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Feds charge 300 in Medicare fraud crackdown

June 24, 2016 by  
Filed under Blog

Hundreds of doctors, pharmacists and nurses — including two dozen medical professionals across San Diego and southern California — have been charged in a massive federal law enforcement crackdown on health care fraud that the Justice Department said Wednesday cost the government $900 million.

Federal officials said more than 300 people nationwide have been charged in the sweep, the largest takedown ever by a Medicare fraud task force of federal, state and local law enforcement agencies.

The defendants face a wide arrays of charges, including conspiracy to commit health care fraud, money laundering, mail fraud and violations of federal anti-kickback laws.

In one case unsealed Wednesday in San Diego federal court, a pharmacist based in Beverly Hills, three medical care marketing professionals and a doctor were all indicted on health care fraud and other charges.

They were accused of bribing doctors to prescribe certain pain creams and medical equipment that weren’t medically necessary. Those prescriptions were then filled by the Beverly Hills pharmacist, Hootan Melamed, or companies that were owned or the marketers had a financial interest in.

The companies would then bill insurers for the unneeded medications, often at hugely inflated costs. For example, the indictment said that a certain pain cream could be produced for around $20, but insurers could be billed up to $3,000.

In total, the defendants fraudulently billed $27 million to insurers for bogus pharmaceuticals and another $7 million for medical equipment, according to the indictment.

The doctor named in that indictment, Phon Hung Tran, was indicted in January in San Diego Superior Court on different fraud charges. In that case prosecutors said Tran bribed two chiropractors to send him patient referrals, then billed insurance companies for medications he prescribed to those patients.

The case is pending, and because of the charges a San Diego Superior Court judge ordered him to stop treating patients until the case is revolved.

In another case, San Diego chiropractor George K. Reese pleaded guilty to accepting bribes of $6,000 per month to refer patients to a company that provided “shockwave therapy.” The company then billed the state workers compensation insurance program for the procedures.

The investigation also resulted in charges against 22 people in the central district, which includes Los Angeles and Orange counties. In one case, a doctor caused $12 million in fraudulent billings by performing unneeded vein surgeries on Medicare patients, officials said.

The documents allege not only fraudulent billing of Medicare but also of TRICARE, the government insurance program for active duty military personnel. In one case John Garbino, a medical marketer from Dana Point, is charged with getting illegal kickbacks from a pharmacy for referring patients there with prescriptions for compounded pain medication creams.

The pharmacies then billed TRICARE, with Garbino getting a kickback as high as 65 percent, court records say.

Officials said that the reimbursements for “compounding pharmacies” that produce the medications can be huge, as high as $15,000. The medicines involve mixing medications in a way that meets the specific needs of a patient.

Attorney General Loretta Lynch noted that the high reimbursements offered for these drugs have made them “a more attractive target for criminals looking to exploit them for profit.”

Medicare spending for such medications has increased significantly, from about $28 million in 2012 to $171 million in 2014.

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