Tuesday, December 20, 2005

Health Care Fraud—Detroit

A Detroit doctor has been indicted in federal court on a staggering array of fraud charges related to allegations that he billed more than 21,000 hours of physical therapy and injections that never happened.[1] Dr. Zack Brown has been charged with 34 counts of , 72 counts of , and to commit both crimes.[2] Dr. Brown’s biller, Davell Culberson, is facing identical charges, while seven additional defendants face similar charges.[3]

Mail fraud carries a penalty of a fine, imprisonment for up to 20 years or both, unless a financial institution is harmed, in which case the fine can be as high as $1 million, and the prison sentence can be as long as 30 years. Health care fraud can be punished with a fine, imprisonment for up to 10 years, or both, unless serious bodily injury occurs—in which case the defendant can be imprisoned for up to 20 years—or death occurs—in which case the defendant can be imprisoned for any term of years, or life. Conspiracy can be punished with a fine, imprisonment for up to 5 years or both.

According to the indictment, Dr. Brown used recruiters to find Blue Cross subscribers who were told that they could share in up to half of the amount falsely billed in their names.[4] While Blue Cross says that as many as 100 patients may have participated in the scheme, allegedly costing the company $1 million, the investigation focuses on more than $410,000 paid to 34 subscribers.[5]

As we mentioned back in , fraudulent billing practices are one of the types of health care fraud that receives an enormous amount of attention from the FBI.[6]

Over the past three weeks, seven other defendants have pleaded guilty to one count each of health care fraud, in exchange for their testimony.[7]

This is often how federal prosecutions work. The FBI and the prosecutors will analyze who they think are lower on the chain. They will then target those individuals, working on them to “flip” on those who are seen as higher up on the totem pole. Incentives like reduced charges or favorable statements during sentencing will be dangled before the underlings, but only if they agree to testify against the head of the conspiracy. In fact, according to the US Sentencing Guidelines, “[i]f the defendant clearly demonstrates acceptance of responsibility for his offense,” his offense level can be decreased by 2.[8] Furthermore, if the defendant qualifies for such a decrease, and the offense level prior to the decrease is level 16 or higher, the offense level can be decreased by an additional 1 level if the government files a motion “stating that the defendant has assisted authorities in the investigation or prosecution of his own misconduct by timely notifying authorities of his intention to enter a plea of guilty,” which saves judicial resources.[9]

In terms of providing assistance to authorities “in the investigation or prosecution of another person who has committed an offense, the court may depart from the guidelines.”[10] The factors the court will consider in departing from the guidelines include, but are not limited to:
  • the court’s evaluation of the significance and usefulness of the defendant’s assistance, taking into consideration the government’s evaluation of the assistance rendered;
  • the truthfulness, completeness, and reliability of any information or testimony provided by the defendant;
  • the nature and extent of the defendant’s assistance;
  • any injury suffered, or any danger or risk of injury to the defendant or his family resulting from his assistance;
    • the timeliness of the defendant’s assistance.[11]
These considerations are independent “of any reduction for acceptance of responsibility.”[12]


[1] Mary Conway, et al., , detnow.com, Dec. 19, 2005. See also, , Associated Press, Dec. 20, 2005 [hereinafter AP]; David Shepardson, , Detroit News, Dec. 20, 2005; Zachary Gorchow, , Detroit Free Press, Dec. 19, 2005.
[2] Id.
[3] Id.
[4] AP, supra note 1.
[5] Id.
[6] See also Federal Bureau of Investigation, , C1 (May 2005). (PDF)
[7] AP, supra note 1.
[8] § 3E1.1(a) (2005).
[9] Id. § 3E1.1(b).
[10] .
[11] Id. § 5K1.1(a).
[12] Id. § 5K.1.1 cmt. 2.

posted by McNabb Associates, P.C. @ 10:10 AM