Ten Charged In Western District Of Kentucky, As Part Of The National Health Care Fraud Takedown

             LOUISVILLE, Ky. –United States Attorney Russell M. Coleman today announced the results of a health care fraud sweep in the Western District of Kentucky as part of the national health care fraud takedown led by the Justice Department. The law enforcement takedown, in the Western District of Kentucky, resulted in charges against ten individuals for their alleged participation in health care fraud schemes, to include unlawful dispensing of controlled substances, including opioids.

            “Healthcare fraud is nothing more than theft and drug dealing, though using complex techniques on a large scale” stated United States Attorney Russell Coleman. “Today’s announcement evidences a commitment across law enforcement to hold these offenders accountable for the harm they visit upon Kentucky families and taxpayer resources.

            U.S. Attorney Coleman was joined in the announcement by:

            Amy Hess, Special Agent in Charge, Louisville Division, Federal Bureau of Investigation stated, “Health care fraud is a growing and serious crime that impacts every city and small town in the Commonwealth.  The FBI is dedicated to working with our federal, state, and local partners to seek justice for the victims of health care professionals who have abandoned their oath to do no harm.”

            “Doctors have a duty to do no harm and provide competent care to their patients,” said  D. Christopher Evans, Special Agent In Charge of the Drug Enforcement Administration’s Louisville Field Division.  “The message we are sending today is clear.  We will not tolerate drug dealers in lab coats.  If you’re a doctor and you’re prescribing dangerous narcotics in a reckless or irresponsible manner, we’re coming after you.”

            “Health care fraud costs taxpayers billions of dollars and places our most vulnerable citizens at risk for harm and neglect,” said Special Agent in Charge Derrick L. Jackson, of the U.S. Department of Health and Human Services, Office of Inspector General. “Working with our law enforcement partners, we are dedicated to protecting patients and the federal health care programs intended to serve them.”

            “This operation by our federal partners and my office is critical each year in stopping those who would harm Kentuckians and our health care system, especially those accused of unlawful distribution and dispensing of controlled substances given our state’s drug epidemic,” Attorney General Andy Beshear said. “I want to thank the offices of our U.S. Attorneys, FBI, DEA, neighboring states' Medicaid Fraud units and others for continuing to fight back against those who defraud our people and our critical government programs.”

            “Medicaid fraud leaves in its wake many victims,” Indiana Attorney General Curtis Hill said. “Any licensed providers who commit this offense are taking advantage of those for whom they are supposed to provide care, including the disabled and less fortunate who rely on Medicaid. In addition, they are also fleecing taxpayers whose hard-earned money is used to fund these programs. The investigators and lawyers in our Medicaid Fraud Control Unit are doing good work to help bring lawbreakers to justice. At the same time, we respect the due process to which all are entitled, and all those who stand accused of crimes are certainly presumed innocent until a court finds otherwise.”

            “Health care fraud affects every American and today’s announcement illustrates that the IRS and our law enforcement partners are steadfast in our commitment to detecting and dismantling health care fraud schemes and holding perpetrators of these crimes accountable,” said Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation. “Waste, fraud and abuse take critical resources out of our health care system, contribute to the rising cost of health care and degrades the integrity of our health care system and legitimate patient care.”

            Anthony S. Gooden, Senior Supervisory Agent, Louisville Division, U.S. Postal Inspection Service. “The United States Postal Inspection Service is dedicated to protecting the United States Mail from criminal attack and criminal misuse.  This includes protecting all businesses and postal customers from any form of fraud utilizing the mails.  We continuously work with other local, state and federal law enforcement agencies to identify and prosecute anyone utilizing the mail in furtherance of a fraud scheme.”

            Steve Conrad, Chief, Louisville Metro Police Department. “This is yet another example of how collaboration between State, Local, and Federal law enforcement strengthens our effectiveness and works to hold people violating the law accountable.”

            In the Western District of Kentucky, four separate cases were indicted on June 25, 2018, and two cases were indicted on May 24, 2018, where the defendants made initial appearances yesterday.  The charges included unlawful distribution and dispensing of controlled substances, health care fraud, theft from a health care benefit program, paying or offering health care kickbacks, mail fraud, money laundering, conspiracy, and aggravated identity theft.

            Specifically, in United States v. Chandra Dundumalla Reddy and Vinodini Dundumalla Reddy: Dr. Chandra Reddy, a licensed physician and Vinodini Reddy, his wife, were charged with two counts conspiracy to commit health care fraud and one count conspiracy for making false statements relating to health care matters.  Dr. Reddy was also charged with one count of conspiracy for unlawfully allowing his nurse practitioners to use his DEA number to prescribe controlled substances.  The charges stem from defendants’ role in a $390,000 upcoding medical services and “incident to” billing scheme. In addition, Dr. Reddy pre-signed a large number of controlled substance prescriptions for his nurse practitioners, who did not have DEA numbers or had limited prescription writing authority, in order to allow the nurse practitioners to distribute controlled substances to patients while Dr. Reddy was either out of the country or out of the office.

            In United States v. Monica Berry and Brandon Gordon: Monica Berry, a medical assistant in Dr. Chandra Reddy’s medical office, and Brandon Gordon, a patient, were charged with one count of conspiracy to unlawfully distribute controlled substances, three counts conspiracy to commit health care fraud, and three counts aggravated identity theft.  The charges stem from Monica Berry using Dr. Reddy’s DEA number to issue Schedule II-IV controlled substances in which Brandon Gordon diverted the prescriptions to the street.  Some of the people who purchased and/or filled the prescriptions used their insurance, causing insurance carriers to pay for medically unnecessary drugs.  The defendants diverted approximately 17,750 units of Hydrocodone, 2,580 units of oxycodone, 1,895 units of Xanax, 210 unit of Ambien, 570 unit of Phentermine, and 600 units of Soma to the street.

            In United States v. Yesdel Acosta and Eduardo Chinea-Martinez: Defendants were charged with one count of conspiracy to commit health care fraud, sixteen counts health care fraud, thirteen counts theft from a health care benefit program, thirteen counts aggravated identity theft, ten counts money laundering, and four counts mail fraud.  The charges stem from defendants’ role in operating three false-front medical clinics where defendants stole the identity of five physicians, four of which were Kentucky physicians, and numerous patients to unlawfully bill for services never rendered, resulting in $4,700,000 in false medical billings submitted to three insurance companies and $258,000 paid in false medical billings. 

            In United States v. Osmaro Ruiz:  Defendant was charged with one count of conspiracy to commit health care fraud, seven counts health care fraud, seven counts aggravated identity theft, and ten counts of money laundering.  The charges stem from defendant operating a false-front pharmacy where he stole and used the identity of patients and doctors to bill for prescriptions the patients never received.  The scheme resulted in approximately $858,000 being paid out in fraudulent proceeds.

            In United States v. Dr. Peter Steiner:  Dr. Steiner, psychiatrist, was charged with one count conspiracy to unlawfully distribute Schedule II-IV controlled substances, thirteen counts to distribute Schedule II controlled substances, and twelve counts to distribute Schedule III controlled substances.  The charges stem from Dr. Steiner operating Kentuckiana Mental Health Associates, a mental health and opioid addiction practice, where Dr. Steiner prescribed medically unnecessary drugs that were also prescribed outside the usual course of professional practice.  He prescribed thousands of units of stimulants and Buprenorphine.  He unlawfully distributed opiates as well.

            In United States v. Dr. Bingston Crosby and Lacy Black:  Dr. Crosby, chiropractor and owner of Crosby Chiropractic Center, Inc., and Lacy Black, Crosby’s runner/marketer, were charged with one count of conspiracy to commit health care fraud, and each one count of paying or offering health care kickbacks.  Crosby is also charged with eight counts health care fraud, seven counts of money laundering, and seven counts mail fraud.  Dr. Crosby paid Black to recruit Kentucky Medicaid and private auto insurance patients to treat at his chiropractic clinic.  Black promised the patients cash or other remunerations to receive treatment at the chiropractic clinic.  Crosby billed for services not rendered when he added charges for treatment patients did not receive.

            In addition, our law enforcement partners executed multiple search warrants over the last four weeks related to alleged health care fraud and opiate overprescribing offenses.  On Monday, May 21, 2018, a search warrant was executed at Ft. Knox, Kentucky at a pediatrician’s office.  On Tuesday, June 12, 2018, six search warrants were executed at six different locations around Louisville, Kentucky, including four pain clinics and one residence. Finally, two warrants were executed on June 22, 2018, at an Oncologist’s practice in Elizabethtown, Kentucky and the doctor’s residence in Louisville, Kentucky.

            These cases are being handled by Assistant United States Attorneys Joe Ansari, Lettricea Jefferson-Webb, and Robert Bonar.  U.S. Attorney Coleman acknowledged and credited the law enforcement agencies investigating these cases: Federal Bureau of Investigation (FBI), U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG), U.S. Drug Enforcement Administration (DEA), U.S. Department of Labor (DOL), United States Postal Inspection Service (USPIS), Internal Revenue Service Criminal Investigation (IRS-CI), Defense Criminal Investigative Service (DCIS), Louisville Metro Police Department (LMPD), Kentucky State Police (KSP), Barren River Drug Task Force, Indiana and Kentucky Medicaid Fraud Control Units, Kentucky Cabinet for Health and Family Services – Office of Inspector General (CHFS-OIG), and the Kentucky Department of Insurance (KYDOI).

            Earlier today, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Alex M. Azar II, announced the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving over 590 charged defendants across 58 federal districts, including over 150 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving over $2 billion in false billings.  Of those charged, today’s action also involved charges against over 150 defendants, including doctors, for their roles in prescribing and distributing opioids and other dangerous narcotics, amounting to more than 13 million illegal dosages of opioids.  Thirty state Medicaid Fraud Control Units also participated in today’s arrests.  In addition, HHS announced today that from June 2017 to the present, 587 providers have been served with exclusion notices for conduct related to opioid diversion and abuse.   

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The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty.