Managers or ministers?

Court holds HME providers to higher degree of accountability
Friday, June 3, 2016

SAN FRANCISCO – The Ninth Circuit Court of Appeals has upheld a judge’s decision to give an HME provider charged with alleged Medicare fraud a stiffer sentence.

The Ninth Circuit Court, in a recent 2-1 decision, agreed that a California federal judge rightly applied an “abuse-of-trust enhancement” when sentencing husband-and-wife team Patrick Sogbein and Adebola Adebimpe to prison terms of 144 months and 51 months, respectively.

“We hold that medical equipment suppliers can have the requisite ‘professional or managerial discretion’ for the abuse-of-trust adjustment to apply,” the two affirming judges wrote. “They are responsible for determining the need for the equipment they provide and personally certify the validity of their claims to Medicare.”

As part of a scheme that spanned years, Sogbein and Adebimpe allegedly enlisted the help of Dr. Edra Calaustro to refer patients to their companies, Debs Medical Distributors in Van Nuys, Calif., and Dignity Medical Supply in Santa Clara, Calif. In turn, they allegedly paid Calaustro, who made the referrals without performing the required medical exams, $100 per prescription.

All told, from December 2006 through July 2011, the couple was paid more than $1.6 million for more than 400 allegedly fraudulent power wheelchair claims.

Healthcare attorney Jeff Baird says the decision to apply the “abuse-of-trust enhancement” to an HME provider—an adjustment historically applied only to “white coat” professionals like physicians—puts them further on the hook.

“To impose the ‘abuse of trust’ standard on a DME supplier conveys the message that DME suppliers will be held to a higher degree of accountability if they certify a need for equipment,” said Baird, chairman of the Health Care Group at Brown & Fortunato.

The sole dissenting judge argued unsuccessfully that the application of the “abuse-of-trust enhancement” in this case mischaracterizes the role of the HME provider.

“In my view, DME suppliers do not exercise substantial professional or managerial discretion within Medicare’s reimbursement scheme because Medicare’s rules and regulations confine them to a ministerial role and leave all critical determinations of medical need to the beneficiary’s physician,” the judge wrote.



Was Dr. Calaustro also given a harsher sentence under this provision? I would think the physician is also in a position of trust regarding prescriptions he writes!