DOJ wraps up $189M Medicare fraud scam with executives' sentencing

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Four executives of Houston-area Continuum Healthcare were sentenced for their involvement in kickback programs where "numerous people" were referred for unnecessary mental health treatments. Ten others had also been sentenced in the scheme. (Getty Images/Olivier Le Moal)

The U.S. Attorney’s Office for the Southern District of Texas announced Friday the final four sentences of a $189 million Medicare fraud scam dating back about a decade.

Bobby Rouse, Steven Houseworth, Jeffery Parsons and David Edson all served on the executive team of Continuum Healthcare, which owned Houston’s Westbury Community Hospital and other mental health centers in the surrounding area.

These locations each operated a partial hospitalization program intended to provide less-than-24-hour daily behavioral care resembling that of a short-term hospital inpatient program.

The four executives were responsible for day-to-day operations at these locations and were involved in kickback programs where “numerous people” were referred for treatment for which they did not qualify, the Department of Justice (DOJ) wrote in an announcement. The “vast majority” of those referred were not experiencing an acute psychotic episode, the DOJ wrote, or instead had a different mental health condition.

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In coordination with 10 others who owned referring personal care homes or worked for Continuum, the DOJ said that the company billed Medicare an approximate total of $189 million for fraudulent services, of which about $66 million was paid out.

The scam’s 14 participants were convicted between 2017 and 2019 on various counts of conspiracy to pay and receive kickbacks, receiving kickbacks and money laundering. The first charges came in 2014 and were prompted by a 2011 Houston Chronicle report on the company’s practices, according to the news outlet.

Rouse was sentenced to 120 months in prison. Edson was sentenced to 48 months. Parsons and Houseworth both received 30 months.

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Healthcare fraud is a frequent focus for the DOJ. The department said that it recovered $1.8 billion tied to fraud and false claims during fiscal year 2020 (ending Sept. 30, 2020), and has brought back more than $64 billion in total since 1986.

Among the more notable recoveries during that window included a $145 million settlement with Practice Fusion over kickbacks from opioid manufacturer Purdue Pharma, and more than $591 million from Novartis Pharmaceuticals after years of fighting claims that it had paid doctors kickbacks for prescribing drugs.

The DOJ also announced last year extensive charges against 345 people in what it described as the largest healthcare fraud takedown in its history. The department said that these charges were tied to more than $6 billion in losses, with more than $4.5 billion of that involving telemedicine schemes.