On February 26th, 2013

Special Agents At Work: Couple Plead Guilty In $16.6 Million Medicare Fraud Scheme

ASA-DOJOur California Statewide Law Enforcement Association (CSLEA) members who are special agents in the California Department of Justice (DOJ) Bureau of Medi-Cal Fraud and Elder Abuse helped crack a $16.6 million Medicare Fraud case that resulted in the arrest of two people who, this week, pleaded guilty to conspiring to defraud Medicare.

Rajinder Singh Paul, 69, and his wife, Baljit Kaur Paul, 65, of Redlands, each pleaded guilty to one count of conspiracy to commit health care fraud.  They each face a maximum penalty of 10 years in prison and a $250,000 fine.

"This case is a shining example of DOJ special agents working with federal agencies to see that justice is served," said CSLEA President Alan Barcelona.  "Because of their thorough investigation, this couple, former owners of a medical equipment wholesale supply company,  admitted their actions and face severe penalties.  This was going on for years."

A United States Department of Justice (USDOJ) press release describes the case:

"In court documents, Rajinder and Baljit Paul admitted that they were the president and vice president, respectively, and shareholders of AHPK Inc., a medical equipment wholesale supply company located in Redlands and Ontario, Calif., and formally known as Major’s Wholesale Medical Supply Inc.  The Pauls later sold Major’s Wholesale Medical Supply Inc. to Major’s Wholesale Medical Supply LLC (collectively, “Major’s”) and, according to court documents, remained employed at Major’s Wholesale Medical Supply LLC as consultants until they were terminated in February 2009.

During the time the Pauls either owned or worked as consultants for Major’s, Major’s sold durable medical equipment (DME) almost exclusively to customers who owned and operated DME supply companies, according to court documents.  A majority of Major’s customers were Medicare providers and relied on Medicare to make money, which they did by billing Medicare for the DME that they purchased from Major’s.

One of the more popular items of DME that the Pauls sold at Major’s were power wheelchairs.  Court documents indicate that to attract customers, the Pauls sold power wheelchairs to Major’s customers wholesale for between $850 to $1,000 each.  Major’s customers, however, billed these power wheelchairs to Medicare at a rate of between $3,000 to $6,000 per wheelchair.

The Pauls admitted they knew that Major’s customers were dependent on Medicare for their revenue, and that Major’s customers could not pay Major’s unless Medicare paid the customers first.  To foster customer loyalty, the Pauls engaged in a variety of conduct over a period of six years that helped Major’s customers defraud Medicare, including by providing Major’s customers with false inventory purchase agreements that showed they had higher credit limits than they really did.  Major’s customers submitted these false inventory purchase agreements to Medicare to prove, as required by Medicare, the ability to purchase the volume of DME they billed.

The Pauls also admitted they provided Major’s customers with backdated invoices, knowing customers were billing Medicare for power wheelchairs and DME before the customers actually purchased or delivered the equipment.  The Pauls admitted that by backdating these invoices, they provided Major’s customers with the paper trail the customers needed to prove to Medicare that they had both purchased the DME and purchased it before they submitted their claims to Medicare.  According to court documents, the Pauls backdated or falsified invoices for more than 100 different customers.

Court documents indicate that two of many customers who conspired with the Pauls to defraud Medicare owned and operated a number of fraudulent DME supply companies in the Los Angeles area, including one customer who used “straw” or nominee owners to operate the customer’s companies.  The Pauls admitted they provided these two customers with false inventory purchase agreements and backdated invoices that the customers used to defraud Medicare.  The Pauls admitted that as a result of their conduct, these two customers were able to use their fraudulent DME supply companies to submit approximately $16,662,143 in false claims to, and receive approximately $9,743,609.42 in ill-gotten reimbursement payments from, Medicare."  ( http://www.justice.gov/opa/pr/2013/February/13-crm-235.html )

The Pauls are scheduled to be sentanced July 8, 2013.

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