Family-Run Medical Equipment And Billing Companies Enterprise Lead To Prison Time
photo by gillmccoll via Flickr
The Miami Herald reports that Laura and David Hernandez, as well as other family members, were sentenced by U.S. District Judge Adalberto Jordan for running a fraudulent Medicare operation.
The Herald states:
Over the past decade, the family-run enterprise of medical equipment and billing companies submitted more than $17 million in false claims to Medicare, they admitted in court.
Their total take: about $6 million.
The family-run enterprise started as a sole medical equipment company and later transformed into “a string of equipment businesses in Miami-Dade.” David Hernandez, a Cuban immigrant who is said to have completed formal schooling up to only the ninth grade, was the mastermind of the conspiracy:
David Hernandez, in the lead role, recruited four people to register as the official owners of four equipment-supply companies to conceal his participation in the scam, according to the court statement. Those ”nominee” owners, members of another family, were charged in a separate Medicare fraud indictment.
In addition to the health care fraud, conspiracy, and money-laundering charges, David and Jose Fernandez employed “kickbacks” in furtherance of their schemes; they “paid kickbacks to patients for the use of their Medicare numbers,” according to the Herald. After procuring the use of those Medicare numbers, the medical equipment-supply companies would bill the government–under those numbers– for medical equipment which was never actually delivered to anyone. Seemingly, such actions could also have subjected the brothers to sanctions for possible violations of the Anti-Kickback Statute, where violations can lead to prison time, criminal fines, civil money penalties, and exclusion from federal health care programs. The sentencing of Laura, David, and Jose Hernandez was the result of a plea agreement.
With the government being the main payor of the health care costs for the elderly (Medicare), poor and disabled (Medicaid), there are, seemingly, ample opportunities for individuals to take advantage of the government funding apparatus– but with these “opportunities” can come grave consequences. The result of this fraudulent Medicare operation shows that not only can those who submit false claims to the government be subject to treble damages and civil money penalties under the Civil False Claims Act, but that individuals who transgress may be subject to substantial prison time under criminal law. In this case, Laura and David Hernandez were sentenced to serve five and ten years in prison, respectively. They were also forced to relinquish ownership of their home and to pay further restitution.
As daunting as that punishment may be, this case does give rise to some questions regarding the efficiency of the investigative and enforcement mechanisms of the government. It took almost 10 years to discover and prosecute this fraudulent Medicare scheme.
As we have noted in prior posts, there seems to be an increased governmental reliance upon qui tam actions, which rely, at least initially, upon the prosecution of claims by private citizen “whistleblowers” in pursuit of pro rata “bounty.” The question is: what happens if no one blows the whistle?
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This is a shame how such companies could carry on swindling money. This is squarely the fault of the enforcement agencies.