DME Owner Pleads Guilty to Defrauding Medicare of Millions in Wake of Hurricanes Katrina and Rita

HOUSTON—A former owner of a durable medical equipment company (DME) pleaded guilty to engaging in a conspiracy to defraud Medicare of more than $5 million, United States Attorney José Angel Moreno announced today.

Patrick Ita, 55, was the owner of Masspoint Medical Equipment & Supplies, a Houston area DME, and of PUITA Research & Procurement Inc., a medical billing company. At a hearing held today before U.S. District Judge Sim Lake, Ita admitted he participated in a 13-month conspiracy to defraud Medicare by billing Medicare using a specific code created by Medicare to expedite the approval and payment of claims for DME lost or destroyed by Hurricanes Katrina and Rita beginning in October 2005. Ita’s fraudulent claims involved the replacement of power wheelchairs by Masspoint. Ita used the CR modifier for power wheelchair claims: 1) where the beneficiary did not have a power wheelchair before the hurricanes; 2) where the power wheelchair owned by the beneficiary did not sustain any hurricane-related damage; 3) where Ita never delivered a power wheelchair to the beneficiary; and 4) where Ita delivered a scooter instead of a power wheelchair to the beneficiary.

Ita admitted during today’s hearing that he purchased beneficiaries’ Medicare information from the owner of a former DME company. Ita went down the list and billed Medicare for a new power wheelchair for every beneficiary without determining if the beneficiary lost a wheelchair in the hurricane. Ita also paid marketers to solicit additional Medicare beneficiaries for power wheelchairs. Ita billed Medicare using the CR modifier for every power wheelchair sold to a beneficiary by the marketers.

Ita also pleaded guilty to wire fraud admitting he filed his fraudulent Medicare claims with Palmetto GBA, a Medicare contractor located in Columbia, S.C. All Medicare payments made based on the fraudulent claims were sent by electronic funds transfer from Columbia to Ita’s bank account in Houston. Ita billed Medicare in excess of $5.4 million and was paid at least $1.6 million as a result of his fraudulent scheme.

Ita is scheduled to be sentenced on July 8, 2011, and faces a maximum penalty of 10 years imprisonment and a $250,000 fine for the conspiracy conviction and a maximum penalty of 20 years imprisonment and a $250,000 fine for the wire fraud conviction. As part of his plea agreement, Ita also agreed to pay restitution in the amount of $1.6 million to Medicare.

The criminal charges are the result of a joint investigation by agents of the FBI, U.S. Department of Health and Human Services-Office of Inspector General, Railroad Retirement Board - Office of Inspector General and the Medicare Fraud Control Unit of the Texas Attorney General’s Office. This case is being prosecuted by Assistant United States Attorney Al Balboni.