Self-directed Fraud

Physical therapist placing kinesio tape on patient's foot

When an on-the-job injury occurs that warrants workers’ compensation benefits, the injured worker is required to visit a licensed physical therapist or chiropractor, who is under the direction of a medical doctor, to participate in a rehabilitation plan that will get them back to work as soon as possible. The founders of a Texas physical therapy clinic, with locations in five states, neglected to follow the rules established by the Department of Labor – Office of Worker’s Compensation (DOL-OWCP) and submitted $9.6 million in bogus workers’ compensation claims for physical therapy services that were not provided as stated.

Four of the clinics submitted the false claims under the Federal Employees Compensation Act (FECA) healthcare benefit program, which is administered by the DOL-OWCP. The program paid the company millions of dollars for services that were provided by unlicensed aides. (That’s a huge no-no seeing that payment is not rendered for any professional services that are provided to federal employees by unlicensed healthcare aides.)

During a 16-day trial, the jury heard testimonies from 38 witnesses – 11 were employees of the deceptive clinic. Some of those on the witness stand were unlicensed therapy technicians from Houston, who explained that 30 to 60 patients came into the clinic each day. Claims were submitted showing that one-on-one physical therapy services had been provided to injured patients by licensed health professionals when they had not.

There were many patients who took the witness stand to set the record straight. Some stated that they had participated in self-directed therapy at the clinic, exercising on treadmills, bicycles, elliptical machines and playing Nintendo Wii games without any help. One witness stated that she had a carpal tunnel wrist injury, but was directed to exercise on the treadmill. (Not so helpful for wrist injuries.) Another patient testified that an unlicensed clinic employee directed him to exercise both arms although he only injured his left elbow. He was also told to obtain a massage from an electric massage chair. (I’m not thinking an elbow massage would be very pleasant, and how could a chair possibly be effective for that body part?)

Eleven employees admitted that they did not always know what their patients were doing in the main treatment area while they were performing massages, electronic stimulation treatments and ultrasound treatments in the back of the clinic. (What if one of the patients had hurt themselves while exercising?) The employees also revealed that they did not perform the one-on-one services as claimed and frequently completed patient treatment notes at the end of the day by using a “cheat sheet” and asking patients what they had done. (There’s a lot of leeway for falsification with that approach.)

The evidence that blew the roof off this workers’ compensation fraud scam involved video from two undercover agents who visited the Houston and New Orleans clinics as injured federal employees. Also, a licensed chiropractor who worked for the company provided covertly recorded meetings with the defendants that offered proof they tried to coerce him to order medically unnecessary treatments. Another key witness in the case included the former Chief Operations Officer (COO), who testified that the Chief Financial Officer (CFO) instructed him to meet her and the Chief Executive Officer (CEO) at the bank to move $700,000 out of the company bank accounts into a transportation company account, which was owned by the CFO and her husband. (Good try. It’s hard to hide from the government for long.)

The 55-year-old Vice President was sentenced to 300 months in prison and ordered to pay $13.4 million in restitution. The 54-year-old female CFO was sentenced to 120 months in prison and ordered to pay $14.5 million in restitution. The Chiropractor was acquitted. Also, a special verdict was returned requiring forfeiture of $220,807, an annuity contract and real property. (Let’s hope these sentences do the trick when it comes to deterring other healthcare providers from engaging in illegal activity to increase their profit margins.)

Source: Today’s “Fraud of the Day” is based on an article entitled, Leaders of Houston clinic indicted on massive worker’s comp schemeposted on on July 14, 2017.

The founders of a clinic with locations in Texas were sentenced to prison Friday for submitting $9.6 million in false worker’s comp claims, according to the U.S. Department of Justice.

Team Work Ready vice president Frankie Lee Sanders, 55, was sentenced to 300 months in prison for conspiracy, health care fraud, wire fraud and money laundering. He was also ordered to pay $13.4 million in restitution. Pamela Rose, a TWR founder and chief financial officer, was sentenced to 120 months and ordered to pay $14.5 million in restitution.


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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.