DOJ Breaks Up $200M Miami Medicare Fraud Scheme

Two Miami-based mental healthcare companies, their four owners and senior managers were indicted Thursday for allegedly billing Medicare for $200 million in bogus mental health services, the Departments of Justice, and Health and Human Services say.

A 13-count indictment unsealed Thursday in U.S. District Court in Miami charges American Therapeutic Corp., and Medlink Professional Management Group Inc., Lawrence S. Duran, Marianella Valera, Judith Negron, and Margarita Acevedo (aka Margarita De La Cruz) with counts that include healthcare fraud, conspiracy to commit healthcare fraud, and related illegal healthcare kickbacks counts.

"Since the Strike Force began operation, we have rarely seen anything like the illegal conduct charged in this indictment, both in terms of the nature and size of the scheme," says Assistant Attorney General Lanny A. Breuer of DOJ's Criminal Division.

 The defendants were arrested Thursday in Miami. Federal agents conducted search warrants at six ATC and Medlink locations in South Florida.

In a related civil action, a temporary restraining order froze the assets of Duran, Valera, Negron, Acevedo, ATC and Medlink.

HealthLeaders Media attempted to contact the defendants Thursday afternoon. No one answered the telephone at ATC, and a recorded voice said the Medlink number had been disconnected.

According to criminal and civil documents, the defendants allegedly submitted false claims to Medicare for medically unnecessary or non-existent mental health services administered at ATC facilities. ATC operated purported partial hospitalization programs—- which provide intensive treatment for mental illness—in seven Florida locations from Homestead to Orlando.

Prosecutors allege that Duran, Valera, Acevedo and ATC paid kickbacks to operators of assisted living facilities and halfway houses in exchange for delivering patients from their facilities to ATC. The indictments allege that in many instances the patients got part of the kickbacks. ATC allegedly billed Medicare for services purportedly provided to these recruited patients. The indictment alleges that the services were not medically necessary or were not provided at all.

ATC allegedly routinely admitted patients to the PHP program who suffered from Alzheimer?s and dementia and therefore were not eligible for the PHP program because their mental capacity did not allow them to benefit from group therapy.

Prosecutors allege that patient charts and notes from therapy sessions were routinely altered at ATC to make it appear that the otherwise disallowed patients qualified for PHP treatments. The indictment alleges that Duran and Valera told employees and doctors at ATC to alter diagnoses, and medication types and levels to make it appear that the patients qualified for PHP treatments. Prosecutors allege that Valera also manipulated the length of patients? stays to maximize Medicare payments.

The civil complaint and temporary restraining order also name American Sleep Institute Inc. and D&V Development Inc., as participants in the fraud. Civil court documents allege that ASI—owned and operated by Valera and Duran—submitted false claims to Medicare for sleep studies, and that D&V was established to divert funds from ATC and ASI.

"Community mental health centers across the country serve a uniquely vulnerable population," says HHS Inspector General Daniel R. Levinson. "Those attempting to defraud this critically important program—as we are charging here today—should expect to pay a heavy price."

Since its inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 825 people who collectively have falsely billed the Medicare program for approximately $2 billion.