PHYSICIAN SENTENCED TO PRISON FOR ROLE IN $200 MILLION MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, October 21, 2014

Miami-Area Physician Assistant Sentenced to 15 Years in Prison for $200 Million Medicare Fraud Scheme

A Miami licensed physician assistant was sentenced today to serve 15 years in prison for participating in a Medicare fraud scheme involving approximately $200 million in fraudulent billings by American Therapeutic Corporation (ATC), a mental health company that was headquartered in Miami.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Derrick Jackson of the Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement.

Robert Bergman, 65, of Miami, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida.  In addition to the prison sentence, Bergman was ordered to pay more than $85.3 million in restitution, both jointly and severally with his co-conspirators.

After a six-day trial, on July 18, 2014, a federal jury in the Southern District of Florida found Bergman guilty of one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to make false statements relating to health care matters.

Evidence at trial demonstrated that Bergman and his co-conspirators submitted false and fraudulent claims to Medicare through ATC, which operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando.  A PHP is a form of intensive treatment for severe mental illness.

Evidence at trial also demonstrated that Bergman and other medical professionals at ATC fabricated and signed fraudulent medical documentation and patient files in order to justify ATC’s fraudulent billings to Medicare.  Included in these false submissions to Medicare were claims for patients who were ineligible for PHP treatment because they were in neuro-vegetative states, in the late stages of diseases causing permanent cognitive memory loss, or had substance abuse issues and were living in halfway houses.  Many of these patients were forced by assisted living facility owners and halfway house owners to attend ATC, and they did not receive treatment for their actual medical conditions.  

ATC, an associated management company, and more than 20 individuals, including ATC’s owners, have all previously pleaded guilty or been convicted at trial.  Bergman has been in federal custody since his conviction.

The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Nicholas E. Surmacz and Kelly Graves of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

OWNER TAX RETURN FRANCHISE AND HEALTH PROVIDER BUSINESS PLEADS GUILTY TO TAX, HEALTH CARE FRAUD, MONEY LAUNDERING

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, April 10, 2014

Owner of Tax Return Preparation Franchise and Health Provider Business Pleads Guilty to Tax Fraud, Healthcare Fraud and Money Laundering

Claude Arthur Verbal II, formerly of Raleigh, N.C., and now of Miami, pleaded guilty to tax fraud, healthcare fraud and money laundering in two separate cases in federal court, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.  Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.  The plea was accepted late yesterday by U.S. District Judge Catherine Eagles in Greensboro, N.C., and sentencing was set for Aug. 11, 2014.  Verbal faces up to 28 years in federal prison and $850,000 in fines, and has agreed to pay restitution to the Internal Revenue Service (IRS) and Medicaid.

The Tax Case

According to court documents, Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012.  Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well.  Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the clients agreed to make a cash payment to the person who prepared their return.  These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.

According to court documents, from 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, N.C.  One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.  

According to court documents, the most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits (EITC) and false education credits.  Verbal himself falsified returns using these items and taught his managers and line employees how to do so as well.  Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other NBT clients’ tax returns.

According to court documents, in November 2010, one of Verbal’s employees informed a U.S. Probation Officer of the fraudulent practices at NBT’s location on Fayetteville Street.  The probation officer informed Verbal of this fraud and he falsely denied knowledge of it.  Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices.  In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee.  Verbal and others jointly persuaded, a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location.  In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.

Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud.  Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.

Related Tax Cases

According to court documents, in a series of related cases in the Middle District of North Carolina, multiple other individuals employed by NBT – including branch managers, return preparers and client recruiters – have also pleaded guilty to charges involving federal tax fraud, fraud, and identity theft crimes.

According to court documents, in a related case, Rakecia Brame pleaded guilty to wire fraud, aggravated identity theft and aiding and assisting the preparation of false tax returns.  Brame, a former social worker with the Alamance County Department Social Services (DSS), admitted to selling the identities of DSS clients to NBT return preparers for use as false dependents on tax returns.

According to court documents, in another related case, Tasha Smith, a former NBT employee who later left and opened her own fraudulent tax return preparation businesses, pleaded guilty on April 8, 2014, to conspiracy to defraud the United States.

“The tax fraud committed by Claude Verbal and the other Nothing But Taxes defendants is an affront to honest, hard-working taxpayers,” said Assistant Attorney General Kathryn Keneally of the department’s Tax Division.  “The Justice Department will prosecute and seek just punishment against those who prepare fraudulent tax returns.”

“Today, Mr. Verbal admitted to owning a tax preparation business that blatantly ignored the tax laws by preparing false tax returns and misusing his electronic filing privileges,” said Chief of IRS-Criminal Investigation Richard Weber.  “Dishonest return preparers use a variety of methods to cheat the government, including falsifying information on the tax returns to generate larger refunds for their clients.  Criminal Investigation will continue to ensure that all tax practitioners, tax preparers and others who practice in the tax law profession adhere to professional standards and follow the law.”

The Healthcare Fraud Case

According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, N.C.  IWC was contracted to provide group therapy, intensive in-home services, enhanced mental health and substance abuse services.  Court documents state that Verbal acquired at least one million dollars in fraudulently obtained funds from the Medicaid program.  The fraudulent activities included:  
·          Changing diagnosis codes so that codes with higher reimbursement rates could be billed;
·          Falsely inflating the number of clients treated during group therapy;
·          Billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists,
·          Unqualified personnel conducting therapy; and
·          Creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
According to court documents, Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry.  The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.

In the course of the health care fraud investigation, law enforcement authorities seized $765, 917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring.  The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the health care fraud and on Sept. 19, 2013, Judge Eagles entered an order forfeiting the property to the government.

“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaging Medicaid, the patients who rely on it, and the taxpayers who support it,” said U.S. Attorney Rand.  “Stopping these fraudulent activities is a priority of the Department of Justice, and we are committed both to bringing the fraudsters to justice and returning the ill-gotten gains to the victimized agencies.”

“The improper billing of the N.C. state community mental health program by unscrupulous providers will not be tolerated,” said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta.  “This costs taxpayers millions of dollars each year and drains the Medicaid program of much needed resources.”

The tax case against Verbal was investigated by agents of IRS - Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Frank Chut and Trial Attorney Jonathan Marx of the Tax Division.  The healthcare fraud case against Verbal was investigated by agents of the Department of Health and Human Services, Office of Inspector General, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton.