DOJ comes for executive in Tenet fraud case

A former senior executive of Tenet Healthcare Corporation is facing charges for his alleged role in a fraud scheme that resulted in Tenet and its subsidiaries billing Medicaid programs more than $400 million over a thirteen-year period. The Department of Justice (DOJ) charged the former senior vice president of operations for Tenet’s Southern States Region and former CEO of North Fulton Medical Center with mail, health care, and major fraud. The executive pleaded not guilty to his alleged role in the scheme, which involved the payment of bribes to prenatal clinics in exchange for referrals of undocumented, pregnant Medicaid patients to Tenet Health System Medical, Inc. (THSM) hospitals, including North Fulton Medical, Atlanta Medical Center, Inc., Spalding Regional Medical Center, Inc., and Hilton Head Hospital.

Tenet, Atlanta Medical, and North Fulton Medical entered into a $513 million settlement in October 2016 to resolve criminal and civil charges; the settlement included the hospitals’ agreement to forfeit more than $145 million in Medicaid payments for unlawful referrals. Atlanta Medical and North Fulton Medical allegedly participated in the scheme while subject to a 2006 corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). THSM and its subsidiaries entered into a three-year non-prosecution agreement, as well (see Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges, October 4, 2016).

In addition to the general scheme involving the payment of bribes and kickbacks from 2000 through 2013, Tenet operated an affiliated billing center than allegedly assisted in processing Medicaid billings for payment from 2007 through 2013. The DOJ alleges that the executive “took affirmative steps to conceal the scheme,” by working around internal accounting controls; falsifying books, records, and reports; and falsely certifying to the OIG that Tenet was complying with the terms of the CIA and Medicare and Medicaid requirements while knowing that Tenet was paying for illegal referrals.

Nursing home executives indicted in $16M fraud scheme

Four individuals, including the former Chief Executive Officer (CEO) and Chief Operating Officer (COO) of a nursing home chain, have been indicted for their roles in a $16 million fraud scheme. The alleged scheme involved American Senior Communities (ASC), located in Indiana.

Scheme 

According to the 32-count indictment, the perpetrators made side deals with vendors at the expense of ASC between 2009 and 2015. To fund these deals, they overcharged ASC for products and services, and then funneled the overcharges through shell companies and back to themselves. Almost all products and services are paid for by Medicare and Medicaid reimbursements.

According to the indictment, the scheme spanned services from landscaping and pharmacy to food supplies, therapies, and decorations. If vendors questioned the overcharges and kickbacks, they were turned down. The funds were allegedly used by the four perpetrators for several personal purposes, including paying real estate, jewelry, and gold bars, as well as making political contributions.

Former CEO indicted for $100M fraud that collapsed Puerto Rico bank

The former CEO of now-defunct Inyx Inc., was charged with eight counts of wire fraud in connection to a $100 million pharmaceutical fraud scheme. The indictment was filed on August 4, 2016, in the Southern District of Florida, and the former CEO was arrested and made his initial appearance Friday, September 30, 2016. The fraud scheme is alleged to have led to the collapse of Westernbank Peurto Rico (Westernbank).

Scheme

During the former CEO’s tenure, which lasted 2005 to 2007, he and other conspirators provided a security interest in Inyx’s assets, as well as its subsidiaries’ assets, in order to receive loans and lines of credit. To facilitate these loans, the former CEO allegedly submitted false and fraudulent invoices as collateral and made false representations about intended loan repayments and the value of the assets pledged as collateral. The government also alleges that he misappropriated $25 million in company funds to his personal accounts and $9.6 million to an associate’s account.

Inyx was previously traded on the Nasdaq Over-the-Counter Bulletin Board. In 2007, the company filed for bankruptcy.