Investigators Dismantle $60 Million Home Health, Pharmacy Fraud Ring

Federal investigators announced Friday the take down of a massive health care fraud scheme that involved more than $60 million of improper billing to Medicare and Medicaid and the convictions of 39 defendants in Michigan.

Propagated by ringleader Babubhai Patel, 51, of Canton, Mich., the scheme involved 26 pharmacies, nine doctors and several home health agencies within the state, with charges ranging from bribes and kickbacks, to thousands of illegal doses for narcotic medications prescribed and millions of dollars billed to the Centers for Medicare & Medicaid Services (CMS) between 2006 and 2011.

The case began in 2008, when the Federal Bureau of Investigation (FBI) learned that a single Mich.-based pharmacy was allegedly sending phony bills to Medicare and private insurance companies for prescription drugs.

An ensuing joint investigation led by the Drug Enforcement Administration and the Department of Health and Human Services’ Office of the Inspector General uncovered a wide array of other pharmacies—among other subjects—linked to the illegal activity.

During this investigation, federal authorities also uncovered the illegal diversion of controlled substances to people who did not medically need them, as well as billings to the government and private insurers for millions of dollars worth of non-controlled medications that were never dispensed to patients.

At the core of the scheme was Patel, a pharmacist who owned and/or controlled 26 pharmacies and various home health agencies in Michigan, and his associates recruited a number of pharmacists—mostly from overseas—to staff his pharmacies and help facilitate the fraud scheme.

Patel and his associates offered kickbacks and bribes to doctors willing to write medically unnecessary prescriptions, home health care referrals ad bills for other services to Medicare, Medicaid and private insurers.

Additionally, the investigation noted Patel also provided kickbacks and bribes to patient recruiters, as well as other incentives, such as doses of the drugs from the illegally-written prescriptions. In turn, recruiters would then offer some of the same inducements to government and private insurance patients to get the patients to fill their prescriptions at Patel-owned pharmacies.

Between August 2011 and March 2013, the investigation netted a total of 39 individuals, including Patel, who were indicted on various federal charges related to health care fraud.

In February 2013, Patel was sentenced to serve 17 years imprisonment on 26 convictions for health care conspiracy, drug conspiracy and related fraud and drug violations.

“When all was said and done, a prolific criminal enterprise was completely dismantled,” FBI writes. “And its ringleader discovered that crime really doesn’t pay.”

In addition to his 17-year prison sentence, Babubhai Patel was ordered to pay nearly $19 million in restitution to the insurance programs he had bilked.

Written by Jason Oliva