Zalma's Insurance Fraud Letter
Barry Zalma, Esq., CFE
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.
Zalma’s Insurance Fraud Letter
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A ClaimSchool? Publication ? 2022, Barry Zalma & ClaimSchool, Inc., Volume 26, Issue 9 – May 1, 2022
The total article is available at https://zalma.com/zalmas-insurance-fraud-letter-2/
Committing Insurance Fraud & Forgery While on Probation Requires Jail Time
Dustin Jungvirt, appealed the sentence imposed following his guilty plea to insurance fraud, claiming the district court failed to properly consider which sentencing option would best rehabilitate him. In State of Iowa v. Dustin Jungvirt, No. 21-1130, Court of Appeals of Iowa (April 13, 2022) the Iowa Court of Appeals resolved the dispute.
BACKGROUND FACTS
The State charged Jungvirt with insurance fraud, claiming he filed false claims with his insurance carrier. Jungvirt was alleged to have committed the offense while on probation for child endangerment causing bodily injury. The State later added a charge for fraudulent practice. After Jungvirt’s arrest, he was released to the Iowa Department of Corrections for supervision.
In May 2020, Jungvirt was arrested for assault while displaying a dangerous weapon. Due to the arrest, the court revoked Jungvirt’s pretrial release. Jungvirt entered a plea agreement on September 11, admitting to the probation violation and pleading guilty to insurance fraud. He also entered a plea of guilty to four counts of forgery in a separate case. As part of the plea agreement, the State agreed to recommend Jungvirt for a residential treatment facility if Jungvirt was deemed appropriate for placement in the facility. If Jungvirt was denied a placement in a residential facility, the State could recommend any legal sentence.
The court received a presentence investigate report (PSI) which recommended probation and placement in a Davenport residential correctional facility (RCF).
Jungvirt failed to appear for sentencing, resulting in the court issuing a bench warrant for his arrest. He was not apprehended until May 2021. Due to his absconding, the RCF would not approve him for placement.
Jungvirt, after being charged with new crime and returning to the court, expressing chutzpah, asked for probation, highlighting as mitigating factors his desire to see family, his limited criminal history, mental-health and substance-abuse issues, and progress he had made toward his education. The State urged the court to impose a prison sentence.
The court sentenced Jungvirt to a prison term of five years for insurance fraud, to run consecutively to the two-year sentence for Jungvirt’s forgery convictions.
DISCUSSION
Jungvirt contended the district court abused its discretion when it sentenced him to a prison term rather than probation. He ignored the reasoning of the sentencing court who, during the sentencing hearing, the court explained its reasoning as follows:
In every case, my duty under the law is to review what is available to me in terms of community resources and to determine what the appropriate rehabilitative plan for you would be, but to always remember first and foremost that the public must be protected.
In doing so, I look at the seriousness of the crimes, the effect the crimes have upon members of the community, your willingness to accept change and treatment, and what’s available within the community to assist you in this process.
The first thing that jumps out at me in looking at the file is that you had a plea agreement for probation. You were at the RCF and something happened and you were out to warrant, then, from October 22nd to May 30th. You knew at that time you pled guilty. You knew you had to take care of these matters and you made no effort to do so, which tells me that you were absconding from your responsibilities and obligations for the crimes you committed.
It’s not completely inconsistent with your criminal history. While these charges are more serious than maybe what you had in the past, you do have a history of failing to appear and a history of violating terms of probation.
I do consider as mitigating any substance abuse or mental health issues that you have.
What’s also concerning to me is that looking at the file, case number 312, you were on probation with a sentencing date of July 19th, 2018, and then comes the insurance fraud case that you’re here on today that happened after that, and it appears while you were on probation . . . .
And then, while you were awaiting trial on pretrial release in that matter, you pick up all the forgery charges that you’ve pled to in 505.
So, each time when you committed a crime, before you resolved it, while you were still on some form of probation, you committed another crime. To me, that warrants incarceration.
The Court of Appeals concluded, faced with the clear and logical statement made by the sentencing court, properly considered the defendant’s chances of reform, criminal history, mitigating factors such as mental health and substance abuse, the resources available to the defendant, the effect Jungvirt’s crime had on the community, and what punishment would best protect the public. In particular, the court emphasized Jungvirt’s consistent pattern of engaging in illegal activity while on probation or pretrial release. The court determined incarceration was necessary.
A district court is not bound by the recommendations in a PSI. Due to its consideration of the relevant factors, the total lack of respect for the court system, the criminal actions when on probation, it became obvious that the district court did not abuse its discretion concerning Jungvirt’s sentence. Accordingly, the court affirmed the sentence.
ZIFL OPINION
It is time that trial and appellate courts stop coddling insurance fraud criminals with probation and half-way-houses and deter the crime with real prison time. That Dustin Jungvirt, had the unmitigated chutzpah, on such a series of criminal conduct to claim the court improperly sentenced him prison was an amazing waste of the time of two courts and should have been condemned with more than affirming the sentence.
Jacques Andres Frym, 53, who owned businesses in the Savannah area, pleaded guilty last year to lying under oath about his income. Frym at one time owned Federal Employee Benefits LLC, an insurance company, along with real estate and other interests, federal court records show.
Frym, a Georgia insurance company owner was sentenced to eight months in prison after prosecutors said he lied in bankruptcy court and on his federal tax returns.
In 2016, Frym filed for Chapter 11 bankruptcy protection to manage more than $5 million in debt. But he falsely testified that he performed no work for and had no income from Federal Employee Benefits, according to the charging information sheet.
In fact, Frym knew that he sold, and was the primary individual responsible for selling insurance contracts on behalf of Federal Employee Benefits. He also understated his income on his 2017 tax return.
In addition to jail time, Frym must also pay $112,000 in restitution and a $30,000 fine. Once released, he will face three years of supervised release, the federal court said.
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Eleventh Circuit Explains How Doctor Defrauded Medicare and Medicaid
领英推荐
Doctor Who Treated Georgia Patients More than 70 hours a Day While he Gambled in Las Vegas Goes to Jail
In United States of America v. Douglas Moss, Nos. 19-14548, 19-14565, United States Court of Appeals, Eleventh Circuit (April 12, 2022) the Eleventh Circuit affirmed the conviction, sentence, restitution and forfeiture of millions taken in his crime.
EXPLANATION OF MEDICARE AND MEDICAID SYSTEM
Medicare and Medicaid combined spend $1,500,000,000,000 a year, which is more than one-third of the total health expenditures in this country. Like other government health care programs, these two work on the honor system. Trust and more trust. Both programs take a pay first, ask questions later (if ever) approach. Which leads to crime and more crime, both sooner and later.
A trust-based system is only as good as the people who are trusted. Douglas Moss is one of those who was trusted but not trustworthy. As a physician, he fraudulently billed Medicare and Medicaid for millions of dollars for visits to nursing home patients that he never made.
For his fraudulent conduct, Moss was convicted of conspiracy and substantive health care fraud, sentenced to 97 months imprisonment, ordered to pay restitution of about 2.2 million dollars, and ordered to forfeit around 2.5 million dollars. He, of course, appealed, using the funds he stole to pay lawyers to challenge the convictions, sentence, restitution amount, and forfeiture amount, which is nearly every component of the judgment against him.
FACTUAL BACKGROUND
To explain Moss’ crimes the Eleventh Circuit began its analysis with how Medicare and Medicaid determine how much health care providers will be paid. It explained that Medicare and Medicaid are federally funded health care programs. Medicare pays “claims,” which are requests by a health care provider to be “reimbursed” (paid) for services provided to Medicare recipients. It also contains a code for the procedure or service performed.
The “CPT codes,” which stands for Current Procedural Terminology codes are a national uniform coding structure created for use in billing and overseen by the American Medical Association. They are used by all health insurance companies and by Medicare and Medicaid. A code represents at least two things: the procedure or service performed and the level of complexity involved in it. One type of procedure or service can have more than one CPT code because the same procedure may, in some cases, be more complex than in others. Generally, for any given category of procedure, the more complex the performance, the higher the number used for its code. In turn, a higher CPT code generally gets a higher reimbursement amount from Medicare.
Most of the fraud in this case involves claims for visits to nursing homes. For Medicare to pay a claim several requirements must be met. The service must be provided to a real patient who is properly enrolled as a Medicare beneficiary; it must be provided by a health care provider properly licensed and “enrolled” as a Medicare provider; it must be a service covered by Medicare; and it must be properly documented and billed. The service also must be reasonable and medically necessary. Health care providers sign a “certification statement” agreeing that they will comply with all of those requirements and will not submit false claims.
To properly bill Medicare at the physician’s rate for services provided in a nursing home setting, the physician must be the one in the patient’s room directly providing the service to the patient. When an assistant performs the service, the claim submitted to Medicare must disclose that fact.
THE FRAUD SCHEME
Moss was the medical director and attending physician at four nursing homes. He recruited Shawn Tywon to be his physician’s assistant and, as it turned out, his co-conspirator. Moss had Tywon help with the nursing home patients, and he trained Tywon how to conduct visits with those patients.
Between January 2012 and January 2015 Moss billed 31,714 claims to Medicare for nursing home visits; 477 were coded as 99306, the highest code for “initial nursing facility care.” And 25,468 were coded as 99309, and 5,769 as 99310, which are the two highest codes for “subsequent nursing facility care.”?Those numbers suggest a staggering amount of work, a seemingly impossible amount of it. And, as it turned out, that amount of work was impossible.
The claims Moss submitted would have required him to see more than 50 patients a day for 293 of the days in the three-year conspiracy period, and even more than 100 a day on some days and more than 150 a day on other days. Not only that, but based on how long the CPT manual suggested those visits should take, Moss was sometimes billing Medicare for services that added up to more than 24 hours a day. He did that on 275 days. And on some days he billed for services that would have taken him more than 70 hours on that day. The services Moss billed on one stellar day would have required him to put in nearly 100 hours in that one 24-hour period. Moss alone miraculously stretched some of his days to far more than 24 hours. If truthful Moss proved Einstein wrong and was able to stop the running of time and work harder than humanly possible.
MIRACLES OR FRAUD
Of course, Moss’ miracle was non-miraculous, it was old-fashioned fraud.
Moss’ billing revealed he personally had seen 345 Medicare patients and 193 Medicaid patients in Georgia. Those two sets of claims are outstanding in the field of Moss’ fraudulent claims because, instead of being in Georgia treating patients on those dates, as he claimed, Moss had been in Las Vegas gambling.
In addition to submitting claims that were fraudulent because he had not performed the services that he had billed in his name and at his rate, he submitted claims that were fraudulent in another way. He also submitted claims that were fraudulent because – whoever he claimed had performed them – they were for services that were medically unnecessary or did not involve the level of complexity indicated by the CPT codes that Moss put on those claims.
Tywon, medical assistant, testified that “probably for 95 percent of the time or more” when he himself had visited a patient, “there was nothing to do.” Instead, what he would do is walk into the patient’s room, ask if everything was okay, and because a “majority of the time” the patient said he didn’t need anything, Tywon would then leave. He usually did not do a physical examination, take blood pressure, or check the patient’s pulse. As Tywon stipulated in his plea agreement, he would just “lay eyes” on the patients, spending only “3 to 5 minutes with” them during visits, except for in the uncommon event that they had some actual medical need. According to him, there was no medical purpose for most of the visits and he did not think he had any reason to be making them. Moss had him make the visit anyway and bill it at the highest code solely because Moss wanted to increase his payments from Medicare, which he did. In that way, Moss added another layer of fraud on top of billing in his name instead of Tywon’s name; he also billed for any services that were provided as if they were far more complex and time consuming than they actually were.
Moss went to trial. After a seven-day trial, a jury found him guilty on all counts. T
SENTENCING
Moss’ presentence investigation report recommended a guidelines range of 78 to 97 months. That range was based primarily on a loss of $6,701,163, which was the amount Moss had billed to Medicare and Medicaid; that factor alone caused an 18-level increase to his offense level.
The court sentenced Moss to 97 months imprisonment, the top of the guidelines range. It also ordered him to forfeit $2,507,623.69 and to pay $2,256,861.32 in restitution.
CONVICTION ISSUES
ANALYSIS
The aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss, i.e., is evidence sufficient to establish the amount of the intended loss, if not rebutted.
Moss intentionally billed in a way that would maximize the money he received from Medicare. As the district court put it: “[W]hile [Moss] may not have expected that Medicare . . . would reimburse him at a rate of 100 percent, it is apparent that he manipulated his billings to maximize his profits. The way Moss “maximized” his profits was by always billing his claims at a rate higher than the one in Medicare’s schedules. By billing more than the scheduled amount, Moss ensured that he always got the full amount Medicare would pay.
RESTITUTION
To no one’s surprise, Moss contends that the $2,256,861.32 the district court ordered him to pay in restitution is too much. Under 18 U.S.C. § 3663A(c), [the Mandatory Victims Restitution Act,] a defendant convicted of fraud must pay restitution to victims of the offense. Restitution must be based on the amount of loss actually caused by the defendant’s conduct and reduced by the value of legitimate medical services provided.
When services are not medically necessary, Medicare reimburses at a rate of $0. Because Moss’ estimate failed to embrace, salute, or even nod at medical necessity, the district court did not clearly err in giving it little or no value.
Given Moss’ failure to identify a single properly billed claim, he did not persuade the appellate court that the district court clearly erred.
ZIFL OPINION
The Eleventh Circuit admitted that, because Medicare and Medicaid payments are made on the “honor system” it is wide open to fraud perpetrated by health care professionals with no honor. Moss was a provider with no honor. That the scheme succeeded for many years is because the system believes all of the health care professional are honorable and just paid Moss what he asked even when a simple calculation would have shown that that he was billing for 70 hours of service in a single day. Moss made a great deal of dishonest money only to complain that he was not allowed to keep the fruits of his crime and as a kind and professional doctor was now required to practice medicine in the federal gray bar hotel – the federal prison. Hopefully this will deter other doctors from trying to emulate his crime.
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(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at https://www.zalma.com and [email protected] .
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