U.S. Attorney's Office
Northern District of Illinois
(312) 353-5300
August 6, 2015

CEO of Chicago-Based Health Care Company Charged with Billing Medicare for Phony and Non-Existent Treatment of the Elderly in $1.2 Million Scheme

CHICAGO—The chief executive officer of Chicago-based Home Physician Services LLC was arrested Thursday on charges that he billed Medicare for up to $1.2 million in fraudulent or non-existent services purportedly provided to the elderly and homebound.

HENRY SMILIE, 54, of Lake Zurich, was taken into custody Thursday morning. At the same time, federal agents executed search warrants at the Chicago and Schaumburg offices of Home Physician Services, where Smilie serves as chief executive officer. He was charged with Medicare fraud in a federal criminal complaint that was unsealed after his arrest.

The charges against Smilie are part of an ongoing investigation into a scheme to fraudulently increase Medicare bills for doctors of home health patients for care that did not qualify for reimbursement or simply wasn’t performed at all. According to a federal affidavit filed with the complaint, doctors employed by Smilie billed Medicare for treatment provided to elderly patients who were supposedly confined to their homes, enabling his company to claim physician fees for in-home treatment. In reality, the patients were not confined to their homes and thus were not qualified to receive the in-home services, according to the affidavit. From February 2012 to July 2014, Medicare paid Home Physician Services $1.2 million for Care Plan Oversight, the billing code for doctor supervision of treatment of a home-health patient, the affidavit states.

Smilie is scheduled to make an initial appearance at 2:00 p.m. this afternoon before U.S. Magistrate Judge Daniel G. Martin. The Medicare fraud count carries a maximum penalty of 10 years in prison, a $250,000 fine and mandatory restitution. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General.

“Home health care fraud carries a very high price tag in our communities,” Mr. Fardon said. “Our partners at the federal, state and local level are committed to rooting out and combatting fraud, waste and abuse in the home health care system.”

According to the affidavit, Home Physician Services, whose principal office is located at 6002 N. Keating Ave. in Chicago, arranges in-home visits for elderly and homebound patients, and contracts with doctors who perform house calls and oversee the patients’ treatment plans. The physicians assign their bill-collecting rights to Home Physician Services, in return for being paid directly by the company. As part of the scheme, Smilie reported to Medicare that his physicians had performed services for the patients, when, in fact, little or no such treatment was rendered, the affidavit states.

According to the affidavit, federal agents have interviewed several current and former employees of Home Physician Services, including some who claimed to have reported fraudulent billing practices to Smilie before they were contacted by federal agents. One former employee, identified in the affidavit as “Individual F,” reported to agents that Smilie instructed him on how to complete the Care Plan Oversight paperwork so that the company could bill the maximum amount to Medicare—even if the treatment was not fully performed, the affidavit states. Another former employee of Home Physician Services—identified in the affidavit as “Individual H”—said the company performed a routine swab of each patient and then billed $1,000 to Medicare for each swab, according to the affidavit.

Individual F told agents Smilie stressed to employees that the minimum duration of the purported treatment needed to add up to 30 minutes, which is the barometer for triggering maximum payment by Medicare for certain Care Plan Oversight service, according to the affidavit. “Individual F told agents that Smilie instructed him to find whatever he could in the patient file to use to document the CPO, and if he did not find enough events to total 30 minutes, to just ‘make it up,’” the affidavit states.

The affidavit goes on to state that Individual F told agents that home-health agency workers from outside entities, such as nurses and therapists, called Smilie to get signed physician orders for treatment. Individuals F and H said they saw Smilie using rubber stamps of physicians’ signatures to create those orders, according to the affidavit. Individual F said that when he notified Smilie that the rubber stamping of physicians’ signatures may be illegal, Smilie “laughed and said that Home Physician Services’ CPO activities were also illegal,” the affidavit states.

As part of the investigation, a confidential source posed undercover as a 71-year-old Medicare recipient, according to the affidavit. Although able-bodied and not confined to his home, the confidential source was certified as homebound by Home Physician Services, the affidavit states. During secretly recorded visits by physicians from Home Physician Services, the confidential source is seen walking outside of his home to tend to his dogs, and explaining to the doctors that he enjoys gardening and visiting friends outside the home, the affidavit states. The confidential source received several house calls from doctors at Home Physician Services, who continued to certify him as homebound in bills submitted to Medicare.

The Medicare Fraud Strike Force began operating in Chicago in February 2011, and consists of agents from the FBI and HHS-OIG, working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is 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. Defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.

The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is being represented by Assistant U.S. Attorney Renato Mariotti.

To report health care fraud or to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), logon to: StopMedicareFraud.gov.

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