Category Archives: Healthcare

Court assesses $170 million in penalties against two Houston opthalmologists

A US District Judge has assessed penalties of $170 million on Dr. Mustapha Kibirige and Dr. Emelike Agomo in relation to fraudulently billing Medicare.



Dr. Libirige owns and operates Outreach Diagnostic Clinic, based in the midtown area of Houston. Dr. Agomo joined the clinic in 2010. The clinic examines patients for glaucoma.

Between February 2006 and December 2011, the clinic billed Medicare for the glaucoma tests performed. Devices that measure eye pressure using a portable pen or puffs of air are billed under one billing code. Imaging scans of a retina are billed under a separate code which has a higher reimbursement rate.  The clinic was performing the former, but billing under the latter.

The clinic submitted 14,450 claims in this manner and received $807,450 in payments from Medicare.

An optometrist at the clinic, who started in 2005, became uncomfortable with the billing practices. In June 2012, he resigned, having failed to persuade Drs. Kibirige and Agomo to change their practices. He later blew the whistle.

The government won a summary judgment in March 2020 against the clinic. As a result, the judge assessed a penalty of

  • Treble damages of $2,422,350
  • A penalty of $11,803 for each claim submitted or $170,553,350.

$11,803 is the minimum penalty that could have been assessed under the statute.

https://www.justice.gov/usao-sdtx/pr/court-assesses-more-170m-penalties-against-two-area-ophthalmologists

Summary Judgment – Damages

Woodlands doctor agrees to pay $0.5 million to settle allegations of fraud

Dr. Emad Bishai, who practices in The Woodlands, has agreed to pay $523,331 to settle allegations that he submitted fake claims for the placement of electro-acupuncture devices as well as making false statements when applying for a loan from the Paycheck Protection Program (PPP).

Dr. Bishai is an anesthesiologist and pain management physician who owns The Woodlands Pain Institute PLLC.



From July 2017 to May 2019, Dr. Bishai billed Medicare and TRICARE (healthcare for military) programs for the surgical implantation of neurostimulator electrodes. This is an invasive procedure for which Medicare pays thousands of dollars. Instead, needles were inserted into the ears of patients and a neurostimulator were taped behind the ears.

In addition to the financial settlement, Dr. Bishai and Woodlands Pain Institute PLLC have agreed to a seven-year-period of exclusion from participation in any federal health care programs.

Indictment re Controlled Substances 

When applying for a $213,400 PPP loan in May 2020 on behalf of his clinic, he answered ‘No’ to the question of whether he had been indicted. In fact, Dr. Bishai was indicted in November 2019 for prescribing controlled substances to patients without a valid medical purpose. Prosecutors allege that his prescriptions resulted in four overdose deaths. Three other doctors in Montgomery County were also indicted at the same time. Charges against one of them were later dropped.

The indictments arose out of a horrific car crash in 2015 in Conroe when a family of four, driving home from a Sunday church service, were killed by another driver, who was impaired due to Valium and oxycodone. Dr Rezik Saqer, the doctor who prescribed the drugs in that case, was later sentenced to 7 years in prison on federal fraud charges. Montgomery County Officials then went looking for other pill mill doctors in the area.

Trial delayed

The trial by jury for Dr. Bishai on the controlled substances charges was set to begin late last month but it was postponed to a later date.

https://www.justice.gov/usao-sdtx/pr/woodlands-pain-doctor-pays-half-million-dollars-fraudulent-ppp-and-billing-allegations

 

CFO resigns at Houston biotech company

Tony Tontat has resigned as the CFO of Kiromic BioPharma. Dan Clark, VP of Finance, has been appointed interim CFO.



Kiromic is a gene-editing company that is focused on solid cancers. It was formed in 2006 but doesn’t have any revenues yet. The company is based in the Texas Medical Center.

It went public via an Initial Public Offering in October 2020. The IPO raised $15 million at $12 per share.

The company raised a further $40 million at $5 per share in July. The company planned to use the second raise for clinical trials for two drugs that were expected to be approved by the FDA (Food and Drug Administration). Instead, the FDA responded two weeks later with further questions on the initial applications, causing a delay in the trials.  The share price plunged and is now $1.94.

Mr. Tontat, who is based in Florida, had served as the CFO since October 2019 and also served as the Chief Operating Officer from August 2019 to April 2021. He was paid $300,000.

Mr. Clark joined the company in February 2020 as its Corporate Controller. Prior to that, he worked for consulting firms The Siegfried Group and FTI Consulting. He started his career at KPMG.

SEC filing – Tontat resignation

 

Houston medical devices company to be acquired for $550 million

Allergan Aesthetics, a subsidiary of AbbVie, agrees to acquire Houston-based Soliton for $22.50 per share, in cash. This values Soliton at $550 million enterprise value.



Soliton is based in the Galleria area and went public in February 2019 at $5 per share. The company uses technology licensed from MD Anderson. The product uses rapid pulses of designed acoustic shockwaves to disrupt cellular structures in skin tissue. It doesn’t have any revenues yet, however it announced its first commercial launch earlier this month.

It believes the product could be used in tattoo removal, cellulite treatment and fibrotic scar treatment. Each device will use disposable cartridges to be used in different treatment devices, equivalent to selling a razor and blades. It gained FDA approval in May 2019 for tattoo removal.

Remeditex Ventures, which owns 43% of the stock of Soliton, has agreed to vote in favor of the deal.

In November 2020, the company appointed Brad Hauser as its new CFO, replacing Dr. Chris Capelli, who became Chief Science Officer. Mr. Hauser joined from  Allergan Aesthetics where he was the General Manager for CoolSculpting, a technology that reduces fat by non-surgical methods.

SEC filing – Soliton takeover

 

Houston-area woman gets 25 years in healthcare fraud scheme

Brenda Rodriguez, 58, of Richmond has been ordered to prison for 25 years. She was convicted of conspiracy and aiding and abetting healthcare fraud following a three-day trial in January 2019.



Rodriguez owned and operated the QC Medical Clinic in Richmond. She paid doctors to approve patients for home health care regardless of whether it was medically necessary. Rodriguez then sold those approvals to various corrupt home health care providers. These providers then billed Medicare for services that were either unnecessary or never provided.

Ultimately, the providers billed Medicare for over $11 million as a result of patients Rodriguez provided.

Three others have pleaded guilty in this case. However, one of them,  John Ramirez, M.D was sentenced to 25 years following his conviction for his role in a $25 million medicare fraud at a different clinic in SW Houston.

Nenna Iro and Magdalene Akharamen, owners of Houston area home-health agencies, each pleaded guilty to conspiracy to commit healthcare fraud in purchasing Plans of Care and other signed medical documents from QC Medical.  Iro was sentenced to seven years, while Akharamen got three years.

 

Autism service provider agrees to pay $2.7 million to resolve fraud allegations

Dr. Domonique Randall, the former owner of The Shape of Behavior (“The Shape”), a Texas-based provider of therapy services for children with autism, has agreed to pay $2.7 million to resolve allegations the company submitted improper claims to TRICARE. TRICARE is the health care program for uniformed service members, retirees, and their families.



Dr. Randall lives in Spring, TX. Humana, TRICARE’s managed care support contractor, uncovered alleged improper claims. The settlement resolves allegations that nine separate TSOB locations submitted claims to TRICARE that

  • misrepresented the identity of the actual rendering providers
  • medical records could not substantiate
  • individual providers billed excessive hours on individual dates of service.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Blue Sprig Pediatrics, also based in Houston, acquired The Shape in October 2018. At that time, The Shape had 22 clinics in four states, including 19 in Texas.

 

https://www.justice.gov/usao-sdtx/pr/former-children-s-autism-service-provider-pays-over-27-million-resolve-health-care

Houston Pharmacy owner and Accountant charged with $134 million fraud

Mohamed Mokbel and Fathy Elsafty have been charged with conspiracy to commit healthcare fraud. Mr. Mokbel is the owner of several Houston area pharmacies, while Elsafty is his accountant.



Mr. Mokbel was the CEO of 4M Pharmaceuticals, the parent company for several retail pharmacies that operated in Houston, Fort Worth, Florida and elsewhere. He also allegedly had ownership in the subsidiary pharmacies. Mr. Elsafty served as 4M’s accountant and tax preparer.

The indictment alleges that 4M functioned as an outbound telemarketing call center that solicited Medicare, Medicaid and commercial insurance patients nationwide. Call center employees would offer patients medically unnecessary diabetic supplies and topical creams. In many instance, 4M would bill the patient’s insurance plan, even if the patient had refused the solicitations.

4M would also target doctors by sending fax requests for prescriptions that patients often did not authorize. Some prescription requests were sent for dead patients.

The scheme ran from December 2013 to March 2020. 4M collectively received over $134 million in payments from Medicare and others.

The funds were allegedly used, in part, to pay for Mokbel’s $1.5 million residence in the Galleria area, $15 million in gambling and casino expenses and purchases and payments for a Ferrari and a Bentley. Mokbel also transferred and controlled over $6 million in health care fraud proceeds in certificate of deposit accounts at banks, according to the allegations.

Mokbel and ElSafty are charged with one count of a conspiracy to commit healthcare fraud, three counts of healthcare fraud and four counts of money laundering. All carry a possible prison sentence of 10 years in prison and a $250,000 maximum fine. The use of telemarketing to target people over 55 as a means to commit healthcare fraud carries an additional penalty of 10 years.

Previous trial and acquittal

In 1999 Mr. Mokbel was charged, with others, with money laundering and conspiracy in relation to a case where individual cans of infant formula had been purchased and then repackaged into trays for resale to wholesalers.

It was alleged at trial that some of the cans had been stolen. A jury convicted the defendants. However, an appeals court overturned the verdict because the evidence supporting the stolen goods charge was insufficient to meet the $5,000 minimum value threshold that applies to interstate transportation of stolen goods. Mr. Mokbel was cleared of all charges.

 

https://www.justice.gov/usao-sdtx/pr/pharmacy-owner-and-accountant-indicted-134m-health-care-fraud-scheme

 

Four charged in $32 million healthcare fraud scheme

A medical director, operator and two unlicensed practitioners have been charged for their alleged role in a $32 million healthcare fraud scheme.



Farrah Forough Farizani, D.O, was the medical director of Hillcroft Physicians, a family practice in SW Houston. Her husband, Hamid Razavi was its operator. Elie Hajjar and Juan Acuna were unlicensed practitioners there.

Farizani, Razavi, Hajjar, and Acuña allegedly misled patients and staff to believe that Hajjar and Acuña were licensed to practice medicine in Texas.

The scheme began in 2010 and continued through 2017. Hajjar and Acuna examined, diagnosed, treated and prescribed prescriptions for patients. However, the practice billed Medicaid and Medicare as if Farizani had provided the services, even if, sometimes, she was out of the country.  Medicaid and Medicare were billed more than $32 million and paid out over $12 million.

The indictment charges all four with one count of conspiracy to commit health care fraud. Farizani, Razavi and Hajjar are also charged with five counts of making false statements relating to health care matters.

https://www.justice.gov/opa/pr/four-charged-32-million-health-care-fraud-scheme

Senior finance exec leaves Carriage Services

Viki Blinderman will be leaving her role of Chief Accounting Officer and Secretary of Carriage Services (‘CSV’) at the end of March. CSV is based in the Galleria and operates 180 funeral homes and 32 cemeteries in 27 states

In practical terms, Ms. Blinderman is the co-CFO alongside Ben Bright. For a time, between 2015 and 2017 that was their official titles. Since February 2017 Mr. Bright has been CFO while she has been Chief Accounting Officer and Secretary. However, for the past three years Ms. Blinderman and Mr. Bright have received the same salary, bonus and stock awards.

Ms Blinderman joined the company in 2002. She will continue to receive her base salary for two years ($300,000 per annum) and a one-time payment. This is not specified in the 8-K but she is entitled to a pro-rata bonus for 2021 ($37,500).

SEC filing – Blinderman

Appeals court overturns $4.3 million fine on MD Anderson

The Fifth Circuit Court of Appeals has overturned a $4.3 million fine on MD Anderson Cancer Center. The fine was originally levied by the US Department of Health and Human Services (HSS) in 2018 for HIPAA violations. HIPAA is the acronym for the Health Insurance Portability and Accountability Act of 1996 that governs patient privacy.

Initial breaches

The fine arose out of three incidents that occurred in 2012 and 2013

  • A laptop of a faculty member was stolen. It was not password-protected or encrypted but contained electronic protected health information (ePHI) for 29,021 individuals.
  • An MD Anderson trainee lost an unencrypted USB thumb drive during her evening commute. This contained ePHI for over 2,000 individuals.
  • A visiting researcher misplaced another unencrypted USB thumb drive, containing ePHI for nearly 3,600 individuals.



MD Anderson disclosed these incidents to HSS who determined that MD Anderson had violated two federal regulations One was the failure to encrypt information covered by HIPAA, the other was unpermitted disclosure of protected health information.

HSS also determined that MD Anderson had ‘reasonable cause’ to know that it had violated the rules. The Administrative Law Judge imposed a fine of $2,000 for each day it wasn’t compliant between 24 March 2011 and 25 January 2013 as well as a $1.5 million fine each year for its
noncompliance in both 2012 and 2013. The total fine was $4.3 million.

Law interpreted incorrectly

After MD Anderson appealed to the Fifth Circuit Court of Appeals, the government conceded that the maximum fine it could impose was $450,000. Instead the Appeals Court quashed the fine as being arbitrary, capricious and otherwise unlawful. They ruled that the Judge had not interpreted the law correctly in the following ways;

  • The HIPAA Act states that entities must have a mechanism to encrypt ePHI. MD Anderson gave its employees an ‘IronKey’ to encrypt and decrypt data and trained employees on how to use it. The Appeals Court ruled that was a ‘mechanism’, even if three employees failed to follow it.
  • Under the terms of regulation HSS wrote, disclosure of protected health information was defined as ‘release, transfer, provide and divulge’. In other words, an active participant not a passive loss of information.  Also, the HSS could not prove that that someone outside MD Anderson actually received the protected information.
  • The judge did not consider other cases involving similar breaches of HIPAA. For instance, a Cedars-Sinai employee lost an unencrypted laptop containing 33,000 patient records. No penalty was imposed in that case.
  • Congress stated that for ‘reasonable cause’ violations, the maximum fine was $100,000 per year. Fines for ‘willful neglect’ can be $1,500,000 per year. However the judge had determined that the violations in this case were not the result of willful neglect.

5th Circuit – MD Anderson