Reporter's notebook: When the FBI comes calling

Friday, July 20, 2012

YARMOUTH, Maine – Typically, when the HME industry makes headlines as part of a fraud bust, the companies involved are little more than sham operations. But, in recent months, two well-established providers with strong ties to the industry were the target of FBI raids: Visalia, Calif.-based Care Medical in May, and Novato, Calif.-based Pacific Pulmonary Services in February. HME talked to industry experts recently who confirmed that this is happening more often. Here's what they had to say.

The attorney

"There are efforts to crack down in general," said Neil Caesar, president of the Health Law Center. "You should you have a policy in place when something like this happens." The policy should cover the basics: Ask to see the warrant, call a lawyer, and monitor everything that happens. "It's all common sense but people get scared and flustered and when that happens they get very confessional."

The former fraud investigator

What happens to the business while it's under investigation? That depends, says Wayne van Halem, president of the van Halem Group. "They can still operate as they normally would if there has been no administrative action taken against them or there's been no civil action taken saying they must cease operations." If it's at a point where the FBI is seizing documents, they have some evidence, he says. "One of their administrative remedies is to suspend their payments and still operate but they are not going to get paid. They would still submit claims and those payments would go into an escrow account."

The former provider

Law enforcement is not your friend in these situations, says Frank Margulis, a former HME provider who, several years ago, was indicted on 165 counts for fraud and wrongdoing—and found guilty of one. "I offered to take their polygraph to clear this up. They weren't interested. My attorney said, 'you know everything Frank billed for he placed.' Is it fraud or a mistake? Is it sloppy billing or is it criminal? They don't care. By the time I proved myself, the damage was done."