Three more people have pled guilty in a Medicare fraud scheme based in Brooklyn, NY that literally involved a “Kickback Room”, a wall of which was adorned with a Soviet-era poster (pictured above) encouraging patrons not to gossip because “It’s not far between gossip and betrayal.”
The scheme at the Bay Medical Clinic, which involved thousands of Russian “patients”-people of other ethnicities were turned away-revolved around paying patients $50-100 per visit in order to submit false claims for physical therapy and other services that were either unnecessary or not provided. These claims totaled close to $72 million; the clinic was reimbursed $46.9 million.
During its investigation of the clinic, the government installed a camera and microphone in the Kickback Room and recorded approximately 1,000 bribes totaling more than $500,000 in just a six week period in mid-2010.
Fifteen people were arrested on July 16, 2010 at the Brooklyn clinic, including two physicians. One of the physicians, Dr. Jonathan Wahl, reportedly lived in a penthouse apartment, drove a Mercedes and owned a yacht. He was released on $500,000 bail; I have not seen that he has gone to trial or been sentenced yet.
The arrests were part of an organized takedown in five states that netted 94 arrests for Medicare fraud totaling $251 million.
So far 10 of the people arrested from Bay Medical Clinic have pled guilty. The remaining conspirators go to trial on January 22, 2013.
Two of the people who just pled guilty face up to 10 years in prison and the third could receive up to 25 years when they are sentenced March 12 and 13 next year.
It never ceases to amaze me how brazen some people can be in their fraudulent endeavors. Did they really think having a room called the “Kickback Room” would never get discovered? Of course, it did take $47 million worth of Medicare reimbursement before they were caught.
WASHINGTON—Two Brooklyn, New York residents pleaded guilty today for their roles in a $71 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of New York Loretta E. Lynch; Acting Assistant Director in Charge Mary E. Galligan of the FBI’s New York Field Office; and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).
Katherina Kostiochenko, 34, pleaded guilty today before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit health care fraud, one count of health care fraud, and one count of conspiracy to pay kickbacks. Sergey V. Shelikhov, 51, pleaded guilty today before Judge Gershon to one count of conspiracy to commit health care fraud.
Co-conspirator Leonid Zheleznyakov, 28, pleaded guilty yesterday before Judge Gershon to one count of conspiracy to commit health care fraud for his role in the scheme.
Kostiochenko, Shelikhov, and Zheleznyakov were employees of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC, and SZS Medical Care PLLC (Bay Medical clinic). According to court documents, owners, operators, and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in services that were medically unnecessary or never provided. The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy, and diagnostic tests.
According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.
Kostiochenko, Shelikhov, and Zheleznyakov pleaded guilty to conspiring to commit health care fraud for their roles in the Bay Medical scheme. Kostiochenko also pleaded guilty to paying cash kickbacks to Medicare beneficiaries as part of the scheme.
At sentencing, Kostiochenko faces a maximum penalty of 25 years in prison, and Shelikhov and Zheleznyakov both face a maximum penalty of 10 years in prison. Kostiochenko and Zheleznyakov are scheduled for sentencing on March 12, 2013, and Shelikhov is scheduled for sentencing March 13, 2013.
In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees, and five external money launderers. To date, 10 defendants have pleaded guilty for their roles in the conspiracy. Six individuals await trial before Judge Gershon on January 22, 2013.
The case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York. The case was investigated by the FBI and HHS.
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 New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.