Wednesday, November 2, 2011

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Six Houston Residents Sentenced to Prison in State and Federal Health Care Fraud Investigation

The U.S. Attorney for the Southern District of Texas issued the following news release on Nov. 1, 2011:

DME Company Owner and Marketers Land in Federal Prison for Massive $17.6 Million Medicare Fraud Scheme

HOUSTON – Six Houston residents involved in a long-term scheme to defraud the Medicare and Medicaid health care benefit programs have been sentenced to federal prison, United States Attorney Kenneth Magidson announced today.

James Reese, 56, and Lia St. Junius, 26, were sentenced to 180 and 135 months in prison, respectively, and both ordered to pay $8.6 million in restitution. Reese was also ordered to pay $477,000 in tax restitution. Brenda Lopez, 35, was also order to pay $8.6 million in restitution and will serve 43 months in prison. In the country illegally, Lopez was ordered to be deported upon completion of her sentence. Both Devon Michel Spicer, 49, and Martha B. Ramos, 58, will serve 60 months in prison. Spicer was ordered to pay approximately $750,000 in restitution as well as a fine of approximately $71,000, while Ramos must pay approximately $53,000 in restitution and a fine of $4,100. The court also ordered that the United States move to rescind Ramos’ status as a legal resident and have her deported upon completion of her sentence. Lily Zathel Johnson, 38, will serve 33 months and was ordered to pay approximately $4 million in restitution to Medicare and Medicaid.

Upon completion of their sentences, all defendants were ordered not to seek employment in any field that billed Medicare or Medicaid.

In October 2010, the defendants were charged in a 47-count indictment with conspiracy to commit health care fraud, paying or receiving kickbacks, money laundering and tax evasion. The sentences handed down today by United States District Judge David Hittner was the result of a long term investigation that revealed that Reese was the owner of the durable medical equipment (DME) company named The Mobility Store. Reese, along with his daughter St. Junius, falsely represented to Medicare and Medicaid that St. Junius was the sole owner of the business because Reese was a convicted felon and could not participate as a provider in the Medicare and Medicaid programs. Reese, Lopez and Johnson pleaded guilty, while St. Junius, Spicer and Ramos proceeded to trial in April 2011.

The indictment alleged that the defendants conspired to defraud Medicare and Medicaid by billing Medicare and Medicaid for orthotic braces and devices, referred to as “The Artho Kit” that were different than equipment that was provided to Medicare beneficiaries. During the two-week trial against St. Junius, Spicer and Ramos, the government called several witnesses who testified that in May 2004, St. Junius had submitted an application with Medicare to become enrolled as a DME company called “The Mobility Store.” Although the application requested the name of all persons who had an ownership interest in the company, St. Junius failed to reveal that Reese was involved in the company. Reese, who pleaded guilty to health care fraud and tax evasion before trial, had previously operated a DME that had been suspended for submitting fraudulent claims. Between 2005 and 2008, St. Junius submitted fraudulent documents to Medicare indicating that Reese was not involved in the operation of The Mobility Store and that marketers were not soliciting Medicare beneficiaries.

The Mobility Store was in fact paying marketers to solicit Medicare beneficiaries. St. Junius paid marketers 10% of the amount received from Medicare for each orthotic brace or device billed. St. Junius was convicted of conspiracy to commit health care fraud, seven counts of substantive health care fraud and conspiracy to commit money laundering. Spicer was convicted on all substantive counts of receiving kickbacks based upon evidence presented that showed her referral of Medicare beneficiaries in 2005 to The Mobility Store resulted in $750,000 being paid by Medicare. Spicer received approximately $71,000 during 2005. Ramos was found guilty on all substantive counts of receiving kickbacks based upon evidence that as a result of referrals by her, The Mobility Store was paid $53,000 and Ramos received approximately $4,000.

Lopez and Johnson worked in the office and were responsible for billing and management of the marketers and pleaded guilty to conspiring to commit health care fraud and testified against the other defendants at trial.

In 2008, Medicare revoked The Mobility Store’s provider number because of its failure to provide accurate information about its operation procedures. As a result of the fraudulent scheme, The Mobility Store billed Medicare and Medicaid more than $17.6 million and was paid more than $8.6 million. Through testimony at trial, the jury heard that St. Junius purchased several expensive cars and a home valued at more than $650,000 with proceeds from the fraudulent scheme.

St. Junius, Spicer, Ramos, Reese and Lopez have been in custody where they will remain pending transfer to a Bureau of Prisons facility in the near future, while Johnson was allowed to voluntarily surrender at a date to be determined later.

Both programs pay for health care services provided to the elderly, the blind and disabled. Medicare is funded by the federal government, while Medicaid is funded by the federal government and the State of Texas. This case was investigated by the FBI, the Department of Health and Human Services - Office of Inspector General, the Medicaid Fraud Control Unit of the Office of the Texas Attorney General and Internal Revenue Service - Criminal Investigations. The case is being prosecuted by Assistant United States Attorney Samuel Louis and Special Assistant United States Attorney Suzanne Bradley.