Sticky Situation

43401192 - healthcare - red office folder on background of working table with stationery, laptop and reports. business concept on blurred background. toned image.

Acupuncture, which was developed more than a thousand years ago in China, is an alternative medical practice that uses needles to alleviate pain and nausea or treat chronic health conditions. (For those who do not like needles, physical therapy and chiropractic treatment can also provide relief.) The owner of a physical therapy practice and the owner of an acupuncture company located at the same address in Brooklyn, New York recently found themselves in a very sticky situation when their healthcare fraud scheme, which involved the submission of $1.3 million in false claims to Medicare and Medicaid, was uncovered. (Unfortunately for them, neither a visit to the physical therapist, adjustment by a chiropractor nor acupuncture treatment could alleviate the pain and nausea they felt when they learned they would have to go to prison and pay back all the money they stole.)

The two co-conspirators claimed that the services their companies billed Medicare and Medicaid for were performed by licensed individuals. (Obviously, today’s case would not be a case if it were not for the unlicensed and unsupervised individuals who performed the services.) For nearly four years, the scam operated out of a basement in a Brooklyn, New York building where the physical therapy and acupuncture businesses were co-located. (That’s kind of creepy. Nothing good ever happens in the basement of an old building in Brooklyn.)

The owner of the physical therapy business directed his clinic’s employees to submit claims to Medicare and Medicaid for physical therapy services that weren’t provided. He also pressured them to bill for physical therapy services that were reimbursable when the services provided were actually acupuncture sessions that were not reimbursable. Lastly, he made his employees bill for physical therapy services that were not performed by licensed individuals. (It makes you wonder what else was going on.)

Well, there was something else going on in that basement. When the employees resisted following their employer’s instructions to fraudulently bill the two government healthcare programs, they were reminded that their employment was sponsored. (That means that they were dependent on the fraudster for their job, as well as their legal status in the United States.) In all, $1,297,000 was stolen from the two healthcare benefits programs through this healthcare fraud scheme.

The basement was also the scene of another fraudulent scheme headed up by the owner of the acupuncture company. This co-conspirator illegally collected nearly $300,000 by fraudulently billing no-fault insurance companies (who provide benefits to people injured in motor vehicle accidents) for acupuncture services under two separate acupuncture businesses set up under the name of someone else. Apparently, the acupuncture company owner coached that person on lying under oath about the business arrangement and billings to the no-fault insurers. Here’s another sticky situation – the company owner had previously settled with two no-fault insurance providers to resolve claims against him. As a result, he agreed not to submit any other claims under his name, or any other name associated with his companies without letting the insurer know. (Well, as you know, that agreement didn’t deter this criminal from getting around that requirement.)

The 47-year-old physical therapy practice owner from Brooklyn, New York and the 44-year-old acupuncture company owner from Watchung, New Jersey both pleaded guilty to healthcare fraud. They will serve 45 and 50 months in prison, respectively. Both fraudsters must also forfeit $1,297,000 and pay restitution of the same amount to Medicare and Medicaid for participating in the healthcare fraud scheme. The acupuncture company owner must also forfeit $293,851 and pay $293,851 in restitution for his no-fault insurance fraud scheme. (I guess you could say that justice prevailed because the judge really stuck it to them by co-locating these two criminals behind bars for the next couple of years. At least they’re out of the basement for now.)

Today’s “Fraud of the Day” is based on a Department of Justice press release, Physical Therapist And Acupuncturist Sentenced In Manhattan Federal Court For Their Roles In Million Dollar Scheme To Defraud Medicare And Medicaid,” released on February 13, 2019.  

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced that ASHRAF HASAN-HAFEZ and ILYA KOGAN were sentenced yesterday to 45 and 50 months, respectively, in prison for their participation in a scheme to defraud the Medicare and Medicaid programs.  HASAN-HAFEZ, the owner of a physical therapy practice in Brooklyn, and KOGAN, the owner of an acupuncture company in Brooklyn, received approximately $1.3 million from Medicare and the New York State Medicaid Program after falsely submitting bills for services that were not provided as billed, or which were rendered by unlicensed and unsupervised individuals.  In a separate scheme, KOGAN also obtained nearly $300,000 from no-fault insurance companies based on billing by fraudulently incorporated acupuncture companies.  HASAN-HAFEZ and KOGAN were sentenced yesterday by United States District Judge Robert W. Sweet. 

According to the Indictment filed in Manhattan federal court, as well as previous court filings and statements made in public court proceedings:

Between at least January 2010 and August 2013, HASAN-HAFEZ was the owner of a physical therapy practice which operated out of a basement on East 18th Street in Brooklyn, New York.  HASAN-HAFEZ employed individuals who provided physical therapy services to patients, and was involved in the clinic’s management and billing.  KOGAN was the owner of an acupuncture company which operated its practice out of the same location on East 18th Street.

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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.