The  Department of Justice (DOJ) last week announced new criminal charges against several individuals in the healthcare industry for allegedly stealing almost $500 million in COVID-19 relief funds from federal health programs.

DOJ takes 'largest-ever' action against COVID-19 fraud cases

In its latest action against COVID-19 relief fraud, DOJ has filed criminal charges against 18 individuals in California, Florida, Louisiana, New York, Puerto Rico, and Utah for allegedly stealing $490 million in funds from federal health programs. Previously, the agency took enforcement actions against similar fraud schemes in May 2021 and April 2022.

According to Assistant Attorney General Kenneth Polite Jr., this "announcement marks the largest-ever coordinated law enforcement action in the United States targeting healthcare fraud schemes that exploit the COVID-19 pandemic."

The individuals who are part of the latest DOJ round of charges are accused of taking advantage of pandemic relief programs, such as the  Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program, the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) Program, and the Health Care Fraud Unit's Provider Relief Fund (PRF) Initiative.

According to the U.S. Government Accountability Office (GAO), pandemic relief programs were likely vulnerable to significant fraud because they "lacked appropriate controls to prevent, detect, and recover fraudulent and other improper payments." In fact, GAO estimated that there were $36.7 billion in "improper payments" to the EIDL and PPP programs alone in 2022.

What are some of the COVID-19 fraud charges?

Several individuals working in healthcare, including doctors and nurses, were part of DOJ's latest round of charges. Some of the alleged fraud schemes orchestrated by these individuals include:

Lab testing scams

In California, Matias Clinical Laboratory, which was operated by Lourdes Navarro and her husband Imran Shams, performed COVID-19 screening for nursing homes, rehab facilities, assisted living facilities, and primary and secondary schools. Although the couple was previously excluded from participating in all federal healthcare programs, they allegedly billed Medicare, HRSA, and a private insurer for respiratory pathogen panel (RPP) testing.

They are also accused of fraudulently adding claims for tests that their clients did not order or were not needed. In addition, they reportedly informed HRSA that some patients had been diagnosed with COVID-19 when they had not been to obtain reimbursement for RPP screening claims. According to court documents, the couple used these funds — which included an "additional loss" of $241 million to payers — on "real estate, luxury items, travel, and household expenses."

False billing of uninsured patients

Anthony Hao Dinh, an ear, nose, and throat specialist who owns Elite Care Medical  Group and two surgery centers, is accused of being behind a $230 million fraud scheme involving HRSA's COVID-19 testing and treatment program for uninsured patients. According to federal authorities, Dinh was the second-highest biller in the country to the program.

In court documents, Dinh was accused of billing the uninsured program for services provided to patients with insurance or for services that were either not provided or medically unnecessary. Some of these services include a biopsy with an endoscope and complex control of a nosebleed.

Between 2020 and 2022, Dinh allegedly lost over $100 million from these funds through high-risk options trading. In addition, Dinh, along with two others, are accused of submitting 70 fraudulent loan applications to the PPP and EIDL programs to obtain $3 million in loans.

Billing for ineligible COVID-19 test kits

Latresia Wilson, a physician, and Corey Alston, chief administrative officer of  Heritage Pharma Group, have been charged with illegally purchasing Medicare beneficiary identification numbers and using them to bill the program for over-the-counter COVID-19 test kits, which were ineligible for Medicare reimbursement.

Wilson and Alton allegedly submitted more than $8.4 million in Medicare claims, with Medicare ultimately paying over $2.6 million for these test kits. Most of these funds were funneled to Alston, but Wilson "retained a portion of the Medicare reimbursement payments for her own use," court documents said.

Appropriating COVID-19 funds for personal use

Melissa Watson, who owned a primary care clinic and medical spa, is accused of submitting false and fraudulent documents to HRSA's PRF and EIDL programs to obtain $1.1 million for her businesses.

Although these funds were intended to fund healthcare professionals providing COVID-19 treatments and assist small businesses affected by the pandemic, Watson reportedly used these funds for personal expenses, such as purchasing luxury cars, real estate, a boat, a trailer, a time share, and "multiple luxury vacations."

Fraudulent COVID-19 vaccine cards

In New York, Kathleen Breault and Kelly McDermott, who ran  Sage-Femme Midwifery, were charged with conspiracy to defraud the United States for distributing roughly 2,700 forged COVID-19 vaccination cards.

According to court documents, the duo enrolled their practice as a COVID-19 vaccine administration site and became one of the busiest sites in the state, "outpacing large, state-run vaccination sites despite being a small midwife practice." They are accused of forging vaccination cards for patients; providing false vaccination cards to ineligible individuals, including minors and non-U.S. citizens; and destroying COVID-19 vaccine vials instead of administering doses.

Similarly, Nicholas Frank Sciotto, from Utah, and Kyle Blake Burbage, from South Carolina, are accused of manufacturing and selling up to 120,000 fake COVID-19 vaccination cards online to customers across the United States, particularly in areas with stricter pandemic rules.

According to DOJ, "the defendants significantly undermined the CDC's COVID-19 vaccination program and other governmental health-and-safety regulations and protocols." (Putka, MedPage Today, 4/21; Kacik, Modern Healthcare, 4/21; DOJ press release, 4/20; DOJ case summaries, accessed 4/24)