Inspections, Compliance, Enforcement, and Criminal Investigations
September 29, 2011: Nationwide Supplier of Medical Equipment to Plead Guilty in R.I. to Health Care Fraud, Money Laundering and Selling Adulterated and Misbranded Medical Devices
Illinois businessman to admit to shipping unwanted and unneeded medical supplies and “erectile pumps” to Medicare recipients at Government expense; agrees to forfeit approximately $2M.
PROVIDENCE,R.I. – An Illinois businessman has agreed to plead guilty in U.S. District Court in Providence, R.I., to a five-count Information charging him with health care fraud; the introduction of an adulterated and misbranded medical device into interstate commerce; and money laundering, it was announced by U.S. Attorney Peter F. Neronha.
In addition, Gary Winner, 49, of Northbrook, Illinois, has agreed to forfeit approximately $2 million in proceeds allegedly derived by defrauding the Medicare program.
According to an Information and Plea Agreement filed with the Court, from 2005 through early 2011, Planned Eldercare, a nationwide supplier of durable medical equipment located in Buffalo Grove, Illinois, and owned by Winner, allegedly targeted, through unsolicited telemarketing, arthritic and/or diabetic Medicare beneficiaries. Winner ensured that his company ordered medical equipment and supplies for Medicare beneficiaries that they did not order and/or were not medically necessary.
According to court documents, Gary Winner instructed Planned Eldercare employees, upon successfully reaching an individual on the phone as a result of an unsolicited telemarketing call, to inquire if they suffered from diabetes or arthritis. Once call recipients identified themselves as suffering from either diabetes or arthritis, as an inducement for recipients to provide their Medicare and physician information, employees were instructed to inform recipients that Planned Eldercare could provide them with products to help with their ailments “at no cost to you.” Once Planned Eldercare employees obtained Medicare beneficiaries’ agreement to receive certain products, Winner allegedly instructed employees to order as many products as possible for those beneficiaries whether or not beneficiaries actually requested the products or had a medical need for the equipment. Medicare was then billed for thousands of products that beneficiaries did not order.
Court documents allege that Winner also directed his sales force to send beneficiaries “packages” of arthritic supplies regardless of medical necessity. When confronted by employees who questioned the practice, Winner typically responded by saying that “it doesn’t cost the client anything as the government is paying for it, and that the government would just print more money, so order more.”Winner responded to beneficiaries who received items that they did not order by stating, “If you don’t need them, put them under the sink.”
According to court documents, it is alleged that Winner also instructed his employees to falsely inform male diabetic beneficiaries that an “erectile pump” was good for prostate problems, and was designed to help blood circulation exclusively in males. Employees were instructed to tell beneficiaries that regular use of the pump increases blood flow in the urinary tract and prostate region.
It is alleged that Winner ordered penis enlargers from an x-rated website for$26.00 each, repackaged them, enclosing an information sheet stating that regular use of the enclosed “erectile pump” helps with bladder control, urinary flow and prostate comfort, and shipped them to recipients. Winner allegedly billed Medicare on average $284 per item, representing to Medicare that the devices sold were designed to treat erectile dysfunction. Under certain circumstances, the Medicare program covers reimbursement for products for the treatment of organic impotence and/or erectile dysfunction. Medicare regulations require that the devices be medically necessary and prescribed by a physician. It is alleged that the devices shipped to Medicare beneficiaries and billed to Medicare served no medical purpose.
In addition, it is alleged in court documents that Winner waived copayments for all Medicare patients, a practice which is prohibited by Medicare. By waiving copayments they otherwise would be responsible for, Winner induced beneficiaries to accept products they had not ordered and not report the alleged fraudulent billing to Medicare. Employees were instructed by Winner to tell beneficiaries that they should ignore their Medicare explanation of benefits form because Planned Eldercare forgave any “remainder of cost.”
Healthcare fraud and money laundering are punishable by maximum sentences of 10 years imprisonment, a fine of $250,000, and a term of supervised release of 3 years; the introduction of an adulterated and misbranded medical device into interstate commerce is punishable by a maximum sentence of 3 years imprisonment, a fine of$10,000, a term of supervised release of 1 year. At sentencing Winner faces a maximum sentence of 33 years imprisonment, a fine of $760,000, and a term of supervised release of 4 years.
An Information is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S Attorney Dulce Donovan.
The matter was investigated by Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Railroad Retirement Board, Office of Inspector General; and the Food and Drug Administration, Office of Criminal Investigations.