Health Care Fraud – Houston Physician Charles Frank Skripka Sentenced to Prison – Comments by White Collar Crime Speaker Chuck Gallagher

Sometimes you question a persons motivation to commit a fraud. Most people would assume that physicians are reasonably well compensated – maybe not rich – but generally paid well. Apparently that is not the case for Charles Frank Skripka, Jr., age 66, who today (April 14, 2008) was sentenced to 78 months in federal prison for his role in a massive health care fraud.

While the wheels of justice most slowly at times, today Dr. Skripka gained closure as he found out that many of his later year – those years that should be spent enjoying retirement – will, instead, be spent in the confines of federal prison earning 12 cents or so an hour. Sad!

According to the US Attorney’s news release: A federal jury in Houston returned the guilty verdict in October 2006, convicting Skripka; Jayshree Patel, M.D., 63; Pius James Ekiko, 44; and David Dennis Brown, 48, of health care fraud for their roles in the fraudulent scheme, which involved several tiers of illegal conduct. Skripka was the last of the five convicted defendants to be sentenced. Patel was sentenced in October 2007 to 78 months imprisonment and ordered to pay more than $9 million in restitution, while Ekiko and Brown were each sentenced to 87 and 80 months imprisonment, respectively. Harold Horatio Iyalla aka “Prince Yellowe,” who cooperated with the United States and testified against the remaining co-defendants, received a sentence of 50 months imprisonment.

The scheme involved the payment of kickbacks by Durable Medical Equipment (DME) companies to recruiters, who solicited Medicare beneficiaries to acquire motorized wheelchairs. Recruiters referred and transported beneficiaries to physicians to secure a false or fraudulent Certificate of Medical Necessity (CMN) that DME companies would use to bill Medicare for a motorized wheelchair.

Skripka and Patel had been hired solely to authorize motorized wheelchairs for Medicare beneficiaries who clearly did not meet the Medicare guidelines to receive such a device. Skripka and Patel routinely approved wheelchairs for as many as 30 to 80 patients a day without performing a physical examination or ordering any medical tests. Recruiters such as Brown solicited Medicare beneficiaries with the promise of free scooters and the payment of $50 to see Doctors Skripka and Patel. Brown recruited patients from Louisiana and transported them 350 miles to Houston to see the physicians.

DME companies, such as Ekiko’s Horizon Medical Supply and Yellowe’s First Choice Medical, then paid the doctor’s office $200 per fraudulent prescription and CMN, while paying Brown and other recruiters as much as $1,000 per patient in order to be able to supply the equipment to the beneficiary and thus be able to bill Medicare for that particular beneficiary. Suppliers such as Ekiko would then use the fraudulent prescription and CMN to bill Medicare for a motorized wheelchair, but would instead deliver the significantly less expensive scooter to the beneficiary. Medicare paid suppliers approximately $4,200 per wheelchair, while the scooters that were actually provided were only paid at a rate of $1,600 per scooter.

Health care fraud is rampant in many areas and investigations regarding over billing just like the one above have become widespread with many convictions following. According to reports from the FBI, “health care fraud is an area of white-collar crime that has become a problem of epidemic proportion. Losses attributable to fraud and abuse have been estimated, by some, to be as much as ten percent of the nation’s total annual health care expenditure. These losses, particularly for Medicaid and Medicare, place a tremendous financial burden on health care programs, affecting the lives of millions of Americans who depend on these programs to pay for or supplement their health care costs.”

Examples of Health Care Fraud:

The FBI initiated a case against a company which defrauded Medicaid out of more than $15 million dollars. The company was billing Medicaid for services involving the use of portable oxygen, when, in fact, limited services if any were actually being provided to patients. The owners of the company were reaping the benefits of this fraud by purchasing luxury automobiles, home furnishings, and real property. Much of the remaining proceeds were laundered through bank accounts. Investigation and financial analysis identified the proceeds of the fraud.

A health care company that participated in the Texas Medicare and Medicaid programs, and was reimbursed for patient visits on a per-visit basis, was investigated for fraudulent billing. The investigation by law enforcement, including the FBI, revealed that the company fraudulently billed Medicaid and Medicare of more than $5,000,000 for purported in-patient hospital visits. The doctors listed on the billing documents did not work for, or provide medical services for, the company and none of the patients purported to have been treated was hospitalized during the time period for which Medicare and Medicaid were billed.

An owner of a clinic, and his office staff, were treating patients from a large warehouse office. He and his office staff were billing Medicare, Medicaid and private insurance companies for services that were most often not provided to the patients. For example, a lawyer involved in the scheme was filing for workman’s compensation insurance on behalf of some of the clinic’s patients for services that were not performed. Also, the owner’s accountant was in charge of laundering the profits of these fraudulent schemes. They are believed to have made a profit of over $11 million dollars from the fraudulent billing schemes.

Health Care Fraud is a burgeoning crime plague that’s adding up in a big way, big-ticket scheme after big-ticket scheme, essentially costing you money every time you walk into a hospital or doctor’s office or fill a prescription, whether you know it or not. The National Health Care Anti-Fraud Association estimates that this fraud collectively costs Americans between $60 billion and $100 billion a year. Ouch!

Every choice has a consequence. Skripka’s choices has lead to a substantial prison sentence, and call for massive restitution. So far I can’t see that the IRS has a claim for tax fraud but I wouldn’t doubt it as tax is due on fraudulently obtained funds. Yes! Tax is due on money from all sources except those that are exempt and stolen money is taxable. I should know – I spent time in federal prison for not paying tax on stolen money. By the way, I am not proud of that fact, but today, I speak nationwide on (1) fraud in business, (2) how to avoid fraud in your company and (3) how business ethics can improve your financial performance.

One thing is for sure – You do reap what you sow! Skripka will come to learn that no amount of money iss worth the price paid for giving up freedom in prison.

If you know Skripka and have any comments on the crime committed here – feel free to comment!