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Medicare Firm pleads guilty in Miami Federal Court to one of the nation’s largest Medicare Frauds

American Therapeutic Corporation pled guilty to operating a chain of clinics in South Florida that submitted seven years of fraudulent Medicare claims amounting to nearly $200 million dollars. The company was shut down at the end of 2010 in the wake of a lengthy federal investigation that revealed the company had operated one of the largest mental health Medicare fraud schemes in the country. The Justice Department had filed a superseding indictment in February, 2011, charging the corporation and its principals Lawrence Duran and Marianella Valera with Medicare fraud. The Justice Department announced that the Medicare program paid American Therapeutic alone approximately $83 million dollars for unnecessary treatment or for treatment that was never received. Fraudulent claims included partial hospitalization programs connected with the treatment of mental illness.

Money was funneled from American Therapeutic to its subsidiary Medilink, to pay off employees and others. The principals started a company known as American Sleep Institute (ASI) that purportedly provided sleep study services which also provided extensive false Medicare claims. Fraudulent claims were also made for the treatment of sleep disorders for patients that were not in need of it.

The companies’ principals Lawrence Durand and Marianella Valera pled guilty last month to extensive fraud charges that included conspiracy to submit false claims to Medicare by falsifying medical records and paying kickbacks to assisted living facilities for patients. Over 20 individuals were charged in this conspiracy with the couple including doctors, patient recruiters and employees. The charges outlined in the indictment describe submitting false claims to Medicare through American Therapeutic for services that were not medically necessary. Other charges included the following:
• paying bribes to patient brokers, Assisted Living Facility owners and Halfway house owners who provided Medicare beneficiaries to attend ASI sleep studies though these services were not medically necessary for these conditions;
• paying bribes to beneficiaries to receive the services though they were not medically necessary for these beneficiaries;
• paying bribes to ensure attendance in programs;
• diverting the funds for personal use.
• paying kickbacks to operators of Assisted Living Facilities and Half-way houses to deliver ineligible patients to the American Therapeutic facilities; often the patients would receive part of the kickback payments.

This plea in federal court was originally reported by Jay Weaver of the Miami Herald on May 3, 2011. Extensive details about the fraud empire at American Therapeutic had been the subject of prior reports in the Miami Herald by Mr. Weaver.

In recent years the Justice Department has waged a war against Health care fraud and Medicare fraud because of the extensive loss of taxpayer’s money to this crime. This case is an example of that campaign. This kind of white collar crime has increasingly grown as health care costs rise and the baby boomer population ages.