Diagnostic Fraud

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Diagnostic tests are necessary to determine how to correctly treat medical symptoms and conditions. A California man used his diagnostic testing clinics to carry out a scheme that bilked nearly $7 million from Medicare by ordering unnecessary tests for patients he illegally recruited. (The ruse continued even after the government diagnosed suspicious practices and slowed down the stream of federal funding.)

Over two years, the man formed 11 clinics in the Houston area and paid co-conspirators $80 – $100 to entice patients to attend the clinic and have the diagnostic tests performed. (The marketer usually kept a part of the fee and the rest went to the patient who stopped by the clinic to be tested.) The clinic then used the patients’ Medicare numbers to fraudulently submit bills for tests that were not medically necessary or performed.

The man had his co-conspirators order ultrasounds, allergy tests and pulmonary function tests for each patient that came through the clinic doors, regardless of whether they needed it or not. He also made sure that every Medicare beneficiary was documented with poor circulation, shortness of breath, heart problems and allergies. (Perhaps the similar and repetitive conditions alerted government investigators that something was awry.)

When the government slowed down the payments to the man’s first clinic by putting it on pre-payment review, he directed others to open more clinics and bank accounts in their names, even though the owner of the clinics would be the recipient of the clinic proceeds. (This definitely shows intent to defraud. He was going to get his free money one way or the other.)

The 55-year-old man and his 48-year-old patient recruiter, who worked at seven of the man’s clinics, both pleaded guilty to Medicare fraud. The man was ordered to serve a maximum of 10 years in prison, while the female recruiter will serve 37 months. The male fraudster admitted to causing a loss of $4,412,944 and the woman caused a loss of $2,569,530. Both fraudsters will pay full restitution to Medicare for their illegal acts. (As they should. How about interest on that amount too?) Two others involved in the scheme have also pleaded guilty to their part in the crime and are awaiting sentencing.

The man at the center of this case took some drastic measures to make sure his diagnostic fraud continued. The court noted that the man’s conspiracy was “extremely serious” and that he had been plotting it for a long time. (It looks like the government performed some diagnostic tests of its own, and determined that this malady deserved to have treatment behind bars. )

Source: Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, Medicare Fraudster Given Maximum Prison Sentencereleased on June 1, 2017.

HOUSTON – A Houston woman and a California man have been ordered to federal prison for conspiring to defraud Medicare through so-called diagnostic testing labs in the Houston area, announced Acting U.S. Attorney Abe Martinez. Zaven “George” Sarkisian, 55, of Fresno, California, and Konna Hanks, 48, of Houston, pleaded guilty Dec. 9 and 2, 2015, respectively.

Today, U.S. District Judge Keith P. Ellison ordered Sarkisian to the serve the statutory maximum of 10 years in prison. In handing down the sentence, Judge Ellison imposed enhancements for obstruction of Medicare’s administrative investigation, leadership role, abuse of Medicare’s trust, sophisticated means and loss to a federal health care program of more than $1 million. The court noted Sarkisian’s conspiracy was plotted over a long period of time and was “extremely serious.” For her role, Hanks will serve a total of 37 months in prison. As part of their pleas, Sarkisian and Hanks acknowledged they caused actual losses in the amounts of $4,412,944 and $2,569,530, respectively. Both defendants were also ordered to pay full restitution to Medicare.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.