Tuesday, June 4, 2013

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Houston-area Doctors Ordered to Pay More than $37 Million in Restitution in Health Care Fraud Case Investigated by State and Federal Officials

The U.S. Attorney for the Southern District of Texas issued the following news release on June 3, 2013:

Local Physicians Sentenced Again – Must Pay More than $37 Million in Restitution

HOUSTON - Drs. Arun and Kiran Sharma, two local physicians previously sentenced for defrauding Medicare, Medicaid and more than a dozen private insurers, have appeared in federal court for a resentencing hearing on restitution and forfeiture issues, United States Attorney Kenneth Magidson announced today.

The Sharmas, both 58, are a married couple who operated medical clinics in Baytown and Webster under the name Allergy, Asthma, Arthritis and Pain Center. In April 2010, they pleaded guilty to conspiracy to commit health care and mail fraud as well as one count of health care fraud for their decade-long scam of billing health care providers for injection procedures that they did not perform. U.S. District Judge David Hittner later sentenced Arun and Kiran Sharma to 15 and eight years in federal prison, respectively. A restitution order of more than $40 million was imposed, and the defendants were ordered to forfeit all property funded with the proceeds of their fraudulent scheme, including their $700,000 home in Kemah, numerous parcels of real property and a large number of investment accounts.

The Sharmas appealed the restitution and forfeiture aspects of their sentences to the United States Court of Appeals for the Fifth Circuit. The convictions were upheld, but the case was remanded for re-sentencing on the narrow issue of the amount of restitution owed to their victims. At today's hearing, Judge Hittner ordered the Sharmas to pay $37,670,826.32 in restitution and ordered them jointly liable for a personal money judgment in the same amount. To date, the United States has seized assets valued at $27.6 million (cash, bank accounts, investment accounts, annuities and jewelry) as well as real estate potentially worth an additional $3.5 million after payment of liens.

All of the proceeds of these forfeitures will be returned to the victims of the Sharmas’ fraud.

Originally charged in June 2009, the Sharmas operated the clinics at multiple locations in Baytown and Webster. Arun Sharma was known as an easy touch for prescribing the “pain cocktail” of hydrocodone, Xanax and Soma. In addition to the prescription of narcotics, a large part of the practice was to provide patients with injections of lidocaine combined with steroids which, at times, provided temporary relief of various joint and muscle pain. Although the injections given to the patients were superficial, they were billed falsely to the insurance companies as facet joint injections, paravertebral injections, sacroiliac nerve injections, sciatic nerve injections and various nerve block injections.

The pain management practice at the clinics grew quickly during the time period of the conspiracy. The doctors went from seeing an average of 50-60 patients per day in 1998 to more than 100 per day beginning in 2003 with a high of 279 on Jan. 6, 2005. From 1998 through 2002, Kiran Sharma saw pain patients at the clinics in addition to her own allergy patients. She maintained a modest allergy practice and would sign patient procedure forms and superbills, falsely indicating that she had administered facet joint injections or other paravertebral injections when in reality she did not. She also prescribed the pain cocktail when she saw pain management patients.

Nearly every patient was prescribed one or more controlled substances and put on a regimen of shots every two weeks. The patients were required to sign the medical progress and procedure notes in their patient chart to prove they were at the clinic and received the shots. Arun Sharma tried to convince all patients to have shots at every visit, but many of the patients did not want the shots every two weeks. For those patients who ultimately refused the shots, he regularly required the patients to sign the progress and procedure notes even though they received only a prescription for controlled substances and did not receive any injections. By the beginning of 2000, Arun Sharma had certain patients sign blank procedure/progress notes and then used those forms to generate a superbill in order to bill the insurance companies for injection procedures on days when the patient was not in the clinic.

Dr. Kiran Sharma hired several foreign medical graduates (FMGs) over the course of the conspiracy to assist in the movement of patients through the clinics. Several of the FMGs helped add fictitious patient examination information to the blank progress/procedure notes after Arun Sharma had added non-existent medical procedures to the blank forms so that insurance companies could be billed as if the person had been in the clinic when in reality they had not. Kiran Sharma witnessed the FMGs creating the fictitious patient progress/procedure notes and knew their ultimate purpose was to bill the insurance companies for procedures that never occurred.

Demonstrative of the implausibility of the volume of patients who allegedly received injections is the fact that the defendants’ own records purport to show that more than 100 patients purportedly received injections on 708 different days during the conspiracy. Further, their fraudulent billings showed that as many as 279 patients allegedly received injections on Jan. 6, 2005.

Both of the defendants have been in custody since their guilty pleas in April 2010 and were remanded back to their respective federal correctional institutions following the resentencing hearing.

This case was jointly investigated by agents of the FBI, the United States Department of Health and Human Services Office of Inspector General, Texas Attorney General’s Medicaid Fraud Control Unit, Office of Personnel Management - Office of Inspector General, Railroad Retirement Board - Office of Inspector General, Drug Enforcement Administration and the National Insurance Crime Bureau.

The case was prosecuted by Assistant United States Attorneys Al Balboni and Jason Varnado. Assistant United States Attorneys Kristine Rollinson and Lauretta Bahry handled the forfeiture matters and the appeal, respectively.