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Where there is an abundance of money, greed and corruption are usually nearby. Such is the case with “Operation Spinal Cap,” a massive sting operation run by the Department of Justice (DOJ). A Palm Desert, California man is the latest individual to plead guilty to charges regarding a healthcare fraud scheme involving $660 million in fraudulent billing. Today’s fraudster committed tax fraud when he served as the chief financial officer (CFO) for a Long Beach hospital at the center of the illegal scheme.

The nationwide healthcare fraud investigation involving more than 600 defendants is still unfolding. (That number of co-conspirators is absolutely ridiculous. It shows how big a web of deception can be.) The former CFO pleaded guilty to tax fraud for his part in the scheme that was run by the former owner of Pacific Hospital in Long Beach. (Over 15 years, the former hospital owner made millions from the submissions of fraudulent insurance claims. The CFO was one of his henchmen.)

The hospital owner was put behind bars for 63 months for bribing physicians at the Long Beach hospital to perform surgeries that were not needed. Then he illegally billed workers’ compensation insurers for the unnecessary procedures. (Now the government is going after all the individuals who helped the former hospital owner carry out the scam.)

The CFO’s part in the scam was preparing a bogus tax return in 2012 for the hospital. (It actually goes deeper than that.) The former CFO also owned and operated multiple healthcare administration companies in southern California that were used in the scheme. (The Palm Desert man also provided tax services for the purposes of generating surgery referral kickbacks to five other businesses owned by his co-conspirators.)

The 65-year-old defendant pleaded guilty to tax fraud and agreed to forfeit $500,000 before sentencing. He also agreed to cooperate with the investigation. (That was a really smart move.) The Palm Desert man is facing a maximum sentence of three years in prison, but lucky for him, prosecutors are willing to reduce his sentence because of his guilty plea.

The DOJ refers to “Operation Spinal Cap” as the agency’s largest healthcare fraud enforcement action because it has resulted in cases totaling approximately $2 billion in alleged false billings. The overall sting has not only caught individuals involved in surgery referral kickbacks, but also healthcare insurance fraud for prescription drugs. (A prescription referral company out of Las Vegas was indicted for bribing doctors to write prescriptions designed to maximize reimbursements from insurance companies.)

The message here is pretty clear. Fraud doesn’t pay, and the DOJ is going to track down every person involved in this scheme that went on behind the walls of the California healthcare institution. (This case is a perfect example as to why healthcare costs are so high.) Congratulations to the DOJ for taking this scheme down, one henchman at a time.

Today’s “Fraud of the Day” is based on an article entitled, “Palm Desert man pleads guilty for his part in $660 million national health care fraud scheme,” published by the Desert Sun on July 9, 2018.

A Palm Desert man agreed to plead guilty to tax fraud charges for his part in a massive health care kickback scheme uncovered in late June by the Department of Justice in a sting the agency called Operation Spinal Cap.

The Department of Justice announced in a June 28 press release that federal prosecutors in southern California filed new charges against 33 defendants, alleging $660 million in fraudulent billing, the latest in a still-unfolding nationwide health care fraud investigation.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.