Justice Department charges nearly 200 people in $2.7 billion health care fraud schemes crackdown

Seal of the United States Department of Justice (Michael Nagle/Bloomberg via Getty Images)

Nearly 200 people have been charged in a sweeping nationwide crackdown on health care fraud schemes with false claims topping $2.7 billion, the Justice Department said on Thursday.

Attorney General Merrick Garland announced the charges against doctors, nurse practitioners and others across the U.S. accused of a variety of scams, including a $900 million scheme in Arizona targeting dying patients.

"Our messages to those seeking to exploit patients and defraud government programs is clear: you cannot hide your crimes," said Attorney General Garland. "We will find you, and we will hold you accountable."

One of the cases alleges a scheme in Florida to distribute misbranded HIV drugs. Prosecutors say drugs were bought on the black market and resold to unsuspecting pharmacies, which then provided the medications to patients.

In some cases, patients were given bottles that contained different drugs than the label showed. One patient ended up unconscious for 24 hours after taking what he was led to believe was his HIV medication but was actually an anti-psychotic drug, prosecutors say.

In total, 193 people were charged in a series of separate cases brought over about two weeks in the nationwide health care fraud sweep. Authorities seized more than $230 million in cash, luxury cars and other assets. The Justice Department carries out these sweeping health care fraud efforts periodically with the goal of helping to deter other potential wrongdoers.

Arizona has connection to two cases

In one Arizona case, prosecutors have accused two owners of wound care companies of accepting more than $330 million in kickbacks as part of a scheme to fraudulently bill Medicare for amniotic wound grafts, which are dressings to help heal wounds.

Nurse practitioners were pressured to apply the wound grafts to elderly patients who didn't need them, including people in hospice care, the Justice Department said. Some patients died the day they received the grafts or within days, court papers say.

In less than two years, more than $900 million in bogus claims were submitted to Medicare for grafts that were used on fewer than 500 patients, prosecutors said.

The owners of the wound care companies, Alexandra Gehrke and Jeffrey King, were arrested this month at the Phoenix airport as they were boarding a flight to London, according to court papers urging a judge to keep them behind bars while they await trial. An attorney for Gehrke declined to comment, and a lawyer for King didn't immediately respond to an email from The Associated Press.

Authorities allege Gehrke and King, who got married this year, knew charges were coming and had been preparing to flee. At their home, authorities found a book titled "How To Disappear: Erase Your Digital Footprint, Leave False Trails, and Vanish Without a Trace," according to court papers. In one of their bags packed for their flight, there was a book titled "Criminal Law Handbook: Know Your Rights, Survive The System," the papers say.

Gehrke and King lived lavishly off the scheme, prosecutors allege, citing in court papers luxury cars, a nearly $6 million home and more than $520,000 in gold bars, coins and jewelry. Officials seized more than $52 million from Gehrke's personal and business bank accounts after her arrest, prosecutors say.

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In another Arizona case, one woman is accused of billing the state's Medicaid agency for substance abuse treatment services that didn't serve any real purpose or were never provided, prosecutors say.

"Those accused today set up sham sober homes and fed people with drugs and alcohol, while billing our health care systems for millions of dollars for services not rendered," said FBI Executive Assistant Timpthy Langan.

"The schemes they perpetrated specifically targeted vulnerable Native Americans by establishing phony sober living homes that claimed to provide addiction treatment and other support. However, these homes really were just false fronts, posing significant risk, again, to the quality of care that those patients needed and deserved in that moment of vulnerability, all the while those false fronts were billing our healthcare system for millions of dollars for services that were never provided," said Andrea Palm, Deputy Secretary of the Department of Health and Human Services.

The DOJ has also accused 52-year-old Rita Anagho of San Tan Valley, linking her to a $69 million scheme involving a drug abuse treatment center called Tusa Integrated Clinic. 

The clinic allegedly submitted false claims to Arizona's Health Care Cost Containment System for services not provided and created false therapy notes. Court documents say AHCCCS paid Tusa $55 million.

Adam Mutwol, 45, of Tempe and Daud Koleosho, 44, of Gilbert are charged with conspiracy to commit health care fraud as well, accused of billing AHCCCS for $57 million. 

The DOJ says the two men owned Community Hope Wellness Center and offered kickbacks and bribes to those who housed patients in need of substance abuse treatment. Court docs reveal AHCCCS paid the clinic $51 million.