of assisted living facilities and group care homes in exchange for the recruiters and owners sending Medicare beneficiaries to Riverside’s PHPs.  Khan also paid Medicare beneficiaries in the form of cigarettes, food and coupons redeemable for items available at Riverside’s “country stores,” in exchange for those beneficiaries attending Riverside’s PHPs.

In his plea, Khan admitted that he and his co-conspirators submitted approximately $116 million in claims to Medicare for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.

Khan is scheduled to be sentenced on May 25, 2012.  Khan faces a maximum sentence of 10 years in prison for the conspiracy to commit health care fraud count, five years in prison for the conspiracy to defraud the United States count and five years in prison for each health care kickbacks count.

Today’s guilty plea was announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU); Special Agent in Charge Lucy R. Cruz of the IRS Houston Field Office; Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).

The case is being prosecuted by Trial Attorney Laura M.K. Cordova, Attorney Allan Medina, Assistant Chief William Pericak and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section.  The case was investigated by the FBI, HHS-OIG, MFCU, IRS, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”