Deaconess Home Health, Inc. and Owner Agree to Criminal and Civil Resolution of Health Care Fraud Charges

The Acting United States Attorney for the Eastern District of Wisconsin, Gregory Haanstad, announced today that the United States has filed a criminal information charging Deaconess Home Health, Inc. and its owner, Lazarus Bonilla, with committing health care fraud against the Wisconsin Medicaid Program.   Deaconess has agreed to plead guilty to the crime under a plea agreement filed with the information.  Bonilla and the United States have entered into a deferred prosecution agreement.  The United States also reached a civil settlement agreement with Deaconess and Bonilla for $3,724,000 pursuant to the federal False Claims Act.

The agreements arose out of an investigation into the false billing of personal care worker services Deaconess (formerly known as Outreach Home Health) to the Wisconsin Medicaid Program.  The Wisconsin Medicaid Program pays for personal care services, which are medically orientated services intended to assist a recipient with activities of daily living necessary to maintain a recipient in his or her place of residence in the community.  As charged in the criminal information and the stipulated statement of facts, the defendants engaged in a scheme to defraud the Medicaid program by (1) intentionally recruiting patients and personal care workers without regards to whether to whether personal care worker services were medically necessary for those patients; (2) instructing nurses employed by Deaconess to routinely inflate, without regard to medical necessity, the assessment of the patient that was provided to the Medicaid program; (3) failing to conduct required supervisory visits to ensure that services were in fact being provided, that services continued to be medically necessary, and that any services provided were appropriate for the needs of the patient; and (4) hiring physicians to act as medical directors to sign plans of care for patients on whom they had not completed a physical examination.

As a result of these practices, the defendants submitted claims to the Medicaid Program for services that were not medically necessary or that Deaconess could not verify had ever been provided. Between 2011 and 2012, Deaconess increased its billing to the Medicaid Program for personal care service by over 100%.

“Medicaid has long been an invaluable lifeline for many of the most vulnerable members of society,” said Acting United States Attorney Haanstad.  “Particularly in a time of increasing federal and state budget constraints, it is vitally important to ensure that funds in that program are not improperly diverted.”

“The billing of Medicaid for services not rendered and/or medically unnecessary services depletes the program of vital resources that are needed for the care of some of the nation’s most vulnerable citizens,” said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “The OIG will continue to root out and identify those who seek to defraud the Medicaid program and work with our law enforcement partners to ensure that they are held accountable.”

Deaconess ceased operation after Medicaid stopped paying claims submitted by Deaconess in April 2013.  Pursuant to a plea agreement, Deaconess will plead guilty to a felony charge of health care fraud and the government is entering into a deferred prosecution agreement with Bonilla.   Bonilla has agreed to be voluntary excluded from participating in any federal health care program, including Medicare and Medicaid, for fifteen (15) years. 

The Civil Settlement resolves there (3) lawsuits filed under the qui tam, or whistleblower, providers of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud against the government to bring civil actions on behalf of the United Sates and share in any recovery.  Two of the whistleblowers are former employees of Deaconess.  As part of today’s resolution, the whistleblowers will receive payment of approximately $600,000.

Acting United States Attorney Haanstad praised the investigative work of the Office of the Inspector General for the United States Department of Health and Human Services, the Medicaid Fraud Control Unit for the Wisconsin Department of Justice, the Federal Bureau of Investigation, and the United States Attorney’s Office for the Eastern District of Wisconsin.

The criminal cases are captioned United Sates v. Deaconess Home Health, Inc,  and United States v. Lazarus Bonilla, 15-CR-207.  The civil cases are captioned U.S. and State of Wisconsin ex rel. Ritacca v. Atlas Healthcare Inc., et al., Case No. 10-C-253;  U.S. and State of Wisconsin ex rel. Komlodi v. Outreach Healthcare Inc., et al,. Case No. 11-C-973; and U.S. and State of Wisconsin ex rel. Campbell v. DHH, et al.,  Case No. 13-C-488.

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