U.S. Attorney's Office
Northern District of Illinois
(312) 353-5300
February 23, 2015

Psychologist and Psychotherapy Services Owner Sentenced to More Than Seven Years and Employee Sentenced to More Than Five Years in $1.5 Million Medicare Fraud

Bryce Woods, 37, an employee of Take Action, Inc., and Inner Arts, Inc., which claimed to provide psychotherapy services to Medicare beneficiaries residing in skilled nursing homes in the Chicago area, was sentenced today by U.S. District Court Judge Virginia M. Kendall to 70 months in federal prison for submitting false claims totaling more than $1.5 million to Medicare for psychotherapy services. Codefendant Keenan R. Ferrell, 55, who was the owner and operator of Take Action, Inc., and Inner Arts, Inc., as well as a licensed psychologist in Illinois, was sentenced to 88 months in federal prison back in August 2014.

“This is an abuse of a program designed for people who need it,” remarked U.S. District Judge Kendall in imposing the sentence today. “This was an egregious fraud.” Judge Kendall also ordered both Woods and Ferrell to serve two-year terms of supervised release and to pay $1,525,496 in restitution.

Ferrell and Woods, both of Chicago, were each convicted of six counts of health care fraud at a jury trial in June 2013. The defendants were convicted of submitting false claims to Medicare for over five years. In each fraudulent claim, Ferrell and Woods represented that Ferrell had provided 45-50 minutes of one-on-one psychotherapy to patients living in skilled nursing homes, when in fact, the sessions were conducted by Woods, psychology graduate students recruited by Ferrell, or others with limited or no supervision.

Knowing that psychotherapy services were reimbursable by Medicare only when performed by an enrolled provider or when “incident to” the services of an enrolled provider, Ferrell and Woods arranged for Ferrell, who was an enrolled Medicare provider and licensed medical doctor, to authorize Inner Arts and Take Action to accept assignment of his claims to Medicare. Ferrell and Woods arranged with psychology graduate students and others to see patients at various skilled nursing facilities. Ferrell himself did not attend or otherwise participate in or supervise any therapy sessions conducted in the nursing homes. As a result, Ferrell was not physically present and immediately available when Take Action and Inner Arts therapists were in nursing homes to visit with patients. As part of the scheme, Ferrell and Woods billed Medicare for more patient visits than had actually been conducted. The defendants also billed Medicare for psychotherapy sessions that Ferrell purportedly provided to patients who in fact were deceased at the time of the purported sessions. In his sentencing arguemnt, Assistant U.S. Attorney Paul Tzur said, “Defendant Woods filed over 31,000 separate claims to Medicare, which was an out and out lie.”

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge for the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh, Special Agent-in-Charge of the Health and Human Services, Office of Inspector General.

The government is represented by Assistant U.S. Attorney Paul Tzur. The case was investigated by the FBI and the Health and Human Services, Office of Inspector General.

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