U.S. Attorney's Office
Southern District of Texas
(713) 567-9000
June 18, 2015

Sixteen Charged in South Texas as Part of Largest National Medicare Fraud Takedown in History

MCALLEN, TX—A total of 16 people have been charged with varying offenses related to their alleged fraudulent schemes in an effort to defraud the Medicare and Medicaid programs, announced U.S. Attorney Kenneth Magidson, Special Agent in Charge Mike Fields of the Department of Health and Human Services—Office of Inspector General, Special Agent in Charge Christopher Combs of the FBI and Director Stormy Kelly of the Texas Attorney General’s Office—Medicaid Fraud Control Unit.

The announcement is being made in conjunction with the national takdown announced today by Attorney General Loretta E. Lynch and DHHS Secretary Sylvia Mathews Burwell. The nationwide event encompassed Medicare Fraud Strike Force operations in 17 cities, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings. In addition, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers using its suspension authority as provided in the Affordable Care Act. This coordinated takedown is the largest in Strike Force history, both in terms of the number of defendants charged and loss amount.

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 their inception in March 2007, Strike Force operations in nine locations have charged over 2,300 defendants who collectively have falsely billed the Medicare program for over $7 billion.

Including today’s enforcement actions, nearly 900 individuals have been charged in national takedown operations, which have involved more than $2.5 billion in fraudulent billings. Today’s announcement marks the first time that districts outside of Strike Force locations have participated in a national takedown and accounted for 82 defendants charged in the takedown.

In the Southern District of Texas, a total of 11 indictments were returned in relation to this action. Six of those indictments were returned in McAllen, Brownsville and Laredo charging 16 defendants. All have made their initial appearance in their respective federal courts.

The cases

Brownsville:

Brandon Phillips, 35, of Weatherford, Okla. Cody Phillips, 33, of Harlingen, along with Georgia Phillips, 64, and James Phillips, 67, both of Olmito, allegedly engaged in a scheme to submit false and fraudulent claims to Texas Medicaid on behalf of Children First Pediatric Rehabilitation and Georgia M. Phillips LLC for children’s therapy services that were not provided. The indictment also alleges that the defendants overbilled Texas Medicaid for more units of therapy services than that which were provided to Texas Medicaid recipients. The defendants illegally used the identities of Texas Medicaid beneficiaries in submitting unlawful billings and additionally used the identifying information and forged the signature of a former employee in submitting documents to Texas Medicaid, according to allegations. The defendants allegedly sent false and fraudulent claims totaling $773,345.00 to Texas Medicaid for children’s therapy services allegedly provided to Texas Medicaid recipients. Texas Medicaid paid out $421,747.07 on the false and fraudulent claims, according to the indictment.

Laredo:

Linda Alaniz, 54, of Laredo, and Alma Garza, 58, of Hebbronville, are charged in a 14-count indictment along with Evelio Peralta, 59, and Cynthia Garcia, 44, both of Laredo. According to the indictment, the fraudulent Medicaid billing was for personal assistance services out of Saint Benedicts Home Health Agency Inc. The services include cleaning, bathing, meal preparation, grocery shopping and other tasks that aid a beneficiary in living independently. According to the allegations in the indictment, Alaniz was a patient and provider recruiter for Saint Benedicts. Alaniz allegedly submitted timesheets for work that was not provided. Garza was the office manager for Saint Benedicts and allegedly used the false timesheets to bill Medicaid for services that were never performed. Peralta and Garcia voluntarily gave their identities to Alaniz for use in the scheme, according to the allegations. Garcia allegedly signed false timesheets as well. Garza and Alaniz allegedly had an agreement to pay Alaniz for the referral of beneficiaries. Alaniz received cash payments twice a month for illegal patient referrals to Saint Benedicts between 2010 and 2015, according to the indictment. As a result of the scheme, Medicaid paid Saint Benedicts approximately $3 million in claims that were allegedly the result of kickbacks.

McAllen:

Dr. Eduardo Carrillo, 42, and his assistant Martha Medrano, 47, both of Edinburg, allegedly solicited and received cash in exchange for referrals of Medicare beneficiaries to prospective home health agencies. The indictment alleges Carrillo illegally solicited and was paid $3,000 cash in exchange for the referral of 13-15 Medicare beneficiaries. Carrillo allegedly wrote down the agreement on his own prescription pad and signed the prescription pad. The indictment further alleges Carrillo and Medrano were paid an additional $3,000 cash in exchange for the referrals of Medicare beneficiaries. Medrano supplied the prospective home health agency employees with patient referral forms, containing Carrillo’s signature and the patient’s name, Social Security number and Medicare number. The defendants illegally used the beneficiaries identifying information to perpetrate the fraud, according to the allegations.

In a separate case, Veronica Vela, 41, of Mission, was the owner of the durable medical equipment company ABC DME, while Cynthia Zapata, 49, also of Mission, served as the biller. They allegedly engaged in a scheme to defraud Texas Medicaid through fraudulent billings for durable medical equipment that was either not provided or not authorized by a physician. According to the indictment, the defendants illegally used the identities of Texas Medicaid recipients in submitting the unlawful billings to Texas Medicaid. Based on the allegations, the defendants sent false and fraudulent claims totaling approximately $4,861,588.53 to Texas Medicaid for durable medical equipment allegedly provided to Texas Medicaid recipients. The indictment alleges that Texas Medicaid paid out $3,505,886.25 on the false and fraudulent claims.

Martha Flores, 51, of Pharr, and Argentina Cavazos, 57, of Hidalgo, allegedly engaged in a scheme of exchanging referrals of Medicare beneficiaries for money. The indictment alleges Flores issued illegal kickback checks to Cavazos in exchange for referrals of Medicare beneficiaries, whose information was used by home health care companies to bill Medicare. According to the indictment, Cavazos was employed as a medical assistant for a McAllen area physician and used her position to gain access to patient information. The indictment further alleges Flores forged and/or caused others to forge the signatures of physicians on the required home health referral forms for patients who were not authorized by their physicians to receive home health services. The indictment alleges the defendants illegally used the identifying information of physicians and Medicare beneficiaries to perpetrate the fraud.

In another case, Ermit De La Torre, 29, of Edinburg, was not licensed as a medical professional in the state of Texas or any other state. He allegedly examined, assessed and treated patients at Palm Village Family Clinic, located in Penitas. Palm Village Family Clinic owner Ricardo Mendez, 56, of Penitas, allegedly submitted claims to Medicare and Texas Medicaid for services provided by De La Torre as if the services had been performed by a qualified, licensed medical professional. The indictment alleges De La Torre performed medical procedures, including pelvic examinations, pap smear, and male genitalia examinations and additionally conducted checkups on infants and minor children without any assistance or supervision from a physician, nurse or other licensed medical professional. The indictment further alleges De La Torre prescribed medication to patients from a pre-signed prescription pad that Mendez, a licensed advanced nurse practitioner, illegally supplied to De La Torre.

The investigations leading to the charges were conducted by DHHS, FBI, Texas Attorney General’s Medicaid Fraud Control Unit, Texas Health and Human Services Commission, Social Security Administration – Office of Inspector General and the Department of Public Safety. Assistant U.S. Attorney (AUSA) Michael Day is prosecuting the cases in McAllen and Brownsville, while AUSAs Adrienne Frazior and Chris dos Santos are prosecuting the Laredo matter.

To learn more about HEAT, go to: www.stopmedicarefraud.gov.

An indictment is a formal accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless convicted though due process of law.

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