Client Alert: Health Care Fraud Prosecutions at Nationwide All-Time High

Criminal prosecutions under the federal health care fraud statute reached a record high of 377 new cases filed in 2013, according to Department of Justice data. This is an increase of 3% over 2012, and an increase of 9.9% over 2003. The data was analyzed by researchers at Syracuse University and presented in a recent report. The data also showed Southern Illinois as the top prosecution “hot spot” in 2013, followed by the Miami/Southern Florida area. While the data includes cases referred for federal prosecution by state and local authorities, it does not include prosecutions brought solely under state health care fraud laws.

Despite the rise of Southern Illinois, Miami continues to be considered “ground zero” for health care fraud, according to an agent of the Department of Health & Human Services’ Office of Inspector General (HHS/OIG), in a testimony given in late March to the U.S. Senate. Nationally, the Medicare program alone reportedly incurs $60 billion to $90 billion in annual costs due to fraudulent payments. Common fraud schemes include illegal kickbacks and billing for medical services that were unnecessary or never provided, often with connections to organized crime. In 2013, OIG’s Health Care Fraud and Abuse Control program recovered a record $4.33 billion in fraudulent payments.

To further combat fraud as well as prescription drug abuse, HHS’ Centers for Medicare & Medicaid Services (CMS) has proposed a physician licensing scheme for the Medicare Part D program. This would be a major expansion of CMS’ existing procedures for the enrollment of physicians and other health care providers to become eligible to bill Medicare. Under the Affordable Care Act (“Obamacare”), the Secretary of HHS also has the power to impose a moratorium on the enrollment of new Medicare and Medicaid providers in metropolitan areas identified as “fraud hot spots,” including Chicago, Dallas, Detroit, Fort Lauderdale, Houston, Miami, and Philadelphia. In New York and New Jersey, CMS has increased its coordination with state health care licensing boards to more quickly suspend payments to providers with revoked licenses.

Examples of recent prosecutions include:

  • Naseem M. Kohli, M.D., of Effingham, IL, was arrested on March 26, 2014 on charges of prescription drug fraud for unlawfully distributing Oxycodone, Hydromorphone, and Methadone. He is also charged with fraudulently billing Medicare and Medicaid for services that he did not actually perform.
  • David L. Johnston, D.O., of Ridgefield, CT, was arrested on March 18, 2014 on charges of fraudulently billing Medicare for medical and physical therapy services that he did not actually perform.
  • Yash Khanna, M.D., of Livingston, NJ, pleaded guilty on March 10, 2014 to soliciting and receiving illegal kickbacks for referring Medicare and Medicaid patients to Orange Community MRI, LLC.  Fourteen other doctors have also been convicted in connection with kickbacks involving this particular MRI facility.
  • Mahesh R. Kuthuru, M.D., of Las Vegas, NV, was arrested on February 28, 2014 on charges of prescription drug fraud for unlawfully distributing Oxycodone, Oxycontin, Methadone, and Morphine. He is also charged with fraudulently billing Medicare for services allegedly performed at his Utica, NY office at times when he was actually in Las Vegas.
  • Danielle Faux, of Weston, CT, was arrested on February 24, 2014 on charges of fraudulently billing Medicare for physical therapy services, including by allegedly altering patient records.
  • Chang Ho Lee, M.D., of Palisades Park, NJ, pleaded guilty on February 21, 2014 to fraudulently billing Medicare for medical and physical therapy services that he did not actually perform. He recruited “phantom patients” solely to obtain their Medicare patient identification numbers.
  • Florence Bikund, of Bowie, MD, was arrested on February 20, 2014 on charges of fraudulently receiving more than $78 million from Medicaid, as part of what is reportedly “the largest health care fraud take-down” in Washington, DC history. Despite being barred from Medicaid after her Virginia nursing license was revoked, Bikundi allegedly continued billing using various aliases.
  • Jennifer Lamphier, D.D.S., of Hopatcong, NJ, was arrested on February 12, 2014 on charges of prescription drug fraud, allegedly by stealing her patients’ identities to obtain Vicodin from local pharmacies. Police relied on data from the New Jersey Division of Consumer Affairs’ Prescription Monitoring Program.
  • Purna C. Aramalla, of Port Washington, NY, was arrested on December 19, 2013 on charges of prescription drug fraud, allegedly by billing Medicare and Medicaid for illegally repackaged second-hand HIV medication. He allegedly bought surplus medication from patients and then re-sold them as if they were new.
  • Farid Fata, M.D., of Oakland Township, MI, was arrested on August 6, 2013 on charges of fraudulently billing Medicare, allegedly by providing chemotherapy to patients who he intentionally misdiagnosed as having cancer.
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