Owner of Orange County Rehabilitation Facility Arraigned on Federal Mail Fraud Charges Alleging Medicare Scam

SANTA ANA, CA—The owner and chief executive officer of an Orange County rehabilitation facility has been arraigned in federal court on charges related to a scheme in which he allegedly submitted nearly $1 million in fraudulent claims to Medicare for services that were not prescribed by treating doctors and were not medically necessary.

Tuan Duc Tran, 50, of Westminster, appeared yesterday in United States District Court and pleaded not guilty to charges contained in a nine-count indictment. Tran was arraigned after surrendering to federal authorities.

Tran operated the Fountain Valley Healthcare Center (FVHC). From May 2003 through January 2008, Tran allegedly sought payments from Medicare based on false claims that Medicare beneficiaries had been referred to FVHC for physical and respiratory therapy by their treating doctors. The indictment also alleges that many of the beneficiaries did not have a medical need for therapy and that Tran employed unlicensed personnel at FVHC.

Tran is charged with nine counts of mail fraud based on a total of $910,588 in checks that were sent to FVHC between March 2006 and January 2008. A federal grand jury returned the indictment in late March.

At yesterday’s arraignment, Tran’s case was assigned to United States District Judge Josephine Staton Tucker, who scheduled a trial for July 5. During yesterday’s hearing, Tran was freed on a $10,000 bond.

An indictment contains allegations that a defendant has committed a crime.

Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Each of the nine mail fraud charges in the indictment carries a maximum statutory sentence of 20 years in federal prison.

The case against Tran was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services - Office of Inspector General, and IRS - Criminal Investigation.