Medicare Fraud Scheme

Detroit-Area Patient Recruiter Sentenced to 27 Months in Prison for Medicare Fraud Scheme


April 17, 2010 - WASHINGTON—A Michigan man was sentenced today in Detroit to 27 months in prison for his role in a wide-ranging conspiracy to defraud the Medicare program, announced the Departments of Justice and Health and Human Services (HHS). U.S. District Court Chief Judge Gerald E. Rosen also ordered Wayne Smith, of Jackson, Mich., to pay $4.9 million in restitution, jointly with co-defendants, and to serve three years of supervised release following his prison term.

Smith, 47, pleaded guilty on Dec. 10, 2009, to one count of conspiracy to commit health care fraud. Between approximately October 2006 and March 2007, Smith and his co-conspirators caused more than $6.5 million in false and fraudulent claims to be submitted to the Medicare program for services supposedly provided by Sacred Hope Center Inc., and Xpress Center Inc., purported infusion clinics. Medicare actually paid more than $4.9 million of those claims.

Evidence presented during the sentencing hearing established that beginning in approximately October 2006 and continuing until March 2007, Smith recruited more than 40 patients to Sacred Hope and Xpress Center. Both clinics existed for the purpose of causing fictitious claims for injection and infusion therapy services to be billed to Medicare. According to court documents, owners of Sacred Hope and Xpress Center, including Miami residents Daisy Martinez and Jose Rosario, came to Detroit to start the clinics because of heavy law enforcement scrutiny in Florida of fraudulent infusion clinics. Smith was hired to recruit and pay kickbacks to Medicare beneficiaries to come to the clinic. Daisy Martinez, Jose Rosario and more than a dozen other defendants have previously pleaded guilty or been convicted at trial for their roles in the two fraudulent clinics. Martinez was recently sentenced to 96 months in prison for her role in the scheme.

According to evidence presented in court, during the time that Sacred Hope and Xpress Center were open, the clinics routinely billed the Medicare program for services allegedly performed, but in reality the services were medically unnecessary and/or never provided. Evidence presented at sentencing and during the trial of Dr. Toe Myint, the doctor at Sacred Hope, showed that the clinics’ owners purchased only a small fraction of the medications for which the clinic billed the Medicare program. According to evidence presented at trial, medications at the clinic were prescribed based not on medical need, but based on what medications were likely to generate Medicare reimbursements.

Evidence presented at sentencing established that Medicare beneficiaries were not referred to Sacred Hope or Xpress Center by their primary care physicians, or for any other legitimate medical purpose, but were recruited by Smith to come to the clinic in exchange for the payment of kickbacks. Smith recruited the beneficiaries in downtown Detroit and drove them to the Detroit suburbs of Southfield and Livonia, Mich., where the clinics were located. Trial evidence showed that in exchange for the kickbacks Smith paid them, the Medicare beneficiaries visited the clinics and signed documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for controlled substances.

Today’s sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

This case was prosecuted by Senior Trial Attorney John Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The FBI and HHS Office of Inspector General (HHS-OIG) conducted the investigation. 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 Michigan.

Since the inception of Strike Force operations in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.