Friday, November 05, 1999
Three Tristaters convicted of $14M Medicare scheme
Businessmen face prison in N.H. court
BY BEN L. KAUFMAN
The Cincinnati Enquirer
Three suburban Cincinnatians were convicted Wednesday in New Hampshire of conspiracy to defraud Medicare of more than $14 million.
John W. Conway, 5 Mariners Cove, Montgomery; Donnie W. Lawson, 510 Carrington Lane, Loveland; and Norman P. Lehrman, 11760 Gable Glen Lane, Montgomery, are free on their promise to return to court Feb. 14 for sentencing.
Their companies, Samaritan Health Systems, of Massachusetts, and Heart Trace of Nashua, N.H., were found guilty of conspiracy.
Mr. Conway, Mr. Lehrman and Heart Trace were convicted of two counts of false statements to Medicare and 22 counts of mail fraud.
Mr. Lawson was found guilty of making false statements to Medicare.
The fraud involved more than 160,000 tests on an estimated 6,000 nursing home patients in 12 states in the early 1990s, but prosecutions were consolidated before U.S. District Judge Steven McAuliffe in Concord, N.H.
There, Assistant U.S. Attorney Robert M. Kinsella said the defendants were paid $4.2 million by Medicare in New Hampshire and Massachusetts before the conspiracy was uncovered.
The $14 million reflects the total billing, he said.
Under federal sentencing guidelines, the men face prison terms of 45 to 87 months each, and their corporations face multimillion-dollar fines.
Restitution is mandatory, although it was unclear whether either corporation can afford repayment or fines because the firms are out of business, Mr. Kinsella said.
Mr. Conway, 67, was an owner of both companies. Mr. Lawson, 41, was manager of Samaritan and an employee of Nashua. Mr. Lehrman, 55, was president of Samaritan and an owner of Nashua.
Mr. Kinsella said the fraud involved transtelephonic electrocardiograph tests done on nursing home residents.
These tests require a small electronic device that records heart activity of patients whose dizziness or shortness of breath are intermittent.
They didn't need them, Mr. Kinsella said Thursday.
Further, instead of one test, each patient received three, and because each recorder required three wires to be attached to the patient's body, defendants fraudulently billed Medicare for nine tests.
No physician is being prosecuted. Mr. Kinsella said they agreed to the tests in the belief that new data would clarify patients' conditions and no one would be billed.
Assistant U.S. Attorney Patrick M. Walsh in Concord is pursing a parallel $9 million civil action against Heart Trace of Nashua and the three men.
A fine and restitution in the criminal case won't diminish his claims because federal law allows treble damages in Medicare civil fraud.
Mr. Walsh said New Hampshire and Massachusetts had relatively high Medicare reimbursement rates in the early 1990s, so heart test electronic data were transmitted by telephone to Nashua and, for a shorter period, to Samaritan, from the individual patients' monitors.
The firms sent the readings back to physicians in the 12 states and that service allowed defendants to bill New Hampshire and Massachusetts rather than patients' home states with lower reimbursement rates.
Mr. Walsh said the $14 million conspiracy total and $4.2 million Medicare payment were national figures.
However, he is limited to seeking the almost $3 million loss from tests in New Hampshire, with the treble penalty. That's why his claim which has been on hold during the prosecution is for about $9 million.
Mr. Kinsella and Mr. Walsh said they knew of no other states pursuing reimbursement from the Concord defendants.
One prosecution witness was Hugo Sakson, of Dogwood Lane in Florence, Ky. He and his firm, Transcor, provided similar tests, Mr. Kinsella said, but Mr. Sakson was not charged with any crime.
However, Mr. Sakson and Transcor were accused of Medicare fraud in a civil action filed by Assistant U.S. Attorney Daniel E. May in Chicago.
They settled two years ago for a $188,000 payment plus return of equipment valued at $12,000, Mr. May said. The accord also covered Sakson-Transcor dealings in Kentucky, Ohio and Indiana, Mr. May said.
As with the New Hampshire defendants, Mr. Sakson and Transcor are barred permanently from federal health-care programs.
Thursday, Mr. Sakson would not comment, citing advice by his lawyer.
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