After a 24-day trial, a federal jury in the Middle District of Florida found two people guilty of participating in an organization that defrauded rural hospitals out of around $1.4 billion by paying for laboratory testing services in a sophisticated pass-through billing system.
Jorge Perez, 62, and Ricardo Perez, 59, both of Miami, Florida, allegedly conspired with others to illegally bill for roughly $1.4 billion in medically unnecessary laboratory testing services.
They also deceptively used rural hospitals as billing fronts to submit claims for the majority of the services, which were rendered at outside laboratories, according to court documents and evidence presented at trial.
Additionally, Jorge Perez and Ricardo Perez plotted to launder the funds of this fraudulent plan after committing health care fraud on five separate occasions.
Assistant Attorney General Kenneth A. Polite, Jr. of the Criminal Division of the Justice Department said, “These defendants preyed on and exploited the vulnerable – vulnerable hospitals, vulnerable underserved communities, and vulnerable patients seeking treatment for addiction – to line their own pockets.”
“We will keep working tirelessly to hold accountable those who compromise the ethics of the healthcare sector for financial gain.”
According to U.S. Attorney for the Middle District of Florida Roger Handberg, the defendants in this case “engaged in an extensive plan to prey upon troubled medical facilities across many states and defraud private insurance.”
“Today’s verdict amply reflects our vigilance to pursue individuals who break the law for financial gain,” the judge said.
According to Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, “the defendants in today’s case allegedly plotted to conduct an extensive billing scheme that took advantage of weak hospitals and the rural populations who relied on them.”
“The FBI and our law enforcement partners are committed to safeguarding the healthcare system and bringing shell companies that engage in false billing to justice.”
The evidence established that the defendants sought out and bought ownership of rural hospitals that were in financial trouble.
to private insurance contracts that stipulated higher reimbursement rates for laboratory testing—a standard element of rural hospital contracts intended to ensure the hospitals’ ability to survive and deliver critically needed healthcare to rural communities—the defendants sought to seize control of these rural hospitals.
In an elaborate and prolonged “pass-through” billing scheme, the defendants billed for false laboratory tests totaling hundreds of millions of dollars while making promises to prevent the demise of these small-town hospitals by converting them into testing facilities.
In most cases, laboratory testing was performed by testing facilities under the authority of specific defendants, but the plan gave the impression that the rural hospitals themselves performed the laboratory testing.
The evidence also revealed that a large portion of the laboratory testing charged through these small-town hospitals involved urine drug testing for unreliable patients undergoing addiction treatment.
These tests were frequently obtained through kickbacks paid to providers and recruiters, frequently at sober homes or drug rehab centers.
The defendants frequently charged for tests that were not medically required. The defendants would switch to another rural hospital if private insurance companies started to question their billings, leaving the small hospitals they took over in the same or worse financial condition as before.
Shortly after the defendants transferred to another small hospital, three of the four rural hospitals closed. The defendants allegedly planned a series of sizable financial transfers to use as a means of laundering the gains from their scam.
Jorge and Ricardo Perez were found guilty of conspiracy to commit wire fraud and health care fraud, five counts of health care fraud, and conspiracy to launder more than $10,000 in illicit gains.
The maximum sentence for each case of health care fraud, wire fraud conspiracy, and money laundering conspiracy against the defendants is 20 years, and each substantive count of health care fraud has a 10-year sentence maximum.
After taking into account the U.S. Sentencing Guidelines and other legal considerations, a federal district court judge will decide on the penalties.
The rural hospitals involved in this case included the 25-bed Campbellton-Graceville Hospital (CGH) in Graceville, Florida; the 40-bed Regional General Hospital of Williston in Williston, Florida; the 49-bed Chestatee Regional Hospital in Dahlonega, Georgia; and the 25-bed Putnam County Memorial Hospital in Unionville, Missouri.
The investigation was conducted by the FBI’s Jacksonville Field Office, the Department of Labor’s Office of Inspector General (DOL-OIG), the Office of Personnel Management’s Office of Inspector General (OPM-OIG), and the Amtrak Office of Inspector General.
The case is being prosecuted by Senior Litigation Counsel Jim Hayes, Trial Attorney Gary Winters, and Assistant U.S. Attorney Tysen Duva for the Middle District of Florida.