DME Owner Indicted in Alleged Scheme to Defraud Medicare of Millions

In Custody Since News Year’s Day, Court Orders Ita Detained Without Bond Pending Trial

HOUSTON—A 31-count sealed indictment charging a durable medical equipment company (DME) owner with conspiracy, health care fraud, wire fraud, and money laundering in a scheme to defraud Medicare of nearly $5 million has been unsealed, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced today.

Patrick Ita, 55, the owner of Masspoint Medical Equipment & Supplies, a DME located in southwest Houston, was arrested by FBI agents at Bush Intercontinental Airport on New Year’s Day after arriving on a flight from Amsterdam. Today, Ita was ordered detained without bond pending trial on the charges before United States District Judge Sim Lake. Trial is scheduled for Feb. 22, 2011. The indictment has been unsealed.

The scheme alleged in the 31-count indictment involved the filing of millions of dollars in claims with Medicare/Medicaid by Ita’s DME company for power wheelchairs allegedly supplied to victims of Hurricanes Katrina and Rita.

According to allegations in the indictment, between October 2005 and November 2006, Ita purchased Medicare beneficiary information from a defunct DME company in order to solicit those beneficiaries for power wheelchairs. Ita used marketers to recruit unwitting Medicare beneficiaries in Texas and Louisiana by promising them a free motorized wheelchair after Hurricanes Katrina and Rita. Ita allegedly fraudulently billed Medicare using a special modifier code issued by Medicare for claims resulting from a catastrophe or disaster like Hurricanes Katrina and Rita. The CR Modifier was supposed to be used by a DME supplier when that supplier had provided a replacement piece of equipment, like a power wheelchair, that had been severely damaged or destroyed by either Hurricane Katrina or Rita. Instead, the indictment alleges, Ita used the CR Modifier for hundreds of fraudulent power wheelchair claims where the CR Modifier did not apply because the beneficiary either: a) did not possess a power wheelchair prior to either Hurricane Katrina or Rita; or b) did not suffer significant damage to, or destruction of, his/her power wheelchair from either Hurricane Katrina or Rita; or c) never received a power wheelchair from the defendant after either Hurricane Katrina or Rita.

Upon conviction, the conspiracy count carries a maximum penalty of 20 years imprisonment and a $250,000 fine. Each of the 21 health care fraud counts carries a maximum penalty of 10 years in a federal prison and a $250,000 fine, while each of the six wire fraud counts carries a maximum penalty of 20 years’ imprisonment and a $250,000 fine. The money laundering counts carry a 20-year maximum penalty and a $500,000 fine. Parole has been abolished in the federal prison system.

The criminal charges are the result of a joint investigation by agents of the FBI, the U.S. Department of Health and Human Services-Office of Inspector General, and the Medicare Fraud Control Unit of the Texas Attorney General’s Office. This case will be prosecuted by Assistant United States Attorneys Al Balboni and Julie Redlinger.