Investigations Newsletter: Former Healthcare Executives Convicted for Health Insurance Policy Fraud Scheme

ArentFox Schiff

ArentFox Schiff

Headlines that Matter for Companies and Executives in Regulated Industries

Former Healthcare Executives Convicted for Health Insurance Policy Fraud Scheme

Steven Dorfman, the former chief executive officer and owner of the Florida-based healthcare company Simple Health, and John Sand, a former vice president at Simple Health, were found guilty after a two-week trial of one count of conspiracy to commit mail and wire fraud, four counts of mail fraud, and eight counts of wire fraud.

According to the government, the defendants trained Simple Health employees to use deceptive sales practices to convince customers to purchase limited indemnity insurance plans that provided low amounts of coverage for medical expenses. Customers would be responsible for paying 100% of their medical expenses once the policies’ low caps were reached. The government alleges that scripts designed by Dorfman and Sand and used by commissioned salespersons stated that Simple Health’s policies would “make your out-of-pocket expenses as low as possible,” and leave the customers “owing pennies on the dollar.” In total, over 400,000 customers purchased Simple Health policies from May 2012 through November 2018, generating over $190 million in revenue for Simple Health.

Defendants face up to 30 years imprisonment for the conspiracy count under the SCAMS Act, and each mail and wire fraud count carries a maximum sentence of up to 20 years in prison.

Sentencing for both defendants is scheduled for May 2024.

The US Department of Justice’s (DOJ) press release can be found here.

Six Men Sentenced for COVID-19 Fraud

Six Texas men were sentenced for their roles in a conspiracy to obtain over $20 million in Paycheck Protection Program (PPP) loans guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. According to the government, the six defendants submitted PPP loan applications that contained false information about their businesses, including the number of employees and payroll expenses. Some defendants are also alleged to have conspired with others to create fraudulent bank records that were submitted in support of the fraudulent loan applications and laundering some of the loan proceeds by writing checks from companies that received PPP funds to fake employees.

All six defendants pleaded guilty and received sentences that include imprisonment. Specifically, Hamza Abbas, 31, Ammas Uddin, 31, and Arham Uddin, 27, all of Richmond, were sentenced to three years and eight months, one year and six months, and one year and six months in prison, respectively. Syed Ali, 55, of Sugar Land, Texas, was sentenced to two years in prison, and Muhammad Anis, 55, and Jesus Acosta Perez, 33, both of Houston, were respectively sentenced to one year and nine months and one year and one day in prison.

The six defendants are the latest to be sentenced in the PPP loan fraud scheme. In January 2024, three defendants were sentenced for their roles in the scheme. And in October 2023, seven other individuals were sentenced, including the leader of the scheme, Amir Aqeel, 55, of Houston, who was sentenced to 15 years in prison.

The DOJ’s press release can be found here.

Medical Equipment Company Agrees to Pay Over $25 Million for Fraudulent Billing Practices

Lincare Inc., a durable medical equipment supplier, agreed to pay $25.5 million to settle claims that it violated the False Claims Act (FCA) by billing federal health care programs for the rental of non-invasive ventilators (NIVs) that were no longer needed or used by patients.

According to the government, from January 2013 through February 2020, Lincare accepted monthly reimbursements from Medicare and other federal health care programs for the unused NIVs. As part of the settlement, Lincare has admitted that it’s clinical staff often failed to visit patients every 60 days, as required by Lincare’s own policies, to confirm that patients were still using their NIVs as directed by their physicians. In addition, Lincare admitted that it failed to use systems that it had access to that allowed for remote monitoring of some newer NIV models.

In addition to violations of the FCA, the settlement resolves claims that Lincare also violated the Anti-Kickback Statute by waiving coinsurance payments from certain Medicare and TRICARE beneficiaries in an effort to persuade them to rent NIVs from LINCARE instead of other suppliers.

The DOJ’s press release can be found here.

[View source.]

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