Iowa

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).

December 2, 2009

Sioux City Hospital to Pay $400,000 to Resolve False Claims Allegations (U.S. Attorney for the Northern District of Iowa)

Mercy Medical Center in Sioux City, Iowa, has agreed to pay the United States $400,000 to settle allegations it violated the False Claims Act by inflating charges for heart patients’ care in order to receive money to which it wasn’t entitled.

The settlement resolves allegations that Mercy inflated charges for Medicare, Medicaid, Tricare, and Federal Employees Health Benefits Program heart patients to obtain additional reimbursement from those federal health care programs. Congress provided for additional payments, called outlier payments, to provide an incentive for hospitals to treat patients when the cost of care is unusually high.

The United States alleged that, between March 1999 and August 2003, Mercy inflated its charges for certain inpatient heart procedures. As a result of this claimed inflation, Mercy allegedly caused federal health care programs to pay more than Mercy was entitled to receive.

The United States also alleged Mercy submitted false and misleading statements involving Medicare and Medicaid cost reports for Oakland Memorial Hospital, Oakland, Nebraska, in fiscal years 2003 through 2006. The United States alleged Mercy sought reimbursement for non-allowable costs included in Oakland’s 2003 through 2006 Medicare and Medicaid cost reports.

In a settlement agreement, Mercy denied any wrongdoing but agreed to pay the United States $400,000 to settle the government’s claims.

“Health care providers knowingly overcharging federal health care programs will be made to pay the price,” said United States Attorney Stephanie M. Rose. “The integrity of the federal health care system for the citizens of Iowa depends on honest dealings, and this office will continue to root out fraudulent claims.”

The case was handled by Assistant United States Attorney Robert M. Butler. The Los Angeles United States Attorney’s Office and the Office of the Inspector General, Offices of Investigations and Audit Services, Department of Health and Human Services, provided investigative assistance. Iowa and Nebraska Medicaid Fraud Control Units and Medicare Program Safeguard Contractors, Cahaba Safeguard Administrators and IntegriGuard, also assisted.

For more information, visit the website of the United States Attorney's Office for the Northern District of Iowa at: http://www.justice.gov/usao/ian/index.html

October 22, 2009

Tennessee Man Sentenced in Health Care Fraud Case Involving Controlled Substances (U.S. Attorney for the Southern District of Iowa)

Des Moines, IA – On October 22, 2009, Douglas McCoy Shreve, Jr., 52, Cordova, Tennessee, appeared before United States District Court Judge James E. Gritzner and was sentenced to 11 months in federal prison, followed by 3 years Supervised Release, announced United States Attorney Matthew G. Whitaker. United States District Judge James E. Gritzner also ordered Shreve to pay a special assessment of $300 to the Crime Victim Fund and $26,000 in restitution.

Shreve had entered a plea of guilty to Defrauding a Health Care Benefit Program and Acquiring a Controlled Substance by Misrepresentation, Fraud, Forgery, etc.

Shreve was indicted on June 24, 2008, charging him with Defrauding a Health Care Benefit Program and Acquiring a Controlled Substance by Misrepresentation, Fraud, Forgery, etc. in the Southern District of Iowa. Shreve will be in the custody of the Federal Bureau of Prisons. There is no parole under the federal system.

“We have seen similar cases before, where individuals obtain controlled substances by fraud for illicit use by themselves or others. The cost of their unnecessary medical procedures and prescriptions results in higher insurance premium costs for the rest of us,” according to Jared Kirby , investigator on the Shreve case for the Iowa Insurance Fraud Bureau.

United States Attorney Matthew G. Whitaker stated the investigation was conducted by
the Iowa Insurance Fraud Bureau, and the Division of Narcotics Enforcement. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.

If you’d like to know more about the Iowa Board of Pharmacy’s ‘Prescription Monitoring
Program’ (PMP), please refer to their website at: www.iowa.gov/ibpe/pmp/pmp_info.html

September 16, 2009

Cresco Pharmacist Pleads Guilty To Prescription Insurance Fraud (U.S. Attorney for the Northern District of Iowa)

United States Attorney Matt M. Dummermuth announced that a pharmacist in Cresco, Iowa, who defrauded his health insurance company by submitting false prescription claims pled guilty on Sept 16 in federal court in Cedar Rapids.

Patrick Slifka, 50, from Decorah, Iowa, waived indictment and pled guilty to one count of wire fraud and one count of aggravated identity theft in connection with a scheme to defraud his personal health insurance provider. At the plea hearing, Slifka admitted he executed a scheme to defraud Wellmark Blue Cross/Blue Shield by submitting fraudulent claims against his family health insurance coverage for medications that were not prescribed by a licenced health care provider and, in some cases, where no medications were dispensed. Slifka also admitted he used the name and Drug Enforcement Agency number of an actual physician to facilitate this scheme. Under the terms of his health care prescription coverage, Slifka was to receive reimbursement payments for medications lawfully prescribed to him.

Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Slifka was released pending sentencing.

Slifka faces a maximum sentence of 20 years’ imprisonment, a $250,000 fine, and 3 years’ supervised release following any imprisonment on the wire fraud charge. Slifka also faces a mandatory 2-year term of imprisonment, a $250,000 fine, and 3 years’ supervised release following his imprisonment for the aggravated identity theft charge. The mandatory two years’ imprisonment for aggravated identity theft must be served consecutively to any term of imprisonment imposed on the wire fraud charge.

The case is being prosecuted by Assistant United States Attorney Ian K. Thornhill and was investigated by the Federal Bureau of Investigation.

More information on the U.S. Attorney for the Northern District of Iowa: http://www.usdoj.gov/usao/ian/index.html

August 25, 2009

Covenant Medical Center To Pay $4.5 Million To Resolve False Claims Allegations (U.S. Attorney for the Northern District of Iowa)

A Waterloo, Iowa, medical center has agreed to pay the United States $4.5 million to settle allegations of health care fraud relating to the center’s financialrelationships with five doctors, United States Attorney Matt M. Dummermuth and the Department of Justice announced on Aug. 25, 2009.

This settlement resolves allegations that Covenant Medical Center (“Covenant”) submitted false claims to Medicare by engaging in financial relationships with five physicians that were prohibited under the Stark Law. The Stark Law prohibits a hospital from profiting from referrals of patients by a physician when the hospital and physician have an improper compensation arrangement. An arrangement is improper if a physician is paid above fair market value for their services and that compensation is not commercially reasonable. The purpose of the Stark Law is to ensure physicians’ medical judgments are not compromised by improper financial incentives and are based solely on the best interests of the patient.

The United States alleged Covenant violated the law by paying commercially unreasonable compensation far above fair market value to five employed physicians who referred their patients to Covenant for treatment. These physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States. In a settlement agreement, Covenant denied any wrongdoing but agreed to pay the United States $4.5 million plus interest to settle the government’s claims.

“This payment is the largest ever related to claims of health care fraud in the Northern District of Iowa,” said Dummermuth. “We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal health care dollars.”

Tony West, Assistant Attorney General for the Department of Justice’s Civil Division, stated “Health care providers must act in the best interests of their patients. The Justice Department will protect patients by pursuing hospitals that have improper financial relationships with physicians.”

The matter was handled jointly by Robert M. Butler, Assistant United States Attorney, and Amy L. Easton, Trial Attorney, Commercial Litigation Branch, Department of Justice, with investigative assistance provided by the Office of the Inspector General, Department of Health and Human Services.

More information on the U.S. Attorney for the Northern District of Iowa: http://www.usdoj.gov/usao/ian/index.html