Houston Man Pleads Guilty in Adult Diaper Fraud Case

HOUSTON—Ene Etim Hogan, of Houston, has pleaded guilty to three counts of healthcare fraud for his role in an adult diaper fraud case, acting U.S. Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today.

Hogan, also known as Ernest Hogan, 59, owned and operated Shanet Medical Source, a durable medical equipment (DME) company. Through his DME company, Hogan routinely billed Medicaid for adult urinary incontinence supplies he did not deliver to the Medicaid beneficiaries or for delivering supplies in amounts significantly less than the amounts billed to Medicaid. Additionally, Hogan routinely billed Medicaid for adult urinary incontinence supplies provided to Medicaid beneficiaries who either did not need the supplies or whose physicians had not prescribed them. Adult incontinence supplies includes adult diapers, underpads, wipes and pull-up briefs. Hogan was indicted in February 2009.

Hogan continued to bill Medicaid for incontinence supplies even after his delivery staff and/or delivery contractors were told by the beneficiaries they did not need or want the supplies. He regularly billed Medicaid the maximum allowed amount of incontinence supplies each month per beneficiary and for extra large size diaper briefs, which have the highest Medicaid reimbursement rate, without consideration to the actual size needed by the beneficiary. He even billed Medicaid for delivering a quantity of adult diapers far in excess of the amount he purchased from wholesale suppliers.

The scheme to defraud began in June 2004, with the last false claim having been filed in March 2006. Hogan billed Medicaid for claims totaling approximately $1,108,667 and received payments for those claims totaling approximately $683,360.

Hogan remains free on bond pending his sentencing hearing scheduled for Aug. 28, 2009. He faces a maximum of 10 years imprisonment and a $250,000 fine on each count of conviction.

This case was the result of the investigative efforts of the FBI and the Texas Attorney General's Medicaid Fraud Unit in Houston. Special Assistant United States Attorney Justo A. Mendez is prosecuting the case.