Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud Scheme

WASHINGTON—A Miami-area resident pleaded guilty yesterday for his role in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI, and the Department of Health and Human Services (HHS).

Frank Criado, 33, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Criado was charged in an indictment unsealed on February 15, 2011 in the Southern District of Florida.

Criado admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink, and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.

According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services to attend treatment programs that were not legitimate PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.

Criado admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.

According to his plea agreement, Criado’s participation in the ATC fraud resulted in $7.3 million in fraudulent billings to the Medicare program.

Sentencing for Criado is scheduled for May 31, 2012 at 8:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.

ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers, and marketers of ATC, Medlink, and ASI were charged with various health care fraud, kickback, money laundering, and other offenses in two indictments unsealed on February 15, 2011. ATC, Medlink, and 11 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012 before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations, Miami Office.

The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Steven Kim, and Robert Zink of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG and 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 Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is 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.