Medicare Strike Team Targets Doctors, Nurses

June 25--The "patients" were rounded up at McDonald's near the downtown bus station, lured by the promise of $50 or $100 and a free ride to a Houston clinic if they reported neck, back or hip pain, or other vague complaints.

The clinic physician noted the symptoms and ordered costly diagnostic tests -- renal ultrasounds, electrocardiograms, anal sphincter exams -- at Medicare's expense.

Some tests were completed; others were not. But none was medically necessary, though Medicare footed the bill for $3.1 million, according to federal investigators.

It was a scam, one of thousands of con operations across the nation that steal billions of dollars in Medicare funds intended for elderly or disabled patients, investigators said.

Just last week, more than 300 people were charged with stealing $900 million in a nationwide sweep billed as the "largest national Medicare fraud takedown in history." Nearly two dozen business owners and medical professionals in the Houston region were charged with stealing $136 million.

"This is an important battle," said U.S. Attorney Ken Magidson in Houston. "The people who commit these crimes are not just defrauding the government of hundreds of millions of dollars. They are attacking our entire health care system."

Greed and easy money drive the schemes, and the Houston area has plenty of both, according to prosecutors.

The Southern District of Texas, which includes Houston, is one of nine hubs for a nationwide Medicare Fraud Strike Force -- and among the most prolific for health care fraud prosecutions.

Some of the largest frauds in the nation have been unearthed in the Houston area -- including a $158 million psychiatric scam at Riverside General Hospital -- by a team of Houston-based investigators from the FBI, the IRS, the U.S. Department of Justice, the local U.S. attorney's office, the U.S. Department of Health and Human Services' Office of Inspector General and the Texas Attorney General's office.

Doctors and other medical professionals hold the key to the scams, unlocking billions of dollars through the federal Medicare and Medicaid programs, according to prosecutors.

"We are specifically targeting doctors and other medical professionals because they are the gatekeepers for Medicare spending," said Peter Carr, a justice department spokesman in Washington, D.C. "Without their participation, many of the fraudulent schemes could not have happened."

The fraudulent bills roll in for hundreds of random ailments -- vertigo, allergy disorders, sleep problems, incontinence.

All they need is a doctor's signature to pay for a host of medical tests, ambulance rides, home health care, wheelchairs and other medical equipment that aren't needed and may never be provided.

In the Houston region, nearly 200 people have been indicted on health care fraud charges since 2009, and 136 have been convicted of fraudulently billing for nearly $650 million.

Nationwide, more than 2,900 have been indicted for falsely billing Medicare almost $9 billion since the strike force formed in 2007.

Holding physicians accountable is key to stopping abuse, though doctors account for fewer than 10 percent of those indicted in national strike force investigations, Carr said.

A physician must obtain a Medicare provider number, open a bank account and file a claim requesting reimbursement for itemized expenses. Patients must have legitimate Medicare cards. A scam can't function without those elements in place.

Recruiters are often used, shopping for patients at nursing homes, bus stops, homeless shelters, group homes and the occasional fast food gathering spot.

"They prey on the weakest members of society, who are mentally ill, handicapped and need medical care," said Mark Donnelly, deputy criminal chief and program fraud supervisor in the U.S. attorney's office in Houston.

Defense attorneys, though, say doctors are often unwitting participants, generating cash for clinic owners but not for themselves.

"The problem is, the doctors get sucked in," said defense attorney Tom Berg, with clients in five local health care fraud indictments.

The clinics usually look legitimate -- with waiting rooms, exam rooms and potted plants -- and doctors believe they have checked them out adequately before interviewing for jobs there.

"Would you call the FBI to check on an employer?" Berg asked.

The Houston clinics were designed to be scams from the start.

The owners, who lived in Glendale, Calif., came to Houston with a plan to set up diagnostic clinics specifically to defraud Medicare.

Zaven "Mike" Pogosyan, 38, and Edvard "George" Shakhbazyan, 40, brought office staffers from California, rented space for three clinics in local strip malls, bought professional office furnishings and installed some medical equipment.

They then turned to Craigslist to hire three doctors to run the show: Giam Nguyen, 46, a Houston internist; Benjamin Seth Martinez, 35, a Dallas anesthesiologist; and Donovan Simmons, 43, an Austin family care doctor.

And they were profitable: The clinic owners carted off bags of cash from Houston to launder the clinics' illegal proceeds, one participant told jurors.

Pogosyan and Shakhbazyan, considered the masterminds of the scheme, pleaded guilty in April to conspiracy and 42 federal charges of health care fraud, and testified at length against the others during a trial that began earlier this month.

Two other participants also reached plea bargains and testified at trial: Seryan "Sam" Mirzakhanyan, 32, of Glendale, Calif., who helped set up a clinic, and Frank "Bones" Montgomery, 66, a recruiter from Houston. They are all set for sentencing later this year.

The three physicians and a medical technician are fighting the charges in a trial that began earlier this month before U.S. District Judge Lynn N. Hughes. Testimony concluded last week and a jury began deliberating before breaking for the weekend. Jurors must decide if the defendants knowingly and willingly participated in the fraud.

The doctors maintain they had no idea the clinics were a sham, their lawyers said.

"He may be naive, unsophisticated, ignorant, a nerd or just dumb, but he's not a thief," said attorney Casie Gotro of her client, Nguyen.

She said Nguyen was a perfect "patsy," hired on the spot after a brief interview and earning $187,000 over the next year and a half without asking questions.

Nguyen took the witness stand, quietly defending the work he did seeing patients and diagnosing their problems. Family members and co-workers also took the stand to vouch for the doctors' integrity, including Simmons' mother, a registered nurse, who told jurors she regretted pointing out the Craigslist ad to her son.

David Adler, who represents Simmons, told jurors the clinic owners took advantage of the doctor.

"It's the equivalent of a kid using a parent's credit card to buy beer," he said during closing arguments last week in the trial. "It's a billing fraud case, and no one in this room had anything to do with the billing."

Assistant U.S. Attorneys Al Balboni and Rodolfo Ramirez, however, said the doctors knew they would be held responsible for their medical decisions, and signed Medicare forms acknowledging they could face penalties for falsifying reimbursement requests.

The doctors ordered unnecessary exams -- including three different exams for fecal incontinence, lower leg dopplers and ultrasounds for thyroid and carotid arteries. Nguyen's signature was on 1,229 files, according to witnesses.

"Sometimes good people do bad things," Balboni told jurors.

Among the largest cases in the Houston area was the conviction of Earnest Gibson III, president at Riverside General Hospital, a psychiatric facility in Houston.

Gibson and several others were convicted in 2014 of cheating Medicare out of $158 million, ostensibly for hospitalization and treatment of mentally ill patients.

Prosecutors said the treatment was a "sham," and that some patients were never hospitalized at all.

Another 2014 case led to convictions for the owners and several employees of Spectrum Care P.A., a Houston mental health care company that claimed to provide intensive outpatient treatment for patients with severe mental illness.

The "treatment," instead, was far less than intense, and included having patients watch television, color and play games -- none of which is covered by Medicare.

Altogether, about a dozen local physicians have gone to prison on billing scams that range from unnecessary pain treatments to falsified incontinence tests.

Those convicted came from vastly different specialties and backgrounds, though they used similar methods.

Husband-and-wife physicians Arun and Kiran Sharma, were sentenced to prison in 2011 after admitting to a decade-long billing scam for bogus injections at their allergy, asthma, arthritis and pain clinics in Baytown and Webster. They were ordered to pay $37.6 million in restitution.

Two years later, Dr. Donald Gibson II, of Sugar Land, was sentenced to four years in federal prison after he admitted to billing Medicare for $19.4 for unnecessary tests for allergies, incontinence tests and pulmonary function over a five-year period.

Earlier this year, Dr. Leonard Kibert, was convicted of fraudulently billing for $2.9 million of unnecessary tests at his allergy and sleep clinic near downtown, and laundering the proceeds.

Also this year, four physicians were convicted in related cases of billing the government nearly $6 million for thousands of unnecessary vestibular exams, used to diagnose vertigo, or dizziness.

Before sentencing one of the physicians, Enyibuaku Rita Uzoaga, U.S. District Judge Ewing Werlein Jr. noted that the number of vestibular tests ordered "exceeded that of any physician I've ever heard of, any of us has ever heard of."

Yet another doctor, Mkrtich "Mike" Yepremian, of Houston, pleaded guilty to paying kickbacks to patients who came to his clinics in Houston and Conroe and billing the government for $13 million in unnecessary blood work. Two other doctors indicted, Ahmed Faiz and Harding Dudley Ross, are awaiting trial.

Doctors who provide referrals for home health care or order wheelchairs and other medical equipment have also been convicted in recent scams, as was the owner of a medical transport company who billed for expensive ambulance services but transported patients in cars and vans.

The recent nationwide sting -- the largest ever -- led to charges against 301 people, including 61 doctors, nurses and others.

They are accused of falsifying a variety of medical services, including home health care and acute outpatient care. Some are accused of paying kickbacks to recruiters.

The cases were filed in 36 separate federal districts, including 11 cases in the Houston region.

The cases mirror the schemes uncovered by the strike force in Houston. They also reflect how quickly medical fraud can shift from one specialty to another, according to Special Agent in Charge C.J. Porter, who heads the Office of Inspector General's health care fraud investigations in Texas and Louisiana.

"As soon as you make an impact in one area, the people intent on committing fraud will move onto another area that's not getting as much attention," she said.

Magidson said the fraud makes health care services more costly for everyone.

"How would you like to go to a doctor and all you see is dollar signs when you walk in the door?" he asked.

"People are, a lot of the time, being used as dupes. They really need the care but they are not getting the treatment they deserve.

"It stops being for the patients' best interest. It's the fraudsters' best interest."

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