Iowa

September 17, 2010

Spencer Pharmacist Guilty of Health Care Fraud (U.S. Attorney’s Office for the Northern District of Iowa)

Sioux City, Iowa - A pharmacist who formerly owned and operated Medicap pharmacy in Spencer, Iowa, defrauded Medicaid and his own health insurance provider and pled guilty on Sept. 17, 2010, in federal court in Sioux City.

David J. Easton, age 57, from Everly, Iowa, was convicted of two counts of health care fraud, one count of money laundering proceeds of his fraud, and one count of aggravated identity theft. At the plea hearing, Easton admitted that, from about 2003 to 2006, he defrauded Medicaid and Coventry Health Care of more than $200,000 by submitting false claims for prescriptions. He used the identities and ID numbers of Medicaid patients when he submitted false prescription claims to that medical assistance program. Easton used some of the proceeds of his schemes, in one instance a check for more than $44,000, to purchase a Cadillac Escalade.

Sentencing before United States District Court Judge Donald E. O’Brien will be set after a presentence report is prepared. Easton remains free on bond pending sentencing. On each of the fraud and money laundering counts, he faces a maximum sentence of 10 years’ imprisonment, a $250,000 fine, a $100 special assessment, and 3 years of supervised release following any imprisonment. On the identity theft count, Easton faces a mandatory sentence of two years’ imprisonment, to be served consecutively to any prison sentence imposed on the other counts. The case is being prosecuted by Assistant United States Attorney Janet Petersen and was investigated by agents of the Office of Inspector General for the Department of Health and Human Services and the Internal Revenue Service.

Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.

The case file number is 10-4084-DEO.

June 18, 2010

Des Moines Man Indicted for Embezzlement in Connection with Employee Health Care Plan (U.S. Attorney for the Southern District of Iowa)

Des Moines, Iowa - United States Attorney Nicholas Klinefeldt announced on June 18, 2010, that Thomas Lee Zmolek of Des Moines has been indicted by a federal grand jury of the United States District Court for the Southern District of Iowa for theft or embezzlement in connection with a health care plan.

The one count indictment, filed on May 27, 2010, charges that Zmolek, then the owner of Zen Industries, an entity comprised of management level employees of four Central Iowa bars, knowingly and willfully embezzledof employee funds that should have been used to pay their insurance premiums.

The indictment also alleges that, as a result of his action, Zmolek caused one or more of his employees to incur medical claims totaling approximately $35,000, which should have been covered by insurance, but was not because their coverage lapse for nonpayment. 

Zmolek appeared before United States Magistrate Judge Ross Walters on June 14, 2010 and entered a plea of not guilty. Trial has tentatively been scheduled for August 30, 2010.

The United States Attorney also reminds the public that an indictment is merely an allegation that the defendant has engaged in criminal activity. A defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The case was investigated by the Employee Benefits Security Administration, United States Department of Labor.

January 14, 1010

Newton Doctor Found Guilty on Health Care Fraud Charges (U.S. Attorney for the Southern District of Iowa)

DES MOINES, IA - On January 14, 2010, Dr. Angel Serafin Martin, MD, age 62, was found guilty on 31 counts of health care fraud at the completion of a 5-day jury trial announced U.S. Attorney Nicholas A. Klinefeldt.

These charges were initiated after a patient complained to Wellmark about an explanation of benefits form indicating a visit with Dr. Martin that did not in fact occur. Wellmark began an investigation of these matters and referred it to the FBI. The FBI initiated its investigation in May 2006. In November 2006, the FBI and HHS-OIG (Health and Human Services Office of Inspector General) executed a search warrant at Dr. Martin’s Newton, Iowa, clinic. This investigation disclosed that Medicare, Medicaid, Wellmark, and Principal were defrauded by this scheme.

During the trial, 27 patients testified, in addition to other witnesses, concerning office visits during the 2005 to 2007 time period. According to trial testimony, during the time period of 2004 to to 2006, Dr. Martin was one of the top billers of the highest consultation rates in the 12 state region and among the top 2 in Iowa. At issue was that Dr. Martin conducted office visits in Newton and Knoxville, Iowa, and submitted bills to insurers private and public greater than justified by the visit. The gist of this is that he performed a rather limited office visit, but billed it as though it were much more involved. This is sometimes referred to as “up-coding.”

Additionally, according to testimony, some of the consultations and visits were medically unnecessary under the circumstances. In one circumstance, Dr. Martin altered a medical record prior to providing it to law enforcement. Analysis showed that on 53 days in the time period 2002 to 2006, Dr. Martin billed for visits which, if performed, would have exceeded a 24-hour day. This was based upon AMA averages of physician time spent on these types of visits.

“This verdict underscores the importance of combating waste, fraud, and abuse in our health insurance system. I would like to commend everyone who brought justice to this case, from the patients who caught and reported it, to the FBI and HHS who investigated it, and to the Assistant U.S. Attorney who prosecuted it. I would also like to thank the jury for their service,” said U.S. Attorney Nicholas A. Klinefelt. A spokesperson for Wellmark said, “On behalf of Wellmark’s members, we are pleased that the U.S. Attorney’s Office has chosen to aggressively pursue health care fraud, because fraud drives up the cost of health care for all Iowans.”

Each count of Health Care Fraud is subject to a maximum sentence of 10 years in prison and a fine of $250,000. The Court will set a sentencing date for Dr. Martin at a future date.

The United States Attorney would like to thank the FBI and Health and Human Services Office of Inspector General (HHS-OIG).