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Judge orders Philippines company to pay $100M for fraud
By RYAN J. FOLEY – 2 days ago

MADISON, Wis. (AP) — A federal judge on Thursday ordered a Philippines company to pay back $100 million it swindled from the U.S. military's health insurance program.

Health Visions Corp., which pleaded guilty to mail fraud, was ordered to liquidate all assets within 10 months and give the proceeds to the U.S. government.

Federal prosecutors say the company bilked the military's Tricare program out of $99.9 million between 1998 and 2004. The program insures 9.2 million current and retired servicemen and dependents worldwide.

The company routinely inflated claims by more than 230 percent, operated a phony insurance program and billed for medical services never delivered, court records showed, and the Pentagon moved slowly to uncover the scheme.

Assistant U.S. Attorney Peter Jarosz described Health Visions as the biggest violator yet in a long-running investigation into Tricare fraud in the Philippines.

"This is basically a death sentence for the company. It will no longer exist and that will protect the Tricare program since it was the biggest violator," he said after the hearing. "We got what we needed out of this prosecution."

The United States closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained.

Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers.

On top of the $99.9 million in restitution, U.S. District Judge Barbara Crabb ordered the company to forfeit an additional $910,000 and pay a $500,000 fine.

Health Visions will be required to sell off land, office buildings and hospitals in the Philippines and an airplane and houses in the U.S. under Crabb's order. The company has run into problems selling hospitals because of ownership disputes, and Jarosz said it was uncertain whether the U.S. government would ever recover the full amount.

The company's lawyer, Christopher Kelly, declined to comment. He told Crabb he had nothing to add beyond a plea agreement, which was unsealed on Thursday.

Health Visions and its former president, Thomas Lutz, were hit with a 75-count indictment in 2005.

Lutz, a U.S. citizen who turned 41 on Thursday, has pleaded guilty to his role in a kickback scheme and could face up to five years in prison when he is sentenced. A date for that hearing will be scheduled shortly now that the company has been sentenced, Jarosz said.

The case has been an embarrassment to the Pentagon, where different branches have blamed one another for allowing the company's fraud to slip through the cracks.

The fraud was so extensive that claims from the Philippines increased by 2,000 percent between 1998 and 2003 even as the number of Tricare beneficiaries remained the same. Payments to the country went up from less than $3 million to more than $60 million during that time.

The Office of Inspector General has criticized Tricare's managers for waiting years to cut off payments to Health Visions after suspecting the company of fraud.

William Winkenwerder, former assistant secretary of defense for health affairs, said Thursday that the inspector general's office was partly to blame because it refused his requests to send additional investigators to the country. He said he worked hard to stop the problems after they came to his attention in 2003.

Asked how the company was able to defraud the program of $100 million, Winkenwerder said: "There were some very deceptive practices that were occurring. The fact that this was a faraway location did add to the challenge of uncovering problems. And they didn't get away with it ultimately, which is the good news."

The investigation has been handled by prosecutors in Wisconsin because WPS Health Insurance, a Madison company, is the subcontractor that handles most overseas claims. About three dozen others have been indicted, mostly U.S. military veterans and Philippine doctors.

Source:  www.google.com

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US military health insurance fraud continues in RP--retirees


By Teresa Cerojano
Associated Press
First Posted 11:52:00 04/27/2008


MONCADA, Philippines--The clinic where Dr. Alberto Marzan allegedly played his role in a $100 million (€64.12 million) swindle of the US military's health insurance program sits abandoned, along with the adjacent family home.

But a legacy remains, with a US Navy retiree saying scams are still rife even after a federal judge ordered a Philippines company to pay back the money it skimmed.

Health Visions Corp., which pleaded guilty to mail fraud, was ordered to liquidate all assets within 10 months and give the proceeds to the US government. Federal prosecutors say the company bilked the military's Tricare program out of $99.9 million (€63 million) from 1998-2004. The program insures 9.2 million active and retired US servicemen and dependents worldwide.

The company routinely inflated claims by more than 230 percent, operated a phony insurance program, and billed for medical services never delivered, court records showed, as the Pentagon moved slowly to uncover the scheme.

Assistant US Attorney Peter Jarosz described Health Visions as the biggest violator yet in a long-running investigation into Tricare fraud in the Philippines.

Marzan, one of the longest-wanted fugitives in the probe, recruited dozens of military retirees to falsely claim they and their relatives were confined at his clinic and received expensive medical services, US prosecutors say.

He made fraudulent claims of $1.5 million (€1 million) to the program and was paid more than $1 million (€640,000), prosecutors add. In return, he typically paid kickbacks to the retirees.

A US federal grand jury returned a 35-count indictment against Marzan in 1999, but he has apparently remained free in the Philippines after vanishing from Moncada.

Neighbors, village leaders, police and former co-workers in the Moncada town hall, where he used to sit as councilor, say the doctor's family slipped out of town more than three years ago and remains underground.

Claro de Castro, head of the National Bureau of Investigation's Interpol division, said his office has arrest warrants for a doctor and a beneficiary. But he refused to identify them or say if the wanted doctor was Marzan because agents are still working on the case.

Jerry Minor, a Navy retiree and administrator of Lifeline Medical Center--a Tricare-accredited clinic in western Olongapo city near the former US-run Subic Naval Base--said many accredited doctors and clinics in the city continue to overprice their services.

Retirees are usually lured into the scheme because the clinics do not charge them the required 25-percent share of the cost, instead sending the whole bill to Tricare, Minor said.

One clinic blacklisted by Tricare for fraudulent claims simply changed its name and is back in business, he told The Associated Press in an interview Friday.

Minor said a retiree's wife who was convinced by a clinic four years ago to sign a stack of blank claim forms--one is filled out every time a beneficiary goes to a clinic--was shocked to find out last December that several women were collecting on claims using her details.

"It was like signing a blank check," he added.

He said he tried to find out for himself about the overpricing by going to a doctor, who told him he would be charged P850 ($20; €12.82) for a 15-minute consultation. The price was higher than the P500 ($12; €7.7) fee per consultation under Tricare regulations.

Minor said when he brought up his share of the cost, the doctor told him, "Don't worry about it, you pay nothing. Tricare does."

He said he has reported the anomalies to Tricare officials but the scams continue.

Vicky Gross, a retiree's widow who used to work for Health Visions, said many doctors and clinics don't charge beneficiaries their share of costs but she did not know what they were charging to Tricare.

Austin Camacho, a spokesman for the Pentagon's Tricare Management Activity, said the program has implemented new controls to combat fraud in the Philippines in recent years. Among other things, the program looks for patterns of aberrant practices and reviews claims that appear excessive.

In 2001-07, the program refused to pay $288 million (€185 million) in fraudulent or excessive claims from the country, he said.

Still, he said it is hard to catch all fraud overseas and Tricare does not exclude providers "without sufficient evidence."

"This can be difficult in an environment where law enforcement resources are limited, providers are not always cooperative and are not subject to the US government's subpoena power," he said.

Rufino Bayao Jr., a Navy retiree who served a 1.5-year US prison term and three years of probation for taking part in the scam with Marzan, advises retirees not to fall for the bait.

"If they are caught, they will also suffer," he told AP in his home in northern Tayug town. "It's not worth it."

Aside from the prison term, Buyao is having more than a third of his $800 (€513) monthly pension deducted to pay for $132,390 (€84,887) in restitution that a US court ordered him to pay.

He says he got only P200,000 ($4,760; €3,052) from Marzan for signing false claims, with much of the money going for drinking binges.

Source:  www.inquirer.net

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