06/23/2010

News / Detroit-Area Medical Clinic Owner and Vice President Convicted in $23 Million Medicare Fraud Scheme

WASHINGTON – The owner and the vice president of a Detroit-area physical therapy clinic were convicted today by a federal jury for their roles in a $23 million Medicare fraud scheme, announced the Departments of Justice and Health and Human Services.

After a six day trial, the jury convicted Bernice Brown of one count of conspiracy to commit health care fraud and 10 counts of health care fraud. Daniel Smorynski was convicted of one count of conspiracy to commit health care fraud and six counts of health care fraud. Smorynski was acquitted on four counts of health care fraud. Each substantive health care fraud charge and the conspiracy charge carry a maximum penalty of 10 years in prison and a $250,000 fine.

Evidence at trial established that Bernice Brown was the owner and president of Wayne County Therapeutic Inc. (WCT) in Livonia, Mich. Daniel Smorynski was the vice president of WCT. WCT purported to be an outpatient clinic that specialized in physical and occupational therapy. Evidence at trial established that Brown purchased fake physical and occupational therapy files from certain third-party contractors, and she and Smorynski billed the services reflected in the files to Medicare as if WCT therapists had provided the services. Brown instructed her staff to create false documents and to add those documents to medical files to make it appear that the WCT therapists, who were licensed in the state and enrolled with Medicare, had performed the services, when she knew they had not. According to evidence presented at trial, Smorynski was in charge of billing at WCT and aided in the submission of claims for services he knew WCT did not provide. Between approximately October 2002 and September 2006, Brown and Smorynski submitted approximately $23.2 million in claims to Medicare for physical and occupational therapy services that were never provided. Medicare paid approximately $6,537,630.34 of those claims.

Evidence at trial showed that the fake files purchased by WCT were created by non-enrolled, and in many cases, non-licensed contractor therapists. The contractor therapists paid Medicare beneficiaries cash kickbacks in return for which the beneficiaries provided their Medicare information and signed false documentation. The contractor therapists also obtained phony prescriptions for the therapy. Evidence at trial established that most, if not all, of the therapy was completely fictitious. For their part, WCT therapists never saw the patients, and did not supervise any of the therapy, but signed documentation in the files to make it appear that they did. All of the services were billed under the provider numbers of WCT therapists enrolled with Medicare.

Evidence at trial showed that Brown and Smorynski, in addition to submitting claims for non-existent physical and occupational therapy, caused WCT to submit fraudulent claims for psychotherapy services. In January 2006, when Congress enacted a cap on physical and occupational therapy services to control costs, Brown and Smorynski devised a scheme to avoid the cap by billing for psychotherapy services. Evidence at trial showed that Brown and Smorynski launched a lobbying effort to repeal the cap, which included WCT staff drafting letters and petitions to Congress purportedly on behalf of Medicare patients. Brown and Smorynski then instructed WCT staff to bill Medicare for their lobbying efforts as psychotherapy evaluations and visits. In 2006, WCT billed $493,200 to Medicare for psychotherapy services that were not necessary and not provided, and Medicare paid approximately $121,921 of those claims.

Today’s guilty verdicts were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of HHS, Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

The case was prosecuted by Trial Attorneys Benjamin D. Singer and Gejaa T. Gobena of the Criminal Division’s Fraud Section. The FBI and HHS-OIG conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 585 individuals who collectively have falsely billed the Medicare program for approximately $1.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

http://www.justice.gov/opa/pr/2010/June/10-crm-730.html

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