Two indicted for exploiting adult day care patients in Medicare fraud scheme

McALLEN, Texas ‐ A physician and employee have been charged for their roles in a health care fraud scheme involving the submission of more than $3.5 million in claims to Medicare, announced U.S. Attorney Jennifer B. Lowery.

Authorities took Dr. Osama Balhir Nahas, 67, McAllen, and Isabel Moreno Pruneda, 50, Edinburg, into custody today. They are expected to make their initial appearance before U.S. Magistrate Judge Juan F. Alanis Aug. 22 at 9 a.m.

A federal grand jury returned the 15-count indictment Aug. 16. It alleges Nahas is a physician and owner, while Pruneda was an employee at Crosspoint Medical Clinic located in Edinburg. Nahas allegedly paid kickbacks to various adult day care companies to gain Medicare beneficiary information under the guise of providing medical services.

Nahas, Pruneda and other co-conspirators used their access to adult day care facilities to perform a variety of unnecessary medical tests and procedures and order prescriptions for expensive medications that were not needed, according to the charges.

The indictment further alleges many of the patients had their own primary care physicians who were not consulted prior to or after the examinations. Most of the patients were allegedly elderly or disabled and lacked the capacity to consent to the examinations, tests and other procedures that Nahas and Pruneda performed.

In addition, marketers paid Nahas and Pruneda illegal kickbacks in exchange for ordering laboratory tests and prescriptions that were unnecessary and that patients often did not want, according to the charges. In many instances, patients allegedly did not receive their test results or the prescribed medication.

Pruneda also forged patient signatures on consent forms connected to the fraudulent laboratory testing services and prescriptions, according to the charges.

The indictment further alleges more than $3.5 million was billed to Medicare in connection to the fraud scheme. 

Nahas and Pruneda are charged with seven counts of health care fraud and conspiracy to do so, all of which carry a possible 10-year-term of imprisonment, as well as one count of conspiracy to receive illegal remunerations which could result in another five years in prison. Both are also charged with aggravated identity theft which carries a mandatory two years in federal prison which must be served consecutively to any other prison term imposed. All convictions could also result in maximum possible fines of $250,000.

The FBI, Department of Health and Human Services-Office of Inspector General (OIG), Texas Health & Human Services Commission-OIG, Texas Attorney General’s Medicaid Fraud Control Unit and Texas Department of Insurance - Fraud conducted the investigation. Assistant U.S. Attorney Andrew Swartz is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.

Updated August 19, 2022

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Two indicted for exploiting adult day care patients in Medicare fraud scheme

Arlington Heights firm used DNA from elderly fearing cancer in Medicare fraud, feds say

Kyle McLean, 36, who pleaded guilty to fraud, was part of a nationwide ring that used DNA swabs from old people who thought it was a cancer-detection test, prosecutors say.

By Frank Main

Kyle McLean.

Cook County sheriff’s office

An Arlington Heights company tricked hundreds of people into giving DNA samples that were used without their knowledge in a multimillion-dollar Medicare fraud scheme, federal authorities say.

Privy Health employees visited senior centers, churches and synagogues to convince people to provide DNA swabs taken from their mouths, according to prosecutors.

The donors were told the swabs would be tested for genetic markers to help determine their chances of getting cancer. Some were offered $75 gift cards for the swabs.

Prosecutors say the tests were part of a scam targeting Medicare, the federal health insurance program for seniors and the disabled. They say the DNA scam exploited elderly people’s curiosity about genetic science and their fears of cancer. 

Kyle McLean, who ran Privy Health, is awaiting sentencing for his role in the scheme after pleading guilty earlier this year to conspiracy to commit healthcare fraud.

According to court records, McLean previously had been sentenced, in 2014, to three years in the Illinois state prisons for forging the names of other real estate appraisers on documents used in mortgage transactions. His appraiser’s license also was revoked.

In the Medicare case, McLean, 36, of Arlington Heights, and four out-of-state men are charged with defrauding Medicare out of more than $4.6 million. 

Efforts to reach McLean’s attorney for comment were unsuccessful.

The investigation resulted in the arrests last year of 35 people nationwide, and more than $2.1 billion in Medicare fraud was identified, according to the Justice Department.

In one of the biggest cases resulting from the investigation, a man in Georgia has been charged with defrauding Medicare of $154 million through testing labs he owned. Federal prosecutors in Florida, where he’s charged, have said they’ll try to recover that money — along with the man’s red Ferrari 388 Spider.

In the case involving McLean, prosecutors say a Florida physician whose title was medical director of Privy Health submitted fake information so Medicare would pay for the DNA tests. They say Dr. Matthew Ellis told Medicare he was ordering the tests for his “patients.” But he never met the people who provided the samples and signed paperwork falsely indicating they had personal or family histories of cancer, authorities say.

Medicare paid the labs for the tests, which cost more than $6,000 apiece. The testing labs shared some of the money they received from Medicare with McLean, Ellis and the other defendants, according to federal authorities.

Since mid-2018, Privy Health received $789,000 in kickbacks, McLean got $87,000 directly, and another company tied to McLean got $32,000, prosecutors say.

Privy Health promoted its DNA
 testing program on social media.
 Here is a testing kit shown on the
company’s Twitter account.

Twitter

According to prosecutors, the people who agreed to give DNA samples frequently weren’t even given the results of their tests.

“Several months I went in and did the testing and I was promised a $75 Visa gift card, which I still have not received,” wrote one woman who reviewed Privy Health on a social-media site in 2018. “Nothing but lies!”

In February, the Better Business Bureau revoked the company’s accreditation.

The federal charges against McLean and the other defendants were filed in New Jersey. One of Ellis’ supposed patients was living in New Jersey, and Ellis wasn’t licensed to practice medicine there, prosecutors said.

One other man charged in the case has pleaded guilty. Charges are pending against Ellis and two other men. 

According to Florida health licensing authorities, Ellis has an active medical license with no disciplinary action or public complaints on his record. 

He couldn’t be reached for comment.

Federal officials say they targeted the Medicare fraud operation in a nationwide investigation called Operation Double Helix — referring to the structure of DNA molecules.

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Arlington Heights firm used DNA from elderly fearing cancer in Medicare fraud, feds say

Texas doctor 'horrified' patient deaths linked to his role in $60M Medicare fraud scheme

An Arlington doctor pleaded guilty Tuesday in federal court to a conspiracy charge in what government officials say was a $60 million scheme to defraud Medicare.

Dr. Charles R. Leach, 66, is one of 16 defendants in the criminal case involving Novus Health Services and Optim Health Services, collectively known as Novus. The Frisco-based company was one of the largest hospice providers in North Texas before it shut down in late 2015.

A federal indictment alleges they defrauded the government by billing for hospice care that wasn't always delivered or warranted. In some cases, patients died after receiving high doses of medication to justify the higher billings, authorities said.

Leach's attorney said the doctor knew nothing about hospice patients being overmedicated to hasten their deaths.

"Dr. Leach is very remorseful for his role," his attorney, Mick Mickelsen, said after the hearing. "He has taken responsibility and [is] fully cooperating with the government."

Sentencing is scheduled for Dec. 14.

Leach worked as a medical director for Novus from April 2014 to October 2015. He also briefly worked for Novus Home Health.

As part of his plea deal, Leach said he falsified claims to Medicare and Medicaid by claiming to have provided medical care that he had not.

He also signed blank prescription forms in bulk for controlled substances such as hydromorphone or morphine. Those drugs were then used to overmedicate patients, according to prosecutors.

The plea documents state that Leach knew Novus CEO Bradley Harris often directed medical services. But Harris, a certified public accountant, had no medical license.

Mickelsen said Leach signed the blank prescriptions "out of convenience" but had no knowledge that drugs were being used to hasten patients' deaths.

"He was horrified to find out," Mickelsen said. "He's responsible, though, for making that possible by breaking the rules when it comes to how those scripts were issued."

Leach is the fourth Novus defendant to plead guilty to conspiracy. The three others were Jessica Love, a registered nurse case manager and regional director for Novus; Melanie Murphey, who worked as Novus' director of operations; and Taryn Stuart, a Novus hospice nurse.

As part of their plea agreements, the defendants face up to 10 years in federal prison and a fine of up to $250,000 or twice any financial gain they received.

Twelve others, including Harris, are scheduled to go to trial in January.

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Texas doctor 'horrified' patient deaths linked to his role in $60M Medicare fraud scheme

Hospice Overdosed Patients To ‘Hasten Their Deaths,’ Former Health Care Executive Admits

Novus Health Services in Frisco, Texas

A former health care executive in Texas has admitted to playing a role in an alleged $60 million Medicare fraud scheme that included disturbing practices such as overdosing hospice patients to “hasten their deaths” and maximize company profits.

Melanie Murphey, a 36-year-old former executive for Novus Health Services in Frisco, pleaded guilty Thursday to conspiracy to commit health care fraud. She could face up to 10 years in prison for the crime.

Federal prosecutors allege that Murphey was one of 16 individuals involved in a hospice care conspiracy that took advantage of vulnerable people.

Murphey worked as director of operations for Novus in north Texas between 2012 and 2015. She reported directly to Bradley Harris, the company’s owner and a co-defendant in the case. Neither Murphey nor Harris was licensed medical professionals, but prosecutors say Harris made decisions about patients’ health care so he could bill Medicare and Medicaid for the cost of the procedures.

In court records obtained by HuffPost, Murphey admitted she knew Harris instructed nurses to intentionally overmedicate patients with medications such as morphine “with the intent to hasten their deaths.” She also acknowledged that she filled out false doctor’s orders for medical services and falsified Do Not Resuscitate orders so that the company didn’t have to pay for ambulance trips to the hospital.

Murphey said she admitted patients to hospice who were not eligible for hospice service, but billed Medicare and Medicaid for those stays and services. She also billed Medicare and Medicaid for hospice service that wasn’t provided to patients.

Murphey said she and Harris were also involved in fraudulent practices around continuous care, or CC, a service typically initiated by doctors so that patients can receive around-the-clock care from a licensed medical professional. Medicare pays a higher rate for continuous care than for routine hospice care.

“Bradley Harris wanted to place Novus hospice beneficiaries on CC as early as possible because Harris wanted to benefit from the higher billing rates,” alleges a legal brief signed by Murphey and a U.S. attorney. “If a beneficiary was on CC for three or four days without change, Bradley Harris instructed the CC nurses to give more medication to the beneficiary ... Harris ordered these increases in medication because he wanted the beneficiaries to die.”

Christopher Knox, an attorney for Harris, denied the allegations.

“We are aware of the allegations lodged by Mrs. Murphy in her factual resume and we wholeheartedly disagree with her opinions,” he said in an email to HuffPost. “Further, we are not aware of any evidence that shows that Mr. Harris caused, hastened or otherwise contributed to the death of the hospice patients being treated by Novus.”

Now that Murphey has entered a plea agreement with the government, she is expected to testify against the 15 others involved in the case, including Harris, his wife, five nurses and five doctors, according to NBC Dallas-Forth Worth.

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Hospice Overdosed Patients To ‘Hasten Their Deaths,’ Former Health Care Executive Admits