Former Houston Doctor Sentenced to Federal Prison

HOUSTON—A former Houston physician has been sentenced to 70 months in prison following his convictions for conspiracy to commit mail fraud and mail fraud, United States Attorney Kenneth Magidson announced today.

Armando Chavez, 42, a former physician and owner of the Chavez Medical Group in East Houston, was sentenced this morning by U.S. District Judge David Hittner to 60 months for the conspiracy charge and to 70 months for each of the three mail fraud charges, all to run concurrently. Chavez was also ordered to pay $3,821,082 in restitution.

Chavez was charged by criminal information in April 2011 and later waived indictment and entered a plea of guilty to one count of conspiracy and three counts of mail fraud.

The charges stem from improper billing at the Chavez Medical Group between 2005 and 2007. Chavez billed for services he did not perform through a process of “unbundling” medical codes used on claims he filed to increase the amount he was paid by insurance companies. Following the initiation of the investigation, Chavez voluntarily surrendered his medical license to the Texas Board of Medicine.

According to the documents filed of record in the case, Chavez was board certified in internal medicine, licensed by the Texas Board of Medicine in 1997. He started his medical practice in family medicine and in 2005, began to perform endovenous laser ablation, a procedure used to repair varicose veins in the legs.

For purposes of billing, the medical insurance industry provides certain billing codes for the laser ablation procedure, which include a group of procedures billed under one code for the entire procedure. Chavez instructed his staff to “unbundle” or separate the codes for this procedure and to bill for individual steps in the procedure, resulting in greater reimbursement and payment for each patient. Additionally, Chavez submitted claims alleging he repaired all six veins for each patient, when in fact—in most cases—he repaired fewer than six veins. By alleging he repaired all six veins, Chavez alleged he performed six procedures over a period of six days, another aspect of the fraudulent billing which he used to justify the unbundling of codes and allowed him to be reimbursed at the highest possible rate.

The typical patient whose billing was submitted as “bundled” into one code resulted in payment of approximately $6000, while the patient whose billing codes were “unbundled” typically resulted in payment of approximately $14,000. From 2005 through 2007, Chavez billed insurance companies and programs, including Medicare and Medicaid, a total of $14.1 million from which he was paid $3.8 million.

Chavez was previously released on bond, where he was allowed to remain pending an order to voluntarily surrender to a Bureau of Prisons facility to be determined in the near future.

The investigation of this case was conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit. Assistant United States Attorney Cedric L. Joubert prosecuted the case.