Rehabilitation Agency Owner in Detroit Found Guilty for Role in $2 Million Therapy Fraud Scheme

WASHINGTON—The owner of a rehabilitation agency in Dearborn, Mich., was convicted today by a federal jury in Detroit for his leading role in a fraudulent Medicare therapy scheme, announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).

Detroit-area resident Tariq Mahmud, 55, was convicted of one count of conspiracy to commit health care fraud and six counts of health care fraud. At sentencing, Mahmud faces a maximum penalty of 10 years in prison on the conspiracy count and each count of health care fraud, as well as a $250,000 fine per count. A sentencing date has not yet been set by the court.

According to evidence presented during the four-day trial, Mahmud was the owner of Comprehensive Rehabilitation Services Inc (CRS), a fraudulent rehabilitation agency located in Dearborn. Between January 2003 and February 2007, CRS purchased pre-packaged, falsified physical and occupational therapy files from more than 30 therapy and rehabilitation companies and used them to fraudulently bill Medicare for more than $2 million.

As part of the scheme, Medicare beneficiaries were paid cash kickbacks and given prescription drugs to sign forms and visit sheets that were later falsified to indicate that they received therapy service that they had never received. Physical and occupational therapists created false evaluations, progress notes and discharge papers indicating that the therapy services were given, when in fact they never were. Evidence at trial showed that the therapists never met the beneficiaries and Mahmud never provided or supervised the therapy billed to Medicare.

In addition to submitting more than $2 million in false therapy claims, Mahmud made additional false statements to Medicare regarding services that were never rendered. For instance, when Medicare inquired regarding a beneficiary who complained that he had not received the services for which CRS billed Medicare, Mahmud returned the payment and told Medicare that he consulted with his professional staff and the beneficiary had not been satisfied with services. In fact, CRS had no professional staff; the therapists who signed the beneficiary’s file never rendered any services; and the beneficiary never received services. Evidence at trial established that the beneficiary’s identity was stolen and used by CRS and a fraudulent file-making company to bill Medicare.

Today’s conviction was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

This case was prosecuted by Assistant Chief Benjamin S. Singer and Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and 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 their inception in March 2007, the strike force operations in nine districts have charged more than 1,160 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.