Two former owners and an employee of an ambulance services provider headquartered in Guam pleaded guilty yesterday for their roles in a health care fraud and money laundering scheme that resulted in a loss to the United States of approximately $10.8 million. This is one of the largest single Medicare ambulance fraud cases prosecuted nationwide.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Shawn N. Anderson of the Districts of Guam and the Northern Mariana Islands, Special Agent in Charge Eli S. Miranda of the FBI’s Honolulu Field Office, Special Agent in Charge Justin Campbell of IRS Criminal Investigation’s (IRS-CI) Seattle Field Office and Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Regional Office made the announcement.
Clifford P. Shoemake, 63, of Guam, Casey C. Conner, 60, of Saipan, and Nicholas A. Shoemake, 31, of Guam, the former owners and an employee, respectively, of Guam Medical Transport (GMT), pleaded guilty before U.S. District Judge Frances Tydingco-Gatewood of the District of Guam, to one count of conspiracy to commit health care fraud and one count of conspiracy to engage in monetary transactions with the proceeds of specified unlawful activity. The defendants are scheduled to be sentenced on Jan. 29, 2020.
Medicare and TRICARE are federal health benefit programs, which, under certain conditions, reimburse providers for medically necessary, non-emergency, scheduled ambulance transportation to and from dialysis treatments, provided to beneficiaries with end stage renal disease (ESRD). Ambulance services are medically necessary when provided to such beneficiaries who cannot be transported by any other means without endangering their health, or were bed confined before, during and after the transportation.
According to their admissions at the plea hearing, from approximately March 11, 2010, to approximately March 21, 2014, the defendants engaged in a conspiracy to defraud Medicare and TRICARE by submitting claims for reimbursement for medically unnecessary ambulance services that GMT provided to patients with ESRD. The defendants admitted they were aware that GMT was transporting patients who did not qualify for ambulance transportation under applicable Medicare and TRICARE regulations and guidelines, with which they had failed to familiarize themselves. Specifically, the defendants admitted they were aware that many of GMT’s patients were not bed-confined, and did not have acute medical conditions that would otherwise qualify them for ambulance transportation. As part of the scheme, the defendants directed GMT employees to remove from internal documents references to GMT patients’ ability to walk because they knew that Medicare and TRICARE would not provide reimbursement for the patients. The defendants further admitted they were aware of, but failed to address, concerns about GMT’s Medicare and TRICARE billing practices raised by other GMT employees. The conspiracy resulted in improper payments to GMT of approximately $10.8 million, the defendants admitted.
The defendants further admitted to conspiring to engage in money transactions involving the proceeds of their health care fraud scheme. Specifically, they admitted that they used the proceeds of their health care fraud scheme to pay for personal expenses, such as vacations, personal income taxes, a personal residence and other items. They then caused these expenses to be falsely categorized as business expenses of GMT, thereby improperly reducing GMT’s taxable income and GMT’s corresponding tax liability, they admitted.
To date, five former GMT owners and employees have pleaded guilty to their roles in defrauding Medicare and TRICARE in this scheme. One additional former employee pleaded guilty to obstructing justice by falsifying materials that GMT prepared in response to an HHS subpoena that was served on GMT in approximately September 2012.
The FBI, IRS-CI and HHS-OIG investigated the case. Senior Litigation Counsel John A. Michelich and Trial Attorney Michael P. McCarthy of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Marivic P. David of the Districts of Guam and the Northern Mariana Islands prosecuted the case.