Doctor Convicted in New York Medicare Fraud Scheme

BROOKLYN—After an eight-week trial, a jury in Brooklyn, New York today convicted Gustave Drivas, M.D., for his role at a clinic that engaged in a $77 million Medicare fraud scheme, announced the Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta Lynch, Assistant Director in Charge George Venizelo of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).

Dr. Gustave Drivas, 50, of Staten Island, New York, was convicted today of health care fraud conspiracy and health care fraud. He was acquitted of kickback conspiracy.

The trial evidence showed that Drivas, a medical doctor licensed in the state of New York, worked for a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC, and SZS Medical Care PLLC (the Bay Medical clinic). Owners, operators, and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary and never provided. The clinic billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy, and diagnostic tests. The evidence at trial demonstrated that Drivas was a “no show” doctor, yet his Medicare billing number was used to bill more than $20 million to the Medicare program, of which more than $12 million was paid. Drivas signed numerous clinic applications to Medicare, was a signatory on two clinic bank accounts that received the ill-gotten Medicare money, and was listed on bank paperwork as the president of Bay Medical.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, identified in the complaint as the “Kickback Room,” in which the conspirators paid cash kickbacks to corrupt Medicare beneficiaries. The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010. The Kickback Room was marked “Private” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, the conspirators used a network of external money launderers. The owners/operators of the clinic wrote clinic checks to numerous shell companies that were controlled by money launderers. These checks did not represent payment for any legitimate service at or for the Bay Medical clinics but rather were written to launder the Bay Medical clinics’ fraudulently obtained Medicare proceeds. Two of the external money launderers, Anatoly Kraiter and Larisa Shelabadova, pleaded guilty prior to trial. Irina Shelikhova and her son Maksim Shelikhov, who directed the money laundering operation from inside the clinic, also pleaded guilty prior to trial to conspiracy to commit money laundering.

At sentencing before U.S. District Judge Nina Gershon of the Eastern District of New York, scheduled for July 9, 2013, Drivas faces a maximum penalty of 20 years in prison. Drivas faces mandatory restitution to be paid jointly and severally with his co-defendants of up to $50 million and a fine of up to $100 million.

The case is being prosecuted by Assistant U.S. Attorneys William C. Campos, Shannon C. Jones, and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS.

In total, 16 individuals were charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees, and five external money launderers. Prior to trial, 12 defendants pleaded guilty. At trial, Alexander Zaretser, 32, of Brooklyn, New York, was acquitted of money laundering conspiracy and two substantive counts of money laundering; and Vladimir Kornev, 53, and Yelena Galper, 40, both of Brooklyn, New York were acquitted of money laundering conspiracy.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.