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Patient Recruiter Pleads Guilty in Louisiana Health Care Fraud Scheme
On July 15, 2010 a federal grand jury in the Middle District of Louisiana named Fred Belcher, among others, in a five-count indictment. The indictment specifically charged Mr. Belcher with (1) Conspiracy to Commit Health Care Fraud and (2) Conspiracy to Defraud the United States and to Receive and Pay Health Care Kickbacks. On January 31, 2012 Mr. Belcher pled guilty to one count of Conspiracy to Commit Health Care Fraud, effectively dropping one of the conspiracy charges against him in return for his plea.
Mr. Belcher’s plea admitted to the court that he worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC, and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed durable medical equipment (DME) to the Medicare program from 2004 to 2009. He and other recruiters were hired to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs, and wheel chair accessories. Specifically, Belcher recruited Medicare beneficiaries to attend “health fairs” that he organized at churches and other locations in the beneficiaries’ communities. At these fairs, he obtained information from the beneficiaries and paid a doctor to prescribe medically unnecessary DME for the beneficiaries. Belcher then sold these prescriptions to the three Louisiana companies listed above to bill Medicare.
Unlike traditional criminal cases, defendants involved in criminal activity related to government health care programs (i.e. Medicare, Medicaid, etc.) must be conscious of potential enforcement actions by the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services (HHS) in addition to any criminal consequences. OIG’s mission is to protect the integrity of HHS programs as well as health and welfare beneficiaries. The OIG accomplishes this primarily by conducting audits, investigations, and evaluations. Perhaps most importantly, OIG has the power to exclude persons from participating in or providing services for or on behalf of HHS programs such as Medicare and Medicaid. In essence, to be excluded by the OIG means being black-listed from the medical industry.
Exclusions are a serious and potentially devestating consequence of pleading guilty to criminal activity involving HHS programs. A quick search of OIG’s database on January 31, 2012 shows that Mr. Belcher has yet to be excluded from the Medicare program. This however, does not mean that he won’t eventually be excluded. OIG exclusions tend to happen subsequent to a guilty plea or criminal investigation and in addition to any imprisonment, forfeiture, or fines levied in the criminal case. In many ways, exclusion by the OIG can be worse for the defendant than many criminal consequences because it denies the defendant the ability to earn a livelihood in the only industry the defendant is familiar with.
Therefore, defense counsel should immediately engage in a dialogue with OIG on behalf of a client facing health care fraud charges to dicuss whether a potential exclusion is being considered. Exclusions are regularly for a term of years, thus there would seem to be room to negotiate more favorable terms for one’s client if an exclusion is inevitable. Moreover, defense counsel should be conscious of an individual client’s exposure to exclusion whenever a corporate entity in the medical field is being investigated or enters into a non-prosecution agreement. Even in instances where a particular client is not charged with criminal conduct, OIG may unilaterally move to have that person excluded from the Medicare program depending on the scope of the entity’s admissions about the client. Nonetheless, defendants in such cases must be made aware of the potential for exclusion so that they can make an informed decision about accepting a plea agreement or going to trial.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
New York Appellate Court Broadens Reading of “Enterprise” Element of Racketeering Law – A “Cyber Crime” Enterprise
A majority panel of New York State Appellate Court judges reversed a lower court’s decision to throw out an indictment against an online money-transfer business for catering to buyers and sellers of stolen credit card information. The court determined that providing an online forum that facilitates some transactions between criminals is an ascertainable structure distinct from the criminal conduct itself.
Unlike an “enterprise” under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, New York state law requires an enterprise to have “an ascertainable structure distinct from that pattern of [criminal] activity.” Section 460.10. However, New York law does not require any particular structure for the enterprise, and nowhere does it indicate that it contemplates a traditional hierarchial organized model. Relying heavily on this last point, the court further eroded the difference between federal and state corrupt enterprises when it decided to reinstate the indictment against Western Express International.
The court stated that nothing in the statute requires the structure of a targeted enterprise to represent a “corporate flow chart,” “structure,” or “chain of command.” The opinion stated further that the indictment’s allegation that Western Express was a “cyber crime” enterprise was accurate since it enabled criminals to associate. The court opined that Western Express and its internet based business knowingly provided the forum and means with which criminals sold and purchased stolen credit card information. The court summarized the critical element opening Western Express to criminal liability with this: “the ‘structure’ at issue here is, essentially, a web site.”
The court went on to justify its position by stating that “although the forms of Internet crime have been evolving and becoming far more sophisticated over the decades since the [corrupt enterprises law] was first enacted, the question is not whether the Legislature had this particular type of criminal enterprise in mind when it formulated the language of the statute. Rather, we need only decide whether the structure of the enterprise at issue falls within its definition of enterprise corruption.”
The dangers of including websites as distinct structures for purposes of establishing a corrupt enterprise are apparent. Very little keeps an aggressive prosecutor from indicting websites that host chat rooms, publish comments, or any other online services that can be used by criminals to facilitate their activities. Blurring the line between reality and the seemingly anonymous world of the internet can sweep up more innocent individuals into the web that is criminal investigations.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
