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Florida Duo Arrested for $22.8 million Medicare Advantage Fraud

John Commins, for HealthLeaders Media, May 13, 2009

South Florida bolstered its reputation as the Medicare fraud capital of the nation this week when two Miami-based operators of 19 sham medical clinics run out of empty store fronts and post office boxes in five states were arrested and charged with fraud, conspiracy, and money laundering.

The defendants, Michel De Jesus Huarte and Ramon Fonseca, each face up to 20 years in prison on the charges, after they allegedly filed $22.8 million in false claims under the Medicare Advantage program, the US Attorney’s office in Miami says.

A criminal affidavit says the two men controlled 19 medical clinics “purportedly operating” in Florida, Georgia, Louisiana, North Carolina, and South Carolina that collectively submitted $22.7 million in bogus claims for services they didn’t provide to several private insurance companies that cover Medicare Advantage beneficiaries.

Two New Orleans-area clinics–Best Cure Company LLC, and Fast Cure Company–were described by prosecutors as “empty store fronts with handwritten business signs.” Two other clinics–Ziallet Services Inc., and Magestic Group Service Inc.,–“were merely post office boxes in North Carolina and South Carolina, respectively, with no real business activity,” federal prosecutors say.  

Most of the fraudulent billings were for pricey cancer and HIV medications administered through infusions. Several Medicare Advantage beneficiaries who the clinics reported were patients at Ziallet and Magestic told investigators they had never heard of the clinics and never received treatments.  

When Huarte and Fonseca allegedly received their fraudulent payments, they would deposit the checks with two Miami-area check cashing stores, which would hold the checks until they cleared, and give the money to the two defendants. “The typical cash deliveries were between $30,000 and $80,000, and occurred multiple times per week,” federal prosecutors say.  

South Florida has long been considered by federal investigators to be a hotbed for Medicare fraud. In 2007, the federal government established a Medicare Fraud Strike Force for the area to identify, and prosecute durable medical equipment suppliers and infusion clinics suspected of Medicare fraud. As of April, the strike force has convicted 146 people and secured $186 million in criminal fines and recoveries.

Last month, the HHS Office of the Inspector General issued an audit for 2007 entitled Aberrant claim patterns for inhalation drugs in South Florida, which found that:

  • While only 2% of the nation’s Medicare beneficiaries live in South Florida, the region accounted for 17% of spending for inhalation drugs. Medicare spent $143 million to treat respiratory cases in Miami-Dade County, which is 20 times more than the amount spent in Chicago, which as twice the number of beneficiaries.

  • For 62% of inhalation drug claims in South Florida, the beneficiary did not have a Part B service visit during the last three years with the physician who reportedly prescribed the drug. Medicare paid $114 million (71% of total South Florida payments) for these inhalation drug claims in 2007.

  • In 2007, Medicare’s average per-beneficiary spending on inhalation drugs was five times higher in South Florida than in the rest of the country. Among beneficiaries with paid inhalation drug claims, Medicare spent approximately $4,400 per South Florida beneficiary on inhalation drugs, compared to just $815 per beneficiary on inhalation drugs in the rest of the country.

  • Supplier billing patterns for inhalation drugs differed substantially between South Florida and the rest of the country. Beneficiaries in South Florida were more likely to have multiple suppliers. Thirty-one percent of South Florida beneficiaries had more than one supplier providing inhalation drugs during 2007, as compared to 12% of beneficiaries in the rest of the country.

  • Medicare paid for inhalation drug claims that did not comply with LCD guidelines. The average Medicare payment for a 90-day supply of budesonide in South Florida was more than double the payment amount for the maximum milligrams listed in the LCD.

  • Certain ordering physicians in South Florida were associated with a large volume of inhalation drug claims. In 2007, 10 South Florida physicians were each listed as the ordering physician on more than $3.3 million in submitted inhalation drug claims. Each of the 10 physicians reportedly ordered inhalation drugs for an average of 745 South Florida beneficiaries in 2007. These physicians had Medicare-paid office visits in 2005 through 2007 with between 1% and 53% of the beneficiaries for whom they reportedly ordered inhalation drugs for in 2007. Medicare paid a total of $28 million for inhalation drugs reportedly ordered by these 10 physicians during the year.


John Commins is a senior editor with HealthLeaders Media.

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1 comments on "Florida Duo Arrested for $22.8 million Medicare Advantage Fraud"


IAm Anonymous (10/21/2011 at 5:59 PM)
The way this is written the Advantage plans did something fraudulent! THEY DIDN'T! In fact Medicare NEVER saw these claims! The claims are filed with the ADVANTAGE plan which EATS or investigates the fraud! Advantage of Advantage plans is THEY absorb the FRAUD NOT Medicare!