Detroit Clinic Owner and Patient Recruiter Plead Guilty in $15 Million Fraud Scheme
Miami Residents Import South Florida Infusion Scheme to Detroit Area

WASHINGTON—Miami residents Jose and Arnaldo Rosario pleaded guilty today to participating in a conspiracy to defraud the Medicare program of approximately $15.3 million, Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Terrence Berg of the Eastern District of Michigan and Daniel R. Levinson, Inspector General of the Department of Health & Human Services (HHS) announced.  Both defendants pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen.

According to information contained in plea documents, Jose Rosario acknowledged that in approximately September 2006, he and a co-defendant incorporated Sacred Hope Medical Center Inc. (Sacred Hope) in the state of Michigan. Sacred Hope purported to specialize in providing injection and infusion therapy services to Medicare patients. Jose Rosario admitted that he and the co-defendant were the owners of the clinic, and agreed to split the profits generated there evenly between them. During the time that Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary and/or never provided. Jose Rosario admitted to being aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. According to information contained in plea documents, patients were prescribed medications at the clinic based not on medical need, but based on what medications were likely to generate Medicare reimbursements. Jose Rosario admitted he participated in hiring co-conspirators to falsify the medical files to make the treatments purportedly being provided at Sacred Hope appear legitimate, when in fact he knew they were not.

In his plea, Jose Rosario also admitted that Medicare beneficiaries were neither referred to Sacred Hope by their primary care physicians, nor for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In exchange for their kickbacks, the Medicare beneficiaries would visit the clinic and sign documents falsely indicating that they had received the services billed to Medicare. According to information contained in the plea documents, kickbacks came in the form of cash and prescriptions for narcotic drugs. Jose Rosario admitted he directed his nephew, co-defendant Arnaldo Rosario, to oversee and facilitate the payment of cash kickbacks to the Medicare beneficiaries. Jose Rosario admitted that he would routinely obtain cash that he would provide to Arnaldo Rosario for the purpose of paying the beneficiaries cash kickbacks. 

Arnaldo Rosario admitted that he was responsible for overseeing and facilitating the payment of cash kickbacks to the Medicare beneficiaries at Sacred Hope. According to information contained in his plea documents, Arnaldo Rosario admitted to obtaining cash on a daily basis from his uncle or other co-conspirators to pay the beneficiaries cash kickbacks. After obtaining the cash, Arnaldo Rosario admitted that he would then distribute the money to two co-defendants who were responsible for recruiting and paying the beneficiaries the kickbacks. Arnaldo Rosario admitted to being directed to pay bonuses to the co-defendants if they were able to recruit additional Medicare beneficiaries to come to Sacred Hope.

In addition to the conduct at Sacred Hope, Jose Rosario admitted to being a part owner of Dearborn Medical Rehab Center (DMRC), a Dearborn, Mich., infusion clinic. Arnaldo Rosario admitted to being a patient recruiter at DMRC. In addition, both defendants admitted to playing similar roles at a third Detroit-area infusion clinic, Xpress Center. As at Sacred Hope, both defendants admitted they were fully aware that the DMRC and Xpress Center routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided. As at Sacred Hope, both defendants admitted that the purpose of the DMRC and Xpress Center was not to provide legitimate health care to patients, but rather to defraud the Medicare program.

Between approximately March 2006 and March 2007, the two defendants admitted to causing the submission of approximately $15,311,605 in false and fraudulent claims to Medicare for services supposedly provided at Sacred Hope, DMRC and Xpress Center. Based on the fraudulent claims, approximately $10,765,325 was paid.

The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The FBI and the HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case 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 Eastern District of Michigan.

Since the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three) and Houston (Phase Four) –  the Strike Force has obtained indictments of more than 293 individuals and organizations that collectively have billed the Medicare program for more than $680 million. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Each of the Strike Force teams across the separate phases are led by a federal prosecutor from the Criminal Division’s Fraud Section or the U.S. Attorney’s Office. Each team has an agent from the FBI and HHS-OIG.

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