Nine Health Care Professionals, Including Five Doctors, Charged in Kickback Scheme

GRAND RAPIDS, MI—U.S. Attorney Donald A. Davis and Michigan Attorney General Bill Schuette announced today the federal indictment of eight individuals, including four licensed physicians and one licensed physician’s assistant, for conspiracy to violate the federal Anti-Kickback Statute. Additionally, a state charge was filed against a Jackson, Michigan physician for allegedly accepting kickbacks to refer his patients to certain rehabilitation facilities. All eight federally charged defendants appeared today before U.S. Magistrate Judge Hugh W. Brenneman for an initial appearance on the charge, which carries a penalty of up to five years’ imprisonment, a $250,000 fine, three years of supervised release, and restitution.

The federal indictment alleges that Babubhai Rathod owned and operated medical clinics, outpatient rehabilitation facilities, and home health care companies that paid employees and outside health care providers for the referral of patients. The Indictment identifies many of Rathod’s companies, which include Lakeshore Spine & Pain, P.C., with clinics in cities including Ludington and Edmore, Michigan, and U.S. Rehab Services, P.C., with facilities around the state, including in Mt. Pleasant, Michigan. The indictment identifies Rajesh Makwana as an administrator of Lakeshore Spine & Pain and Raju Nakum as a manager of U.S. Rehab Services.

The indictment alleges that Rathod, Makwana, and Nakum paid health care providers agreed rates for the referral of patients for electrodiagnostic testing, physical therapy, and home health care services. The indictment identifies Lino S. Dial, Jr., D.O., Natalie Schutte, P.A., Niti Thakur, M.D., Andre Blair Smith, M.D., and Muhammad Salman Rais, M.D. as health care providers who referred Medicare and Medicaid patients to companies operated by Rathod in return for illegal kickback payments. The indictment further alleges that the kickback payments were falsely disguised as reimbursement for other purported expenses, including mileage, medical director fees, continuing medical education, and contractual labor.

Kevin S. Witt, D.O., 51, is charged in 54B District Court in East Lansing, Michigan with two felony violations of MCL 400.604, which makes it a crime to receive kickbacks in exchange for referring patients for treatment elsewhere. The charge is a four-year felony. Witt was arrested this morning by Attorney General investigators and was arraigned this afternoon.

U.S. Attorney Davis stated that the state and federal charges result from a joint investigation with the Health Care Fraud Division of Michigan Attorney General Bill Schuette’s office. Special agents from the Bay City, Michigan Office of the Federal Bureau of Investigation and the Grand Rapids, Michigan Office of the U.S. Department of Health and Human Services, Office of Inspector General are coordinating the federal investigation.

U.S. Attorney Davis noted, “The federal Anti-Kickback Statute prohibits the payment of any remuneration that is designed to induce or reward medical referral decisions involving Medicare, Medicaid, and other federally-funded health care programs. In passing the anti-kickback legislation, Congress intended that medical decisions be made with the patient’s best interest in mind and not because the referral of a patient will result in a financial benefit to the referring physician. Because our health care system relies heavily on the trust and integrity of medical professionals to provide services under the appropriate conditions and in the interests of patients, we will continue to aggressively investigate allegations of fraud and kickbacks and prosecute cases where professionals have abused this trust.”

“Patients deserve to know that when a doctor refers them for additional treatment, the decision to do so is based upon quality health advice—not what is best for the doctor’s bank account,” said Attorney General Schuette. “Kickbacks with the Medicaid program don’t just hurt patients, they affect the taxpayers who support the bottom line. Medically unnecessary treatments drive up the costs of Medicaid, and taxpayers ultimately pay the price.”

Lamont Pugh III, Special Agent in Charge of the Chicago Region of the U.S. Department of Health & Human Services, Office of Inspector General echoed U.S. Attorney Davis and Attorney General Schuette’s comments. “Patients trust that their physicians are making referrals to other health care providers so they can obtain the highest quality of care, not because they financially benefit from it,” said Pugh. “Paying kickbacks and bribes in exchange for such referrals is illegal, and the OIG will aggressively investigate allegations of this nature in order to protect Medicare and Medicaid beneficiaries and taxpayer dollars.”

Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation, Detroit Field Division emphasized that, “The FBI will remain vigilant in stopping health care fraud in the State of Michigan. This type of crime affects all of our health care premiums and serves as a drain on society. The indictments of these physicians and others send a strong message that abuse of the health care system will not be tolerated.”

The charges in an indictment, as well as state charges, are merely accusations, and the defendants are presumed innocent until and unless proven guilty in a court of law.