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Medicare Fraud Strike Force Convicts Owner of Miami Durable Medical Equipment Company of Defrauding Medicare


WASHINGTON – The owner of a Miami health care company has been convicted on charges of defrauding the Medicare program of millions of dollars, the Department of Justice announced today.

After a three-day trial in Miami, the federal jury found Gisela Valladares, owner of PRN Home Health Care, Inc., guilty on five counts – conspiracy to defraud the U.S. Department of Health and Human Services and submit false claims and receive kickbacks, conspiracy to commit health care fraud, and three counts of receiving kickbacks. Valladares faces a maximum sentence of 30 years in prison. She is scheduled to be sentenced on Sept. 20, 2007, before U.S. District Judge Michael Moore.

Two Miami pharmacy owners, Alfonso Rodriguez and Henry Gonzalez, billed the Medicare program for over $20 million based on the referral of false prescriptions for “compounded” aerosol medications provided by Valladares and other co-conspirator durable medical equipment (DME) owners. After billing Medicare based on the prescription provided by Valladares, the pharmacy owners would kick back half of the money paid by Medicare to her. Testimony at trial revealed that Valladares and other company owners paid elderly Medicare patients to get access to their Medicare information to support the scheme.

The owners of the pharmacies testified that the key to the scheme’s success was acquiring the patients’ information – the role Valladares played in the conspiracy. The pharmacies also testified that the medication that was billed to Medicare was not legitimate and was illegally manufactured in shell pharmacies that contained almost no real pharmaceutical products. According to one pharmacy owner, his business had no foot traffic, no patients ever came to the pharmacy, and he stocked no sundries or real medicine – it was simply a mill to defraud Medicare and they got the prescriptions from DME owners like Valladares.

Patients testified that the aerosol medications they received, including Albuterol, Metaproterenol, and Ipatropium Bromide, were simply thrown into the trash because they did not need them. These aerosol drugs are introduced into the lung through a piece of durable medical equipment known as a nebulizer. Medicare pays for such aerosol medication through the Part B program. Knowing the Medicare payment rules, the conspirators exploited the program by manufacturing the unnecessary, non-FDA approved medicine through a process known as “compounding.”

Evidence at trial established that patients were paid $100 per month for the use of their Medicare cards. Pharmacy owners testified that the scheme was designed from the beginning to defraud Medicare and they were unwilling to buy FDA-approved medication to fill those prescriptions – and relied on the defendant to obtain fraudulent prescriptions for medications that were not commercially available so that the pharmacies could “compound” the medications and then bill Medicare. Patients testified at trial that they did not want the boxes of medicine and the only reason they went to the doctor was at the direction of the defendant and for the purpose of receiving cash kickbacks.

The prosecution resulted from the establishment of the Medicare Fraud Strike Force, a multi-agency team of federal, state and local investigators in south Florida designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing data.

“Fighting health care fraud is critical to help ensure the viability of our health care program for generations to come,” said Assistant Attorney General Alice S. Fisher of the Criminal Division. “Today’s conviction was due to the hard work of the many federal, state and local agencies that are part of the recently established Medicare Fraud Strike Force in South Florida, which will continue to prosecute cases such as this.”

“The U.S. Attorney’s Office in the Southern District of Florida implemented a health care fraud task force to fight fraud and abuse in our community,” said U.S. Attorney R. Alexander Acosta of the Southern District of Florida. “Our involvement in today’s multi-agency anti-fraud effort is a critical part of our continuing resolve to safeguard the integrity of the Medicare program by stopping fraud and abuse, particularly in cases of durable medical equipment and infusion therapy frauds.”

The case was prosecuted by Trial Attorney Hank Bond Walther and Special Trial Attorney Robert K. DeConti of the Fraud Section of the Department of Justice in Washington, D.C., with the investigative assistance of the U.S. Department of Health and Human Services, Office of the Inspector General, and the FBI. The strike force teams are led by a federal prosecutor supervised by both the Criminal Division’s Fraud Section in Washington and the office of U.S. Attorney R. Alexander Acosta of the Southern District of Florida. Each team has four to six agents, at least one agent from the FBI and HHS Office of Inspector General, as well as representatives of local law enforcement. The teams operate out of the federal Health Care Fraud Facility in Miramar, Fla.


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