Florida Resident to Pay $128M in Health Care Fraud and Money Laundering Guilty Plea

According to the Pennsylvania Department of Justice, a Florida resident has pleaded guilty to three counts of conspiracy related to submitting fraudulent health care claims. The defendant faced prosecution in New Jersey, Pennsylvania, and Florida for charges related to Medicare fraud, receiving illegal kickbacks, and money laundering connected to a conspiracy involving cancer genomic (CGx) testing. 

The defendant, Daniel Hurt, 58, has agreed to pay $31 million in criminal forfeiture and $97 million in restitution. Sentencing is scheduled for January 23, 2023. 

Fraudulent health care claims

According to information filed in Pittsburg federal court, the CGx testing conspiracy began in late 2018. Within less than a year, Hurt and his co-conspirators obtained thousands of CGx testing samples from Medicare beneficiaries and shipped them to Ellwood City Medical Center in Pennsylvania. Even though the hospital did not have the correct equipment to undertake CGx testing, Hurt used the hospital as the billing entity for Medicare purposes. Under Hurt’s direction, hospital staff repackaged the samples and sent them to third-party reference laboratories for testing. 

Between January and October 2019, Medicare reimbursed Ellwood City Medical Center more than $25 million for CGx testing. In court, Hurt admitted using funds from the hospital to pay millions of dollars in kickbacks to the marketers that helped him obtain the CGx samples. To disguise the unlawful payments, Hurt entered into fake contracts with the marketers to make it look like they were engaged in legitimate referral and marketing services.

In a similar scam organized in New Jersey between 2019 and 2021, Hurt received at least $26.9 million from Medicare reimbursements. 

In Florida, Hurt and his co-conspirators also took part in a scheme to defraud two government-funded health insurance plans, TRICARE and CHAMPVA. In this scheme, patients were recruited to obtain expensive prescriptions that would trigger the maximum possible reimbursement from the insurance companies. The patients were then referred to a telemedicine facility in Utah, which sent the medications to a pharmacy co-owned by Hurt. In both this case and the scam in New Jersey, kickbacks were paid to recruited doctors and patients. 

Health care fraud in North America

The 2018 National Money Laundering Risk Assessment (NMLRA) lists health care fraud as a top priority. While the US Sentencing Commission reported a 20.9% decrease in health care fraud from 2018 to 2021, alleged annual losses remain around $1.4 billion.  

According to an FBI factsheet, common types of health care fraud include:

• Phantom billing: Billing for supplies or a service visit the patient never received
• Unbundling: Submitting multiple bills for the one service
• Upcoding: Billing for a more expensive treatment than the patient received, as seen in this recent case of Medicaid fraud
• Forgery: Using or creating forged prescriptions
• Diversion: Diverting legal prescriptions for illicit uses, such as selling prescription medication

Key takeaways

To learn more about the realities of health care fraud and the importance of implementing an effective compliance program, the US Department of Health and Human Services provides health care fraud prevention and enforcement action compliance training.  

Additionally, compliance teams should be aware of the following health care fraud red flags when monitoring transactions and completing know your customer (KYC) checks:

• New customers without the necessary credentials to support their occupation
• Differences between the customer’s ownership information self-reported to the government insurer and the financial institution at account opening
• Insurance payments being used for personal purposes rather than professional
• The customer receiving payments from un-related medical providers