Kusserow’s Corner: Another Doctor Sentenced in $77 Million Russian Clinic Medicare Fraud Case

Gustave Drivas, M.D., of Staten Island, N.Y., was sentenced on September 16, 2013, to serve 151 months in prison for his role as a “no show” doctor in a $77 million Medicare fraud scheme. He was convicted last April after a seven-week trial of health care fraud. In addition to the prison term, he was sentenced to three years of supervised release with a concurrent exclusion from Medicare, Medicaid and all federal health programs, ordered him to forfeit $511,000, and pay restitution in the amount of $50.9 million. To date, 13 individuals have been convicted of participating in the massive fraud scheme, either through guilty pleas or trial convictions.

Drivas was the medical director of or a rendering physician at a clinic in Brooklyn that billed Medicare under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (collectively, Bay Medical Clinic). The crux of the case was that Drivas knowingly authorized his co-conspirators at a Brooklyn medical clinic to use his Medicare billing number to charge Medicare for more than $20 million in medical procedures and services that were never performed. In return, he received more than $500,000 for his role in the scheme. He was characterized as a “no show” doctor, who almost never visited the clinic except to pick up his check. The evidence also showed that the clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary and never provided.

The arrest was made in July 2010. At the time, the FBI announced Drivas arrest, along with Dr. Jonathan Wahl, Sergey Shelikhov, Leonid Zheteznyakov, among others, as well as “professional patients” in Russion clinics in Brooklyn. In one Brooklyn office, the doctors had set up a “cash kickback room” to pay patients for allowing them to submit false bills to the government health programs. The room had a poster on the wall resembling Soviet-era propaganda, showing a woman with a finger to her lips and two messages in Russian: “Don’t Gossip” and “Be on the lookout: In these days, the walls talk.” The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic in which the conspirators paid cash kickbacks to corrupt Medicare beneficiaries. In this government surveillance, the walls did have ears and eyes.

The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare. To generate the large amounts of cash needed to pay the patients, co-conspirators were recruited a network of external money launderers who cashed checks for the clinic. Clinic owners wrote clinic checks payable to various shell companies controlled by the money launderers. These checks did not represent payment for any legitimate service at or for the Bay Medical Clinic, but rather were written to launder the clinic’s fraudulently obtained health care proceeds. The money launderers cashed these checks and provided the cash back to the clinic. Clinic employees used the cash to pay illegal cash kickbacks to the Bay Medical Clinic’s purported patients.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.