Multiple Texas Health Care Providers and Suppliers Charged in DOJ’s June 2024 Strike Force Takedown

/ HEAT Strike Force, Medicare, Medicaid & Private Payor Updates / By
DOJ Strike Force teams are actively investigating and prosecuting health care fraud- Liles Parker

(July 11, 2024): Last week, the Department of Justice (DOJ) announced that it has criminally charged 193 defendants with violations of various health care fraud statutes. The government estimates that the fraudulent schemes employed by the defendants resulted in losses of $1.6 billion to Federal, State, and private payor health care programs. These cases are being prosecuted by Health Care Fraud Strike Force Teams (Strike Force) comprised of DOJ Criminal Division Trial Attorneys, Assistant U.S. Attorneys (AUSAs) out of dozens of U.S. Attorneys’ Offices around the country, and multiple State prosecutors working out of their respective Offices of the State Attorney General. These cases were built on the efforts of Strike Force agents and investigators working for a wide variety of Federal and State enforcement agencies. The primary players involved in the takedown include the Federal Bureau of Investigation (FBI), the Department of Health and Human Services -- Office of Inspector General (OIG), DOJ’s Drug Enforcement Administration (DEA), and multiple State Medicaid Fraud Control Units (MFCUs). This most recent “takedown” action is especially notable in that the efforts of Special Agents for the Department of Homeland Security (DHS) were specifically cited for their contributions in these cases. This article examines the history of DOJ’s use of Strike Force teams in the investigation and prosecution of health care fraud, with a focus on the most efforts of the Strike Force teams in Texas.

I. History of DOJ’s Health Care Fraud Strike Force Team Model:

  • What is a Health Care Fraud Strike Force?

    Simply speaking, DOJ has established interagency Strike Force teams of Federal and State prosecutors, agents and investigators whose mission is to identify and combat serious cases of health care fraud. In addition to traditional investigative techniques, Strike Force teams also employ “advanced data analysis techniques to identify aberrant billing patterns” and “hot spots” where it appears that fraudulent billing practices may be taking place. [1]

  • When was the First Health Care Fraud Strike Force Team Established?

    The first Strike Force was established in Miami, Florida, by DOJ in early 2007. The mission of the first Strike Force was to target health care fraud crimes in South Florida. At that time, Federal and State prosecutors and investigators came together to collaborate and jointly investigate and target individuals and entities committing health care fraud.

  • What is the Historical Focus of Individual Health Care Fraud Strike Force Teams?

    Building off the successes achieved in South Florida, DOJ, and its law enforcement allies subsequently established Strike Force teams in multiple regions around the country. Strike Force teams are currently established in the following geographic areas OR focus on specific areas of enforcement:

    Health Care Fraud Strike Force Teams

    Strike Force Geographic or Area of Focus Discussion
    Florida Strike Force Southern District of Florida (USAO-SDFL)
    Middle District of Florida (USAO-MDFL)    		 The first Strike Force was established in Miami, Florida. The Miami Strike Force served as a model for subsequent Strike Force teams established to combat health care fraud around the country. Since first established, Florida Strike Force teams have also been set up in the Middle District of Florida (Tampa and Orlando). To date the Florida Strike Force has been responsible for the prosecution and conviction of hundreds of defendants involved in the commission of health care fraud. Individuals involved in these health care fraud cases have included physicians, nurse practitioners, physician assistants, clinic owners, patient recruiters, substance abuse treatment facility owners, nurses, DME company owners, and a wide range of other health care providers and suppliers.[2]
    New England Strike Force District of New Hampshire (USAO-NH).
    District of Vermont (USAO-VT)
    District of Maine (USAO-ME)    		 DOJ’s New England Strike Force includes the U.S. Attorneys’ Offices in New Hampshire, Vermont and Maine, along with their law enforcement investigative and agency partners. The New England Strike Force has been focusing on Controlled Substance Act violations and the improper proscribing of controlled substances outside the usual course of professional practice.[3]
    Northeast Strike Force Eastern District of New York (USAO-EDNY)
    District of New Jersey (USAO-NJ)
    Eastern District of Pennsylvania (EDPA)    		 DOJ’s Northeast Strike Force includes the U.S. Attorneys’ Offices for the Eastern District of New York, the District of New Jersey and the Eastern District of Pennsylvania, along with their law enforcement partners. The Northeast Strike Force has been actively working to identify and dismantle opioid diversion schemes.[4]
    National Rapid Response Strike Force Nationwide Enforcement While most of DOJ’s Strike Force teams have been geographically based, the Rapid Response Strike Force has been tasked with investigating and prosecuting many of the country’s largest, most complex health care fraud matters and cases. This Strike Force has also been delegated responsibility for coordinating multi-jurisdictional cases. Particular areas of interest have included nationwide telemedicine fraud cases, sober home fraud prosecutions, and COVID-19 fraud schemes.[5]
    Prescription Strike Force Nationwide Enforcement of Prescription Drug Crimes Initially established as the "Appalachian Regional Prescription Opioid Strike Force," this group focused its efforts on white-collar offenses involving prescription drugs. The group’s area of responsibility was subsequently expanded beyond its Appalachia footprint and the Strike Force is now involved in prosecuting prescription drug crimes around the country.[6]
    Midwest Strike Force Eastern District of Michigan (USAO-EDMI)
    Northern District of Illinois (USAO-NDIL)    		 DOJ’s Midwest Strike Force includes prosecutors out of the U.S. Attorneys’ Offices for the Eastern District of Michigan (Detroit) and the Northern District of Illinois (Chicago), along with their investigative law enforcement partners. Since first established, DOJ’s Midwest Strike Force has aggressively pursued violations of the Federal Anti-Kickback Statute and other complex health care fraud schemes.[7]
    Los Angeles Strike Force Central District of California (USAO-CDCA) DOJ’s Los Angeles Strike Force has investigated and prosecuted a wide range of health care fraud cases, ranging from hospice to telehealth. The Los Angeles Strike Force has also been on the cutting edge of identifying and combatting sober home fraud.[8]
    Gulf Coast Strike Force Eastern District of Louisiana (USAO-EDLA)
    Middle District of Louisiana (USAO-MDLA)
    Western District of Louisiana (USAO-WDLA)
    Northern District of Mississippi (USAO-NDMS)
    Southern District of Mississippi (USAO-SDMS)
    Western District of Tennessee (USAO-WDTN)    		 The Gulf Coast Strike Force is comprised of Federal prosecutors in the Eastern District of Louisiana (New Orleans), Middle District of Louisiana (Baton Rouge), the Western District of Louisiana (Lafayette), the Northern District of Mississippi (Oxford), the Southern District of Mississippi (Gulfport), and the Western District of Tennessee (Memphis). Since first established, the Gulf Coast Strike Force has prosecuted more than 100 health care fraud defendants that have been responsible for more than $1 billion in intended fraud losses to Federal, State and private health care programs.[9]
    Texas Strike Force Northern District of Texas (USAO-NDTX)
    Eastern District of Texas (USAO-EDTX)
    Western District of Texas (WDTX)
    Southern District of Texas (SDTX)    		 Over the last 15 years, the Texas Strike Force has aggressively investigated and prosecuted health care fraud cases throughout the State of Texas. The Texas Strike Force currently has a presence in the Southern District of Texas (Houston), the Western District of Texas (San Antonio), the Northern District of Texas (Dallas), and the Eastern District of Texas (Sherman). Historically, the Texas Strike Force has focused its efforts on pharmaceutical compounding cases, and violations of the Controlled Substances Act.[10]

    Since establishing the first Health Care Fraud Strike Force, teams now operate out of 27 districts, except for the Strike Force teams operating with a nationwide enforcement focus. To date, more than 5,400 defendants have been charged. These individuals and entities have billed the Medicare, Medicaid, and private payor health benefit programs more than $27 billion in fraudulent claims.[11]

  • What is the Enforcement Focus of the DOJ’s Recent June 2024 Takedown?

    A total of 193 defendants were criminally charged as part of last week’s takedown action. These defendants were charged with one or more criminal violations, ranging from conspiracy to commit health care fraud to money laundering. Six specific enforcement areas, involving 67 different defendants, were highlighted in DOJ’s press release. These include:

    1. Amniotic Wound Grafts. Over the last few years, amniotic liquid, tissue, skin substitutes and wound care products have received considerable scrutiny by the Centers for Medicare and Medicaid Services (CMS) and its program integrity contractors.[12] As part of the current takedown, the government has charged a number of defendants with fraud, alleging that they caused medically unnecessary and expensive amniotic grafts to be applied to vulnerable patients without properly coordinating the treatments with each patient’s treating physician and without providing proper treatment for infection.
    2. Distribution of Adderall and Other Stimulants. DOJ has charged several defendants for the unlawful distribution of millions of Adderall pills over the internet. The indictment alleges that one nurse practitioner improperly prescribed more than 1.5 million pills of Adderall and other stimulants to patients around the country.
    3. Diverted HIV Medications. DOJ has charged the owners and executives of a pharmaceutical wholesale distributor with conspiracy to commit wire fraud. The government alleges that the defendants sought to introduce adulterated and misbranded HIV drugs into the market. As DOJ’s press release notes:

      "The defendants allegedly purchased these drugs from the black market and resold them to pharmacies throughout the country with falsified documentation designed to conceal the true source of the medication. Pharmacies then dispensed these diverted HIV medications to unsuspecting patients." [13]

    4. Addiction Treatment Cases. When discussing the addiction treatment cases charged as part of the recent takedown, the government cited one case in particular where a defendant is alleged to have paid kickbacks to induce the referral of homeless individuals and individuals living on Native American reservations. These substance abuse services were then billed to Arizona’s Medicaid program. Finally, the government alleges that the substance abuse services were either not provided OR were provided at a substandard level.
    5. Telemedicine and Laboratory Fraud Cases. Of the 193 defendants charged in the current takedown, 36 of the defendants were charged with telemedicine-related fraud schemes. Many of the fraudulent claims associated with this conduct involved orders for medically unnecessary genetic testing. As DOJ’s press release further notes:

      "Other telemedicine schemes included the unsealing of a complaint in the Eastern District of Virginia against a psychiatrist who allegedly submitted fraudulent claims based on minimal patient interactions, including for visits that lasted between 10 to 30 seconds."

    6. Cases Involving Illegal Prescription and Distribution of Opioids and Other Health Care Fraud Schemes. As part of the takedown, 14 defendants were charged with crimes involving the illegal prescription and distribution of opioids.

    Over the next few months, a deeper dive into each of these highlighted enforcement initiatives will be covered in articles on our website.

  • Do Health Care Fraud Strike Force Takedown Actions Constitute the Bulk of Health Care Prosecutions Nationwide?

    While Strike Force enforcement takedown actions have received considerable press coverage, health care providers and suppliers need to remember that most civil and criminal health care fraud cases are prosecuted outside of annual (and in some cases, biannual), much-publicized takedowns. Each of the 94 U.S. Attorneys’ Offices around the country has designated both a Civil and a Criminal Health Care Fraud Coordinator. Health care fraud prosecutions are actively pursued by Federal prosecutors in each of these offices.

  • Are Health Care Fraud Cases a Significant Portion of DOJ’s Overall White-Collar Criminal Caseload?

    For several years now, health care fraud enforcement has dominated DOJ’s prosecution efforts. For example, focusing on only the criminal prosecution efforts of DOJ’s Fraud Section, during Fiscal Year (FY) 2023, fraud prosecutions handled by DOJ’s Health Care Fraud Unit were more than double those handled by other fraud units in the section.

    DOJ Criminal Fraud Section is actively investigating and prosecuting for health care fraud violations - Liles Parker
    • FCPA: Foreign Corrupt Practices Act Unit prosecutions focus on global corruption prosecutions.
    • MIMF: Market Integrity and Major Fraud Unit prosecutions focus on bank fraud, mortgage fraud, Federal program fraud, securities, commodities, corporate, investment, and cryptocurrency-related cases.
    • HCF: Health Care Fraud Unit prosecutions focus on Federal health care benefit program frauds.

  • Are Strike Force Enforcement Activities Expected to Expand?

    The recent 2024 health care fraud takedown action merely reinforces the fact that both health care fraud enforcement efforts and the frequency of Medicare, Medicaid, and private payor audits are anticipated to increase throughout 2024 and will likely continue increasing for the foreseeable future.

II. A Closer Look at Texas Strike Force Investigations and Prosecutions:

Since first established in 2009, the Texas Strike Force (Federal prosecutors and their law enforcement partners) have actively investigated and prosecuted health care providers and suppliers accused of committing health care fraud.

  • Historically, What Types of Health Care Fraud Cases Have Been Prosecuted by Team Members of the Texas Strike Force?

    Examples of Prior Health Care Fraud Cases Pursued by the Texas Strike Force

    Type of Case Summary of the Allegations Charges Associated with this Conduct
    Illegal Prescription of Compounded Medications In this case involving fraudulent claims submitted to TRICARE, the owner of several compounding pharmacies in Fort Worth was alleged to have paid kickbacks to marketers who recruited physicians to write prescriptions for expensive compounded medications. The defendant also created “investment opportunities” so that physicians who wrote prescriptions for compounded medications could profit from the pharmacy’s operations. Violations of the Anti-Kickback Statute.
    Money Laundering
    Illegal Distribution and Dispensing of Controlled Substances (Opioids) In this case, the owner of a pain clinic and his office manager (both from Laredo, TX) were convicted of drug crimes. The physician owner allegedly prescribed dangerous combinations of controlled substances including hydrocodone, carisoprodol, and alprazolam to his patients without a legitimate medical purpose. In exchange for these prescriptions, the physician received cash payments ranging from $250 to $500 per patient. The office manager was alleged to have coordinated with “crew leaders” to bring multiple people – including individuals living in homeless shelters – into the practice to pose as patients. Over a 14-month period, the practice allegedly prescribed more than 600,000 Schedule II opioids – including hydrocodone – and other controlled substances. The office manager and physician were convicted of conspiracy to distribute and dispense controlled substances and unlawfully distributing and dispensing controlled substances. Defendant #1:
    Conspiracy to distribute and dispense controlled substances AND unlawfully distributing and dispensing controlled substances.

    Defendant #2:
    Conspiracy to distribute and dispense controlled substances AND unlawfully distributing and dispensing controlled substances.
    Ordering Medically Unnecessary DME and Cancer Genetic Testing In this case out of Flower Mound, TX, the defendant was accused of electronically signing orders for durable medical equipment (DME) and cancer genetic testing that he knew were used to submit more than millions of dollars in false and fraudulent claims to Medicare. In exchange for writing these orders, the defendant received approximately $30 in exchange for each doctor’s order he signed authorizing DME and cancer genetic test orders that were not legitimately prescribed, not needed, or not used. The Medicare patients for whom the defendant prescribed DME and cancer genetic testing were targeted by telemarketing campaigns and at health fairs. The patients were allegedly induced to submit to the cancer genetic testing and to receive the DME regardless of medical necessity. Conspiracy to commit wire fraud

  • Overview of Cases Pursued by the Texas Strike Force as Part of the June 2024 Takedown:

    Eight of the criminal cases included in the recent health care fraud takedown are being pursued by members of the Texas Strike Force. While these eight cases are now focused on ten different defendants, it is important to keep in mind that the government’s target list is likely to expand significantly as these cases move forward.

    • Case #1 – COVID-19 Collection and Testing Fraud: In this case, out of the Eastern District of Texas, the owner of a mobile laboratory company has been charged (by Information) with health care fraud. The government has alleged that the defendant fraudulently billed the Medicare program for COVID-19 sample collection and testing services that did not take place. The government has also alleged that the defendant inflated claims for mileage reimbursement to pick up specimens from homebound patients.
    • Case #2 – Genetic Testing Fraud / Illegal Kickbacks: In this case out of the Northern District Texas, the owner of two clinical laboratories has been indicted for conspiracy to defraud the United States and to pay and receive health care kickbacks. More specifically, the government has alleged that the defendant paid kickbacks to marketers in exchange for their referral of Medicare beneficiaries’ DNA samples for medically unnecessary cardio genetic testing.
    • Case #3 – Genetic Testing Fraud / Illegal Kickbacks: In this case out of the Southern District of Texas, Defendant #1 (the owner of two Houston-area laboratories) has been charged with conspiracy to commit health care fraud, conspiracy to defraud the United States, and to pay and receive health care kickbacks. Defendant #2 was charged with conspiracy to defraud the United States, and pay / receive health care kickbacks, The government alleges that Defendant #1 entered into “sham” flat fee contracts with Defendant #2, knowing that Defendant #2 (and the marketers she worked with) used call centers and telemedicine doctors to obtain DNA samples and signed doctor’s orders and that the results of these tests were not used by the Medicare beneficiaries’ treating physicians for treatment purposes. In summary, this conduct resulted in Medicare being billed for medically unnecessary genetic tests that were induced by kickbacks.
    • Case #4 – Forged Prescriptions / Illegal Kickbacks: In this case out of the Southern District of Texas, the government has charged the defendant with conspiracy to defraud the United States, and pay / receive kickbacks. More specifically, the government claims that the defendant referred forged prescriptions in the names of workers’ compensation claimants to a pharmacy in exchange for illegal kickbacks.
    • Case #5 – Referral of Prescriptions in Exchange for Illegal Kickbacks: This case is being prosecuted out of the Southern District of Texas and involves two defendants. The government has claimed that Defendant #1 owned a physical therapy company and referred workers compensation claimants to Defendant #2’s pharmacy in exchange for illegal kickbacks. Both Defendant #1 and Defendant #2 have been charged with conspiracy to defraud the United States and pay and receive kickbacks.
    • Case #6 – Home Health Fraud / Illegal Kickbacks: This case is out of the Southern District of Texas. The government has alleged that the owner of a home health agency billed Medicare and Medicaid for home health services that were either not provided, were not medically necessary, and / or were based on kickbacks to marketers and patients.
    • Case #7 – Pharmacy Fraud: This case is being prosecuted out of the Southern District of Texas. The government has alleged that the defendant (the owner of a Houston pharmacy), billed private insurance companies for medicines that were never provided to patients. The defendant then transferred these fraudulently obtained funds to overseas accounts in Asia.
    • Case #8 – Dialysis Treatment Fraud: This case is being prosecuted out of the Southern District of Texas. The government has alleged that the defendant created a “phantom” business and billed private insurance companies for dialysis treatments that were not rendered. The government has also alleged that the defendant obtained a fraudulent loan under the Economic Injury Disaster Loan (EIDL) program, in the name of his phantom company.

III. Reducing Your Level of Regulatory and Statutory Risk:

It’s now been just over a year since the Secretary of the Department of Health and Human Services (HHS) allowed the COVID-related Public Health Emergency (PHE) to expire.[14] Since that time, we have seen a significant increase in the number and scope of new Medicare, Medicaid, and private payor audits and investigations. Allegations of Medicare and / or Medicaid fraud identified in administrative audits are regularly referred by Unified Program Investigative Contractors (UPICs). Similarly, private payor Special Investigative Units (SIUs) don’t hesitate to refer instances of fraud to Federal and State regulators for possible enforcement. Texas providers must continue their efforts to ensure that both business, operations, and billing practices fully comply with applicable statutory and regulatory requirements.[15]

To reduce their level of regulatory risk, it is essential that Texas providers and suppliers ensure that they have implemented an effective compliance program and are working to ensure that all applicable statutory and regulatory obligations are being met. It's also important to keep in mind that Medicare, Medicaid, and private payor medical necessity, documentation, coding, and billing policies are subject to change, so staying updated with the latest guidance from your various payors is crucial for accurate reimbursement.

  • How Should Our Practice Respond if a Payor Audit or Investigation has Been Initiated?

    If your health care practice or organization is audited or investigated, call an experienced health care lawyer. If brought into the audit process early, there are proactive steps that a skilled health care lawyer can take to reduce your financial exposure and your company’s overall level of risk. This approach can help a provider maintain compliance and reduce the risk of future Medicare, Medicaid and private payor audits.

    Health care regulatory lawyers have specialized knowledge and expertise in health care laws, regulations, coding, billing, and compliance requirements. They are familiar with the complex legal landscape surrounding telehealth and Medicaid billing. Having a health care lawyer on the provider's side ensures that they have access to expert advice and guidance throughout the entire audit process.

    An experienced health care lawyer can guide a provider through the audit, help gather relevant documentation, and ensure compliance with audit requests. Perhaps most importantly, a health care lawyer can help protect a provider’s financial and personal interests.

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Need help?  Give us a call.  A number of our health care lawyers are Certified Professional Coders (CPCs) and / or Certified Medical Reimbursement Specialists (CMRSs).  Our attorneys have extensive experience representing Texas providers and suppliers in connection with UPIC and other program integrity audits.  Additionally, several of our attorneys have held significant positions as Federal prosecutors with the U.S. Department of Justice.  To the extent that an administrative audit, or a civil / criminal investigation has been initiated by the government, our attorneys will diligently work to attempt to obtain a favorable outcome in your case. For a free consultation, please give us a call: 1 (800) 475-1906.