1 April 2005 – LAWFUEL – The Law News Network – Ten people were indicted yesterday on federal charges of fraudulently billing Medicare for more than $24 million in durable medical equipment (DME) – specifically nutrition products and motorized wheelchairs – that were not medically necessary and, in many cases, never provided.
Federal authorities today arrested seven of the defendants named in the indictment. Those taken into custody without incident this morning are:
* Phu Luong, 50, a Huntington Beach resident who operated United Medical Supply in Huntington Beach;
* Sareth Tath, 55, of Long Beach, an employee of United who allegedly recruited physicians to provide fraudulent prescriptions;
* Mo Thi Pham, 49, of Westminster, another United employee who allegedly recruited Medicare beneficiaries to receive DME that was not medically necessary;
* Vu Nguyen, 33, of Santa Ana, a United employee who allegedly submitted fraudulent claims to Medicare;
* Truc Duong, 37, of Garden Grove, an employee of United;
* Khanh Duong, 31, of Garden Grove, another United employee who along with his wife, Truc, allegedly recruited beneficiaries; and
* Vu Nghi, 47, of Garden Grove, who drove beneficiaries to see doctors.
* The indictment charges three other defendants who will be summoned to appear in court in the coming weeks. They are:
* Dr. Derrick Hubbard, 45, formerly of Los Angeles and now practicing in Atlanta, Georgia;
* Dr. Matthew Khatibloo, 71, of Fullerton, who along with Hubbard operated medical offices in Fountain Valley and now maintains an office in Brea; and
* Peter Kim, 81, of Los Angeles (90022), a United employee who allegedly recruited Medicare beneficiaries.
* The indictment alleges 35 counts of health care fraud against each defendant and five counts of money laundering against Luong. The indictment specifically alleges that Luong used United Medical Supply to fraudulently bill Medicare for “enteral nutrition” (which is liquid nutrition such as Ensure) and motorized wheelchairs. Enteral nutrition is covered by Medicare only if a beneficiary requires tube-feeding. Motorized wheelchairs are covered by Medicare only if a beneficiary is confined to a bed or chair and is unable to use a manual wheelchair. In this case, the indictment alleges, none of the beneficiaries billed by United had feeding tubes or required motorized wheelchairs.
* The indictment further alleges that Tath recruited physicians, including Hubbard and Khatibloo, to prescribe enteral nutrition and wheelchairs that were not medically necessary. Recruiters, such as Pham and the Duongs, allegedly recruited beneficiaries in the Vietnamese and Korean communities with promises of free “milk” (meaning enteral nutrition) and motorized wheelchairs. Drivers allegedly took the beneficiaries to Hubbard and Khatibloo, who would do only cursory examinations and without fail prescribe enteral nutrition and sometimes motorized wheelchairs. United would continue to bill Medicare every month for enteral nutrition, regardless of whether the beneficiary wanted it or whether it was actually provided. Moreover, United typically billed Medicare for more enteral nutrition than was actually delivered to the beneficiaries. United also would bill Medicare for wheelchairs that were never delivered.
* The money laundering charges allege that Luong spent the proceeds of the Medicare fraud on a $185,575 yacht, a $118,000 Rolls-Royce automobile, a $1.7 million down payment on a home in Huntington Beach; a $170,395 Lamborghini, and $120,000 in gambling bills at the Bellagio Hotel & Casino in Las Vegas.
* The investigation into United’s activities began when Medicare noticed that United was submitting an exorbitant number of claims for enteral nutrition and that the referring physician on almost all of the claims was either Hubbard or Khatibloo. Furthermore, Medicare received 363 complaints against United, which generally alleged that the beneficiaries did not need and/or did not receive the items billed by United to Medicare.
* Of the $24 million in fraudulent claims, Medicare paid approximately $14 million.
* An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
* The defendants taken into custody this morning are expected to make their initial court appearance today in United States District Court in Santa Ana.
* Every count in the indictment carries a statutory maximum sentence of 10 years in federal prison.
* The case was investigated by the Department of Health & Human Services – Office of Inspector General, the Federal Bureau of Investigation, and IRS-Criminal Investigation Division.