Excluded Felon Sentenced To Twelve Years For Health Care Fraud And Aggravated Identity Theft

Babubhai Rathod Ran Multiple Health Care Providers After Being Convicted And Excluded From Medicare And Medicaid For Paying Illegal Kickbacks

          GRAND RAPIDS, MICHIGAN — U.S. Attorney Andrew Birge announced today that Babubhai Bhurabhai Rathod, of Okemos, Michigan, was sentenced to 10 years in prison for health care fraud and an additional 2 years in prison for aggravated identity theft. Rathod pleaded guilty to both charges in August 2018. U.S. District Judge Janet T. Neff also ordered Rathod to pay $939,795.89 in restitution to Medicare and Medicaid.

          In 2013, Rathod was sentenced to four years in prison—and was further excluded from participating in Medicare and Medicaid—after being convicted of paying practitioners illegal kickbacks in exchange for patient referrals to his health care companies. While in prison, Rathod faked a drug and alcohol use disorder in order to qualify for admission into the Residential Drug Abuse Program ("RDAP"). Rathod completed RDAP and was released early from custody. Within days of his release in 2016, Rathod began violating his exclusion and supervised release conditions by operating four health care providers across the State of Michigan: Advanced Medical Services (d/b/a Advanced Sleep Diagnostics of Michigan); Sleep Diagnostics of Michigan; EZ Sleep Supplies; and Paramount Home Care. To conceal his ownership of these providers from Medicare and Medicaid, Rathod used a variety of aliases, straw owners, and shell holding companies that were registered to other people. Rathod’s scheme netted nearly a million dollars in Medicare and Medicaid reimbursements to which his providers were not entitled.

          As part of his scheme, Rathod used the name, address, date of birth, Social Security Number, and driver’s license of a physician colleague to obtain working capital loans for Advanced Medical Services. Rathod also used the physician’s identity, without the physician’s knowledge, to personally guarantee those loans. When Advanced Medical Services defaulted on one of these loans, a state-court judgment was entered against the physician—without the physician’s knowledge—and the physician’s bank account was frozen.

          At sentencing, Judge Neff noted the "breadth, scope, and depth" of Rathod’s fraud and remarked that he was "stealing from the government. That is what this is." Judge Neff described Rathod as both "a man for whom the truth is a stranger" and a naturalized citizen who has "taken advantage of opportunities available in this country to steal from it."

           "The resources it took to unravel Mr. Rathod’s elaborate scheme reflects our commitment to holding accountable those who would violate their federal program restrictions," U.S. Attorney Birge said.

          "Exclusion is one of the most important tools that HHS-OIG has to protect beneficiaries and counter fraud and abuse in federal health care programs", said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. "Mr. Rathod intentionally and recklessly tried to circumvent his 20 year exclusion in an attempt to line his pockets with vital taxpayer dollars. Excluded providers need to know that HHS-OIG takes its exclusions authority seriously and will ensure that it is strictly enforced."

          This case was the result of a coordinated investigation by the U.S. Attorney’s Office for the Western District of Michigan, the U.S. Department of Health and Human Services, Office of Inspector General, the Federal Bureau of Investigation, and Blue Cross Blue Shield of Michigan. Assistant U.S. Attorneys Adam B. Townshend and Raymond E. Beckering III represented the United States.