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Hospital Executive Charged In $1.4B Rural Hospital Billing Scheme

Lauren Weber and Barbara Feder Ostrov, Kaiser Health News

A Miami entrepreneur who led a rural hospital empire was charged in an indictment unsealed Monday in what federal prosecutors referred to as a $1.four billion fraudulent lab-billing scheme.

In the indictment, prosecutors stated Jorge A. Perez, 60, and 9 others exploited federal laws that permit some rural hospitals to cost considerably greater charges for laboratory testing than different suppliers. The indictment, filed in U.S. District Court in Jacksonville, Florida, alleges Perez and the opposite defendants sought out struggling rural hospitals after which contracted with exterior labs, in far-off cities and states, to course of blood and urine assessments for individuals who by no means set foot within the hospitals. Insurers have been billed utilizing the upper charges allowed for the agricultural hospitals.

Perez and the opposite defendants took in $400 million since 2015, in response to the indictment. Many of the hospitals run or managed by Perez’s Empower firms have since failed as they ran out of cash when insurers refused to pay for the suspect billing. Half of the nation’s rural hospital bankruptcies in 2019 have been affiliated along with his empire.

“This was allegedly a massive, multi-state scheme to use small, rural hospitals as a hub for millions of dollars in fraudulent billings of private insurers,” stated Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division in a statement.

Attempts to succeed in Perez for remark Monday night have been unsuccessful. But final yr when Perez spoke to KHN, he stated he was dropping sleep over the likelihood he may go to jail after propping up struggling rural hospitals.

“I wanted to see if I could save these rural hospitals in America,” Perez stated. “I’m that kind of person.”

Pam Green, a former evening cost nurse on the now-shuttered Horton Community Hospital in Horton, Kansas (inhabitants below 1,700), stated she hopes Perez and his colleagues obtain lengthy jail sentences.

“He just devastated so many people, not just in Kansas, but in Oklahoma and all the other places where he had hospitals,” stated Green, 58, of close by Muscotah, Kansas. “I went months and months without pay, without health insurance. He robbed the community.”

Green recalled that cash was so tight below Perez’s administration of her former hospital that the electrical energy was shut off at the very least twice and staffers had to herald their very own provides. She stated she is owed about $12,000 in again pay, in addition to cash for uncovered dental bills and a office harm that will have been coated had workers’ insurance coverage or employees’ compensation premiums been paid.

A KHN investigation printed in August 2019 detailed the rise and fall of Perez’s rural hospitals. At the peak of his operation, Perez and his Miami-based administration firm, EmpowerHMS, helped oversee a rural empire encompassing 18 hospitals throughout eight states. Perez owned or co-owned 11 of these hospitals and was CEO of the businesses that offered their administration and billing providers.

Perez styled himself a savior of rural hospitals, swooping into small cities with guarantees to save lots of their struggling services utilizing his “secret sauce” of economic ventures. Multiple workers instructed KHN they’d no concept what occurred to the cash their hospitals earned after Perez and his associates took management, because the services appeared perpetually starved for money.

Over the previous two years, amid mounting authorized challenges and considerations in regards to the lab-billing operation, insurers reduce off funding and his empire crumbled. Overall, 12 of the hospitals have entered chapter and eight have closed. The staggering collapse left a whole lot of workers with out jobs and small cities throughout the Midwest and South with out lifesaving medical care.

The 4 rural hospitals named in the indictment are Campbellton-Graceville Hospital in Graceville, Florida; Regional General Hospital of Williston, Florida; Chestatee Regional Hospital in Dahlonega, Georgia; and Putnam County Memorial Hospital in Unionville, Missouri.

The indictment marks the third main case federal prosecutors have filed alleging billing fraud at Perez-affiliated hospitals. In October, David Byrns pleaded guilty to a federal cost of conspiracy to commit well being care fraud involving a Missouri hospital he managed with Perez. A Missouri Auditor General report beforehand discovered that the 15-bed hospital, Putnam County Memorial in Unionville, had acquired about $90 million in questionable insurance coverage funds in lower than a yr.

In July 2019, Kyle Marcotte, proprietor of a Jacksonville Beach, Florida, habit remedy heart, pleaded guilty for his half in a $57 million lab-billing scheme involving two Perez-affiliated hospitals, Campbellton-Graceville and Regional General Hospital. Marcotte admitted cooperating with unnamed hospital managers to offer urine samples from his sufferers for lab testing that was billed via the agricultural hospitals and, in trade, getting a reduce of the proceeds.

Perez, on his personal and thru Empower-affiliated firms, in 2016 and 2017 bought South Florida properties that totaled greater than $three.7 million, together with three condos on Key Largo, in response to property information. He instructed KHN final yr that the Florida properties have been purchased with earnings from unrelated software program firms however declined to present particulars. He and his brother Ricardo Perez, if convicted, should forfeit over $46 million, in response to the indictment, in addition to two Key Largo condos and different properties.

Another defendant, Aaron Durall, if convicted, may lose $184.four million and a six-bedroom, 6,500-square-foot dwelling within the prosperous Parkland district north of Fort Lauderdale, Florida.

Perez-affiliated hospitals additionally face ongoing lawsuits in Missouri and different states filed by dozens of insurers asking for a whole lot of tens of millions in restitution for allegedly fraudulent billings. In these courtroom paperwork, Perez repeatedly has denied wrongdoing. He instructed KHN final yr that his lab-billing setup was “done according to Medicare and state guidelines.”

For former workers of EmpowerHMS and members of the affected communities, the indictment represents vindication. As the corporate foundered, a whole lot of workers labored with out pay in useless efforts to maintain their hospitals afloat. They would uncover later that, together with the lacking paychecks, their insurance coverage premiums had not been paid and their medical insurance policies had been discontinued. In the June 2019 interview, Perez acknowledged that, as funds withered, he stopped paying worker payroll taxes.

“It’s nice to think he might be held accountable,” stated Melva Price Lilley, a former X-ray technician at Washington County Hospital in Plymouth, North Carolina, which has reopened with new house owners below a brand new title. “At least there’s a chance that he might have to suffer some consequences. That gives me some hope.”

Lilley, 56, stated she and different workers couldn’t retrieve their retirement financial savings from the bankrupt hospital till about three weeks in the past. She has been making an attempt to repay about $68,000 in medical payments from a again surgical procedure she wanted for a office harm that wasn’t coated by employees’ compensation insurance coverage premiums that went unpaid for hospital workers. She stays unable to work full time.

I-70 Community Hospital, an Empower facility in Sweet Springs, Missouri, has remained closed since February 2019. Tara Brewer, head of the Sweet Springs Chamber of Commerce and the native well being division, stated she was virtually shocked to listen to that Perez had gotten indicted after months of questioning if something would occur.

While she hopes these fees deliver closure to her group, she stated, the fees do little to repair the closed hospital doorways for a county that has had one of many highest per capita charges of coronavirus instances in Missouri.

“What he did to us will linger on for a long time,” Brewer stated.

Kaiser Health News (KHN) is a nationwide well being coverage information service. It is an editorially unbiased program of the Henry J. Kaiser Family Foundation which isn’t affiliated with Kaiser Permanente.

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