Headlines that Matter for Companies and Executives in Regulated Industries

$140 Million Healthcare Fraud Case to Be Retried

On June 27, a Houston federal district court judge indicated that a $140 million healthcare fraud case, which ended in mistrial in December 2022 due to allegations of prosecutorial misconduct, would be retried. Judge Alfred Bennett denied motions from the defendants seeking to bar retrial and rejected their arguments that allowing the US Department of Justice (DOJ) to retry the case would violate the prohibition against double jeopardy. The court also ruled that misconduct by the DOJ — the omission of evidence during trial — was not malicious or intentionally fraudulent.

Judge Bennett found that the DOJ’s failure to make Brady disclosures for a third of its witnesses made it clear that a mistrial was “manifestly necessary.” Manifest necessity refers to circumstances where having a fair trial is impossible. According to Judge Bennett, various forms of relief proposed by defendants to address the DOJ’s omissions, including ordering the jury to disregard tainted evidence or admonishing the DOJ in the jury’s presence, would not result in a fair trial, and a mistrial was the only option.

In his order, Judge Bennett noted that he was “greatly dissatisfied” with the prosecutors’ conduct but granting defendants’ double jeopardy motions would eliminate the DOJ’s opportunity to hold defendants accountable for their actions, which a grand jury found were potentially criminal.

A copy of the order can be found here.


DOJ Announces Charges Against 78 Defendants for Healthcare Fraud

The DOJ announced that a two-week nationwide law enforcement action that included coordination with federal and state agencies resulted in criminal charges against 78 defendants for their alleged participation in various health care fraud and opioid abuse schemes. In total, the DOJ alleges that the schemes resulted in over $2.5 billion in fraudulent claims submitted to the government for reimbursement. The defendants allegedly used the proceeds from these false claims to purchase luxury items such as yachts and jewelry.

The law enforcement action targeted several alleged schemes, including a telemedicine scheme where defendants allegedly targeted the elderly and disabled people with various forms of advertising to induce them to contact “boiler-rooms” where individuals used high-pressure sales to convince them to purchase unnecessary medical equipment and prescriptions. Another scheme involved purported software and services companies selling templated doctors’ orders for orthotic braces and pain creams in exchange for kickbacks. In total, the DOJ alleges that this conspiracy resulted in the submission of $1.9 billion in fraudulent claims to Medicare and other government insurers.

The government also charged 10 defendants for their alleged role in submitting fraudulent claims for prescription drugs. The defendants include the owner of a wholesale pharmaceutical distribution company that is alleged to have purchased illegally diverted HIV medication and then sold it after representing that it had been legitimately obtained. Other defendants include 24 physicians and other licensed medical professionals who are alleged to have illegally distributed opioids, including through schemes involving kickbacks to recruiters in exchange for patient information that was used to submit fraudulent bills for Medicare reimbursement.

A copy of the DOJ’s press release can be found here.


Former NBA Player Pleads to Healthcare Fraud

Former NBA player Darius Miles pleaded guilty to one count of conspiracy to commit health care fraud for his alleged role in a scheme to defraud the NBA’s health benefits program.

The government alleges that the scheme involved former players conspiring with medical professionals to submit false claims. In total, the government contends that the players submitted $5 million worth of fraudulent invoices. As previously covered in the Investigations Blog, the government brought charges against 24 individuals and, following Miles’ plea, only three defendants have not accepted plea deals or been sentenced. Miles, who admitted to submitting fraudulent dental and chiropractic bills, agreed to pay more than $359,000 in restitution as part of his plea agreement. Sentencing has been set for October 24.

A link to our prior coverage of this matter can be found here.


Pharmacist Faces 10 Years in Prison for Stealing COVID-19 Vaccination Cards

Tangtang Zhao, an Illinois pharmacist, was convicted of 12 counts of theft of government property for allegedly stealing COVID-19 vaccination cards from a pharmacy and selling them to over 200 buyers across the country. The government claims that Zhao sold 630 vaccination cards that he marketed as “Straight from the CDC” via an online marketplace in just three weeks in March and April 2021.

Zhao is scheduled to be sentenced on November 28, 2023, and faces up to 10 years’ imprisonment.

A copy of DOJ’s press release can be found here.

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