Hospital exec arrested in $116M Medicare scheme

Officials yesterday arrested and charged an assistant administrator of Houston's Riverside General Hospital for his alleged role in a $116 million Medicare fraud scam, involving false claims for mental health treatment and using kickbacks (including cigarettes and food) for patient referrals, the Department of Justice, the FBI and the Department of Health & Human Services said in a statement yesterday.

In an alleged three-year scheme that ended yesterday, Mohammad Khan is charged with one count of conspiracy to commit healthcare fraud, one count of conspiracy to pay and receive illegal healthcare kickbacks, and five counts of paying or offering to pay healthcare kickbacks. From 2008 and continuing until his arrest yesterday, authorities allege that Khan and his unnamed coconspirators submitted false and fraudulent claims for partial hospitalization program services--a form of intensive outpatient treatment for severe mental illness--to Medicare through the hospital. 

"The defendant charged in this indictment is accused of stealing precious Medicare resources by billing for services that were medically unnecessary or never provided," Special Agent in Charge Stephen L. Morris of the FBI's Houston Field Office said in a statement.

Khan also allegedly paid kickbacks to patient recruiters and owners of group homes and assisted living, then billed Medicare for approximately $116 million. He allegedly paid one patient recruiter $5,000 twice in 2011 so the recruiter would refer Medicare beneficiaries to Riverside General's six Houston-area clinics offering outpatient psychiatric care, the Houston Chronicle noted. He also allegedly paid a second recruiter $300 a head for each patient referral.

Federal prosecutors also claim Khan used cigarettes, food and coupons redeemable for items available at the hospital's "country stores" to gain patients.

Riverside hospital officials said the hospital has done nothing wrong.

"I have no concerns at all," spokeswoman Tasha Armstead told Click2Houston. "I feel very comfortable knowing Riverside is doing all the right things, and there shouldn't be any issues at all. Our attorneys are handling the rest of it."

Khan's arrest is another recent example of the governmental crackdown on healthcare fraud. Since the Medicare Fraud Strike Force was introduced in 2007, authorities have charged more than 1,190 people who collectively have falsely billed Medicare for more than $3.2 billion.

"We will continue aggressively to pursue individuals who attempt to enrich themselves at the expense of the Medicare program," Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division said.

For more information:
- read the DoJ statement
- read the Houston Chronicle article
- see the Click2Houston video report

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