U.S. Files Civil Suit to Forfeit Over $1.8 Million Obtained from Medicare Fraud

United States Attorney Michael Shelby announced that the United States has filed a civil suit seeking to forfeit over $1.8 million allegedly obtained by Rhonda Fleming and others in connection with a scheme to defraud the Medicare Program.

On Jan. 5 and 7, 2005, the United States executed seizure warrants and seized the $1.8 million from numerous bank accounts and other sources. The warrants were obtained in the course of an investigation into alleged health care fraud, wire fraud and money laundering by Rhonda Fleming.

The civil forfeiture complaint filed on Friday, March 4, 2005, alleges that agents with the U.S. Department of Health and Human Services, Office of Inspector General; Internal Revenue Servicel; and the Federal Bureau of Investigation, obtained evidence that in 2004 Medicare paid Fleming, through her businesses, Hi-Tech Medical Supply and Delivery and Advanced Medical Billing Specialists Inc. located in Houston, about $3.7 million based on fraudulent claims.

At the time, Fleming was serving a term of supervised release following her conviction for access device fraud out of the United States District Court for the Eastern District of Arkansas for which she received 21 months imprisonment to be followed by a three-year term of supervised release.

One of the conditions of supervised release prohibited Fleming from violating the laws of any state or of the United States. On Feb. 10, 2005, the United States Probation Department, responsible for supervising defendants, filed a petition to revoke Fleming”s supervised release alleging Fleming had defrauded Medicare of more than $3.7 million between January 2004 and December 2004 by submitting false and back-dated claims for services that were not provided in violation of the conditions of her release.

During a three day revocation hearing held last week before United States District Judge Melinda Harmon, Assistant United States Attorney Al Balboni presented evidence establishing Fleming had defrauded Medicare.

Harmon concluded from the evidence presented that Fleming violated the terms of her supervised release as alleged in the Probation Department’s petition. The Court revoked her supervised release and sentenced her to additional two years imprisonment.

The United States brought a civil complaint for forfeiture on March 4, 2005, asserting that $1,846,668.98 seized in January 2005 should be forfeited because the money was derived from proceeds traceable to health care fraud, wire fraud and money laundering. Assistant United States Attorney Katherine Haden will litigate civil forfeiture case.

The money seizure and the revocation of Fleming’s supervised release were premised upon evidence that showed that Medicare issued Hi-Tech a supplier number in January 2003 enabling Hi-Tech to submit claims to Medicare for durable medical equipment. Documentation was later submitted to enable Medicare to electronically deposit claim payments into Hi-Tech’s bank account.

On Dec. 29, 2003, Medicare revoked Hi-Tech from the Medicare Program for failing to meet numerous Medicare supplier standards. Hi-Tech was prohibited from billing Medicare for any services or equipment provided after the revocation date. Shortly before the revocation date, an assumed name certificate for Hi-Tech was filed in Harris County listing Fleming and “King Arthur” as the co-owners of Hi-Tech. The preceding assumed name certificate filed for Hi-Tech in August 2002 only listed Arthur as the owner.

The complaint for forfeiture alleges that Advanced Medical Billing, a business operated by Fleming to perform the billing services for Hi-Tech, continued billing Medicare under Hi-Tech’s supplier number throughout 2004 claiming purported services and/or equipment were provided before the revocation date.

Medicare paid more than $3.7 million on claims filed under Hi-Tech’s supplier number for services or equipment allegedly delivered in 2003. Medicare received, in 2004, at least 69 complaints from beneficiaries disputing claims by Hi-Tech for services or equipment in 2003 that were not delivered. Medicare frequently requested documentation from Hi-Tech to support the disputed claims and never received any response.

Agents determined many 2004 claims were filed for individuals who had already filed claims in 2003. Also, many of the referring physicians listed on the claims were under indictment in the Southern District of Texas.

Agents also determined that Hi-Tech’s bank account received a high volume of money from Medicare and lacked corresponding business expenses. Fleming transferred over $3.2 million from Hi-Tech’s account into her own personal account in 2004. This amount came from the $3.7 million that Medicare electronically deposited into Hi-Tech’s account that same year.

Additionally, Fleming is alleged to have violated the money laundering statutes by engaging in a number of financial transactions in November and December 2004 to launder the above money that was fraudulently obtained from Medicare.

A criminal investigation into the alleged fraud is continuing.