DOJ announces large-scale takedown of mental health providers in Miami

by Ben Vernia | October 21st, 2010

On October 21, the Department of Justice announced that it had made numerous arrests, frozen assets, and was conducting simultaneous search warrants in connection with a $200 million healthcare fraud investigation in Miami. According to DOJ’s press release:

Two Miami health care companies and four owners and senior managers of the companies were indicted today for their alleged participation in a fraud scheme involving approximately $200 million in Medicare billing for purported mental health services, announced the Departments of Justice and Health and Human Services (HHS). In a related civil action, a temporary restraining order was obtained to freeze the assets of the indicted companies and individuals.

A 13-count indictment unsealed today in U.S. District Court in the Southern District of Florida, charges American Therapeutic Corporation (ATC) and Medlink Professional Management Group Inc. (Medlink), as well as Lawrence S. Duran, Marianella Valera, Judith Negron and Margarita Acevedo, aka Margarita De La Cruz, with one count of conspiracy to commit health care fraud. ATC, Duran and Valera were also charged with 11 counts of health care fraud. ATC, Duran, Valera and Acevedo are charged with one count of conspiracy to defraud the United States, to receive health care kickbacks and to pay health care kickbacks. The individuals were all arrested this morning in Miami and will make initial appearances in U.S. District Court later today. Federal agents are conducting search warrants today at six ATC and Medlink locations.

In a separate action, a civil complaint for injunctive relief was unsealed today in U.S. District Court in the Southern District of Florida and a temporary restraining order was obtained to freeze the assets of Duran, Valera, Negron, Acevedo, ATC and Medlink.

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According to the criminal and civil court documents, the defendants allegedly participated in a scheme to defraud the Medicare program by submitting false claims for mental health services administered at ATC facilities that were medically unnecessary or were not provided. ATC, headquartered in Miami, operated purported partial hospitalization programs (PHPs) in seven different locations throughout Florida, from Homestead to Orlando. A PHP is a form of intensive treatment for mental illness.

Court documents allege that Duran, Valera, Acevedo and ATC paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses in exchange for the ALFs and halfway houses delivering patients from their facilities to ATC. According to the indictment, in many instances, the patients received a portion of the kickbacks from the owners and operators of the ALFs and halfway houses. ATC allegedly billed Medicare for services purportedly provided to these recruited patients. According the indictment, the services were not medically necessary or were not provided at all. According to the civil complaint, ATC routinely admitted patients to the PHP program who suffered from Alzheimer’s and severe dementia and therefore were not eligible for the PHP program because their mental capacity did not allow them to benefit from group therapy.

Court documents allege that patient charts and notes from therapy sessions were routinely altered at ATC in order to make it appear that the patients being treated at ATC qualified for PHP treatments when, in fact, they did not. According to the indictment, Duran and Valera allegedly instructed employees and doctors at ATC to alter diagnoses and medication types and levels to falsely make it appear that the patients qualified for PHP treatments. Court documents also allege that Valera manipulated the length of patients’ stays in order to maximize the number of days Medicare would pay for the PHP services.

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

Assistant Attorneys General Lanny Breuer (Criminal Division) and Tony West (Civil Division) spoke at a press conference in Miami.

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