Category: MIL-OSI

Source: United States Department of Justice Criminal Division

Three former executives of Outcome Health (Outcome), a Chicago-based health technology start-up company, were sentenced for their roles in a fraud scheme that targeted the company’s clients, lenders, and investors and involved approximately $1 billion in fraudulently obtained funds.

• Rishi Shah, 38, a co-founder and former CEO of Outcome, was sentenced on June 26 to seven years and six months in prison.
• Shradha Agarwal, 38, a co-founder and former president of Outcome, was sentenced yesterday to three years in a half-way house.
• Brad Purdy, 35, the former chief operating officer and chief financial officer of Outcome, was also sentenced yesterday to two years and three months in prison.

“Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Their sentences should serve as yet another reminder that ‘faking it until you make it’ is not an acceptable practice for any business, whether that company is a technology start-up or a well-established corporation. Lying about your revenue to obtain customers or financing is fraud, plain and simple. The Criminal Division is committing to holding companies and their executives accountable for their misconduct.”

“The defendants’ vast scheme defrauded the clients, investors, and lenders who supported their business,” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois. “Although they sought to hide the fraud by silencing whistleblowers and duping auditors, a jury rightly held the defendants accountable for their extensive fraud scheme. Our office will continue to work tirelessly with our law enforcement partners to deliver justice for the victims of complex fraud schemes.”

According to court documents and evidence presented at trial, Outcome, which was founded in 2006 and known as Context Media prior to January 2017, installed television screens and tablets in doctors’ offices across the United States and then sold advertising space on those devices to clients, most of which were pharmaceutical companies. Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients and then under-delivered on its advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full. Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts. Purdy and others at Outcome also inflated metrics that purported to show how frequently patients engaged with Outcome’s tablets installed in doctors’ offices. According to the trial evidence, the scheme targeting Outcome’s clients began in 2011 and lasted until 2017, and resulted in at least $45 million of overbilled advertising services.

“This was an elaborate, billion-dollar fraud scheme by three people who were supposed to be leaders of the company,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response, and Services Branch. “Instead, these now former executives attempted to illegally line their own pockets. This type of fraud and abuse takes critical resources out of our health care system, and the FBI will always work with our law enforcement partners to investigate and prosecute anyone who intends to defraud the American public.”

Shah, Agarwal, and Purdy also defrauded Outcome’s lenders and investors. The under-delivery to Outcome’s advertising clients resulted in a material overstatement of Outcome’s revenue for the years 2015 and 2016. The company’s outside auditor signed off on the 2015 and 2016 revenue numbers because Purdy caused others to fabricate data to conceal the under-deliveries from the auditor. Shah, Agarwal, and Purdy then used the inflated revenue figures in Outcome’s 2015 and 2016 audited financial statements to raise $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017. The $110 million debt financing resulted in a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal, and the $487.5 million in equity financing resulted in a $225 million dividend that benefited Shah and Agarwal.

“The defendants in this case have been brought to justice for their actions in deceiving Outcome Health’s clients and fraudulently obtaining approximately $1 billion from its lenders and investors,” said Assistant Inspector General for Investigations Shimon R. Richmond of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). “The FDIC-OIG will continue to work alongside our law enforcement partners to hold accountable individuals who harm lenders, investors, and clients by committing such fraudulent acts.” 

A federal jury convicted Shah, Agarwal, and Purdy in April 2023. Shah was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering. Agarwal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution.

Three other former Outcome employees pleaded guilty prior to trial. Ashik Desai, the former chief growth officer, pleaded guilty to one count of wire fraud. Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai will be sentenced on Sept. 20. Choi and Han will be sentenced on Oct. 4 and Oct. 11, respectively.

The FBI and FDIC-OIG investigated the case. The U.S. Securities and Exchange Commission provided assistance in the case. 

Assistant Chief Kyle C. Hankey of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason Yonan, Corey Rubenstein, and William Hogan for the Northern District of Illinois prosecuted the case. Former Assistant Chief William E. Johnston of the Criminal Division’s Fraud Section and former Assistant U.S. Attorneys Matthew F. Madden and Saurish Appleby-Bhattacharjee for the Northern District of Illinois also prosecuted the case through trial.

Source: United States Department of Justice Criminal Division

Guardian Health Care Inc., Gem City Home Care LLC and Care Connection of Cincinnati LLC, home health agencies operating in Texas, Ohio and Indiana, along with their owner Evolution Health LLC (together, the Companies), have agreed to pay $4,496,330 to resolve allegations that they violated the False Claims Act by knowingly providing illegal kickbacks to assisted living facilities and physicians in exchange for Medicare referrals.

This settlement resolves allegations that, from 2013 to 2022, Guardian Health Care, Gem City Home Care and Care Connection of Cincinnati provided lease payments and other valuable benefits, including wellness health services, sports tickets and meals, to numerous assisted living facilities and their residents, as well as certain health care providers, in exchange for referrals of Medicare beneficiaries. The home health agencies then billed Medicare for the home health services they provided to the referred patients.

The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives. Claims that are knowingly submitted in violation of the Anti-Kickback Statute are ineligible for payment and can violate the False Claims Act.

“It is imperative to ensure that improper financial incentives play no role in decisions regarding patient care,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s resolution demonstrates the department’s commitment to protecting the integrity of federal health care programs and the medical treatment received by their beneficiaries.”

The Companies received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Among other actions, the Companies disclosed the conduct to the government, identified the individuals involved and assisted in the determination of losses caused to Medicare.

The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

Trial Attorney Elizabeth A. Strawn of the Civil Division’s Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney Brandi Stewart for the Southern District of Ohio handled the matter.

The claims resolved by the settlement are allegations only. And there has been no determination of liability.

Source: United States Department of Justice Criminal Division

Health care fraud is a crime that impacts every American. It siphons off hard-earned tax dollars meant to provide care for the vulnerable and disabled. When health care providers and executives place greed above patients’ needs, it increases the cost of care for all Americans. Even worse, as the prosecutions announced on Thursday highlight, health care fraud can harm patients and fuel addiction.

Combating health care fraud is a critical priority for the Justice Department. That is why we established the Health Care Fraud Unit within the Criminal Division’s Fraud Section. Since the Unit’s inception in March 2007, prosecutors have been stationed across the country — from Brooklyn, New York, to Los Angeles — to provide a dedicated and forceful response to the problem.

Thursday’s announcement underscores how our approach has resulted in historic law enforcement success. Over just the past two weeks, the Health Care Fraud Unit has charged — either on its own or in partnership with U.S. Attorneys’ Offices — nearly 200 defendants with committing over $2.7 billion in health care fraud. Over a quarter of the defendants charged are medical professionals.

But this announcement is only the latest in a series of accomplishments. Since 2007, the Health Care Fraud Unit has charged more than 5,400 defendants with fraudulently billing Medicare, Medicaid, and private health insurers more than $27 billion. In recent years, the average loss associated with the schemes prosecuted by the Health Care Fraud Unit has steadily risen, underscoring our focus on the most egregious offenders.

How does the Health Care Fraud Unit accomplish these results year after year? Through a data-driven approach that responds to evolving threats and partnerships across the government.

First: data. The Health Care Fraud Unit has a dedicated data analytics team that monitors billing trends, identifies aberrant providers, and helps our prosecutors spot emerging schemes and stop them. These cutting-edge data analytics jumpstarted our investigations of Done ADHD and a separate $900 million amniotic wound care fraud scheme. Beyond those cases, proactive data analysis also led the Health Care Fraud Unit to investigate a spike in genetic testing claims at a laboratory in Houston. Our prosecutors pursued this lead, which ultimately resulted in an indictment against the owner of that laboratory in connection with a $356 million scheme to bill Medicare for medically unnecessary genetic tests that were induced by kickbacks.

These cases show how the department’s investment in data analytics produces outsized returns.

Second, the Unit responds to evolving threats. For many years, the Unit followed the data to launch Strike Forces in cities identified as health care fraud hot spots. But then the COVID-19 pandemic ushered in a new era of telemedicine, with schemes that spanned the entire country. We responded by creating the National Rapid Response Strike Force to address emerging, complex schemes.

This new Strike Force has been a success. It has helped lead our response to telemedicine and laboratory schemes, including by partnering with the Dallas Strike Force to charge another $54 million genetic testing scheme announced on Thursday. In addition to stealing taxpayer money, the defendants responsible for this scheme are alleged to have laundered their criminal proceeds through, among other things, the purchase of luxury cars.

Perhaps most importantly, through this model, we rapidly deploy prosecutors to stop schemes in their tracks.

For example, when law enforcement obtained evidence that Arizona’s Medicaid agency was being defrauded in connection with addiction treatment services allegedly provided to Native Americans, the Strike Force surged resources there. On Thursday, in partnership with the District of Arizona, we announced charges against three defendants, including the owner of an outpatient treatment center, for a $69 million health care fraud and money laundering scheme. This center claimed to provide addiction treatment services for people suffering from alcohol and drug addiction. But the indictment alleges that, in reality, the center either provided no services at all to patients or provided services that were so substandard that they failed to serve any valid treatment purpose. While legitimate outpatient treatment centers, or “sober” homes, can provide drug- and alcohol-free environments that are crucial to promoting and sustaining long-term recovery, the department will aggressively prosecute those who exploit vulnerable individuals for profit.

Third is our whole-of-government approach. One of the Health Care Fraud Unit’s key strengths, as demonstrated on Thursday, is our partnerships across government, including with law enforcement and other prosecutors. This enforcement action is the direct result of close coordination among the Health Care Fraud Unit, U.S. Attorneys’ Offices across the country, State Attorneys General, Medicaid Fraud Control Units, and our law enforcement agency partners. I would like to extend a special thanks to our partners, including the Department of Health and Human Services Office of the Inspector General, FBI, Drug Enforcement Administration, and Homeland Security Investigations. These partnerships are critical for our work to have maximum impact.

In closing, the cases we have announced show our unwavering commitment to rooting out fraud, wherever it may be found, and no matter who it implicates. And we are using more tools than ever before to uncover misconduct and hold wrongdoers to account — whether they are executives in corner offices or doctors who violate their oaths — including and especially when it comes to corporate healthcare fraud.

There’s more to come. This spring, we announced a pilot program to encourage individuals to come forward and report criminal schemes that we don’t otherwise know about. If you call us before we call you and assist us in investigating and prosecuting more culpable individuals, you may be able to earn a non-prosecution agreement.

Our message is clear: we are committed to protecting the American people and the critical health care programs that help them. And we will continue to hold accountable to the fullest extent of the law those who exploit these programs and place greed and profits above patient care.