Halfway House Owner Gets 24 Months Imprisonment For Health Care Fraud & Kickback Conviction

 Broward County, Florida halfway house owner and operator Barry Nash was sentenced to to 24 months in prison followed by three years of supervised relief for his role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced today (March 13, 2012).

 Nash pleaded guilty on Jan. 9, 2012, to one count of conspiracy to commit health care fraud. In his guilty plea, Nash admitted that, in exchange for illegal health care kickbacks, he agreed to refer Medicare beneficiaries who resided at Starter House to American Therapeutic Corporation (ATC) and American Sleep Institute (ASI), a company related to ATC.  Nash knew that ATC and ASI fraudulently billed Medicare for partial hospitalization program (PHP) services and sleep treatment purportedly provided to his referrals.

PHP is a form of intensive mental health treatment.

According to court documents, ATC’s principals paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI.  In some cases, the patients received a portion of those kickbacks.  Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services.

Ultimately, the Justice Department alledges ATC and ASI billed Medicare for more than $200 million in medically unnecessary services.

According to the plea agreement, Nash’s participation in the fraud resulted in more than $959,901 in fraudulent billing to the Medicare program. 

ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011.  ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial.  Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.

Feds Continue To Turn Up HEAT on Health Care Fraud

The prosecution of Nash and other defendants charged in connection with the Florida mental health investigation are one of a growing number of prosecutions and convictions resulting from the federal HEAT Task Force health care fraud enforcement efforts empowered with new data mining, statistical profiling and other new fraud fighting resources created under the Patient Protection & Affordable Care Act (Affordable Care Act) and other recently enacted laws.  Using these new tools,  the HEAT Task Force and other federal health care fraud investigators are enjoying record successes in deploying these tools to achieve successful health care fraud prosecutions.  Government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in Fiscal Year (FY) 2011 according to the FY 2011 Health Care Fraud and Abuse Control Program Report  jointly released by HHS and the Justice Department on February 14, 2012.

Health Care Providers Must Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

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THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2012 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

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