Houston-Area Durable Medical Equipment Company Owner Pleads Guilty to Fraud Scheme Involving Nutrition Supplies

WASHINGTON—The owner and operator of a Houston-area durable medical equipment (DME) company today pleaded guilty to defrauding the Medicare program, announced the Departments of Justice and Health and Human Services (HHS).

William M. Reece Jr., 54, pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge David Hittner in U.S. District Court in Houston. In his plea, Reece admitted that he owned and operated a DME company called Bright Star Medical Equipment Health Services, and that he billed Medicare for equipment and supplies that were medically unnecessary and were never actually provided to Medicare beneficiaries. Sentencing has been scheduled for Aug. 17, 2010.

Reece admitted that beginning in 2005 and continuing through 2009, he conspired with others to submit approximately $600,000 in fraudulent claims to Medicare. Specifically, Reece admitted that he billed Medicare for enteral nutrition products, a type of DME that, according to Medicare regulations, was to be used only for patients who had feeding tubes inserted or surgically implanted in their noses, mouths or stomachs. According to court documents, the beneficiaries for whom Reece submitted the claims did not, in fact, receive enteral nutrition through a feeding tube. Reece also admitted that he delivered only a fraction of these products for which he billed Medicare.

In his plea, Reece admitted that in 2005, he agreed to pay kickbacks to a patient recruiter in exchange for the referral of Medicare beneficiaries for whom he supplied DME. Reece admitted that he then billed Medicare for the DME. He also admitted that the Medicare beneficiaries were recruited for the purpose of filing claims with Medicare for DME that was medically unnecessary and was not provided.

Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the HHS Office of Inspector General (HHS-OIG), Office of Investigations.

The case is being prosecuted by Trial Attorney Katherine Houston of the Criminal Division’s Fraud Section, and was investigated by the FBI and HHS-OIG.

This case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.