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10 Charged in Relation to $15 Million Scheme to Defraud Medicare by Billing for Physical Therapy Services Never Provided

Posted by Fay Arfa | Feb 01, 2016 | 0 Comments

LOS ANGELES – Federal authorities this morning arrested three defendants who are charged in relation to a scheme that fraudulently sought approximately $15 million from Medicare for physical therapy services that were never provided to “patients.”

The three men arrested today are among 10 defendants who have been charged in recent months for their roles in the scheme that led Medicare to pay approximately $7.8 million after receiving fraudulent bills.

The scheme revolved around clinics called Rehab Dynamics, RSG Rehab and Innovation Physical Therapy that operated at various locations in Los Angeles and Orange counties. These clinics were owned and operated by two men – Joseff Sales, 39, of Buena Park, a licensed physical therapist, and Daniel Goyena, 38, of Buena Park, a licensed physical therapist assistant – who were indicted in October.

Sales pleaded guilty on January 25, and Goyena pleaded guilty on December 17. Both men pleaded guilty to health care fraud and paying illegal kickbacks before United States District Judge Dean D. Pregerson, who is scheduled to sentence the defendants later this year.

A third man indicted in October – David Y. Kim, 53, of the Arlington Heights district of Los Angeles, a licensed chiropractor and former owner/operator of New Hope Clinic – is a fugitive who is currently being sought by federal authorities. Kim is charged with four counts of health care fraud, five counts of receiving illegal kickbacks and two counts of aggravated identity theft.

Today's announcement is the result of this morning's arrests of three defendants related to the scheme who were indicted over the past two weeks. The men taken into custody today are:

• Byong Chun “David” Min, 67, of Irvine, co-owner/operator of Glory Rehab Team, which operated as Dream Hospital in Orange County;

• Jason S. Min, 34, of Irvine, David Min's son, who was the other owner/operator of Glory Rehab; and

• Simon Hong (who is also known as Seong Wook Hong), 54, of Brea, who was the owner of several clinics in Walnut, Torrance and other Southland locations that operated under companies called Hong's Medical Management, CMH Practice Solution, and HK Practice and Solution.

The Mins and Hong are expected to be in United States District Court this afternoon to be arraigned in their respective cases.

“Health care fraud affects all Americans by driving up medical costs and, in the case of Medicare fraud, stealing money from taxpayers,” said United States Attorney Eileen M. Decker. “Medicare is regularly targeted by fraud, but the Department of Justice is diligently investigating and prosecuting those responsible for defrauding this important public health care program.”

The indictment against the Mins alleges that over a two-year period they provided Medicare beneficiary information to Rehab Dynamics and RSG Rehab. The Medicare beneficiary information was used to submit fraudulent bills to Medicare for services supposedly provided at Glory Rehab – services that were never provided. Rehab Dynamics and RSG Rehab allegedly received nearly $600,000 as a result of these fraudulent claims to Medicare, and approximately $323,380 was paid in kickbacks to the Mins. The indictment charges the Mins with six counts of health care fraud, six counts of receiving illegal kickbacks and two counts of aggravated identity theft.

The case against Hong alleges that Medicare beneficiaries who came to his clinics sometimes received massages, acupuncture or therapy treatment plans, but they did not receive any services that are reimbursable under Medicare rules. Nevertheless, according to the indictment, from the spring of 2009 until November 2013, bills were submitted to Medicare that claimed the “patients” had received physical therapy treatment from Rehab Dynamics and RSG Rehab, which led Medicare to pay nearly $3 million. The indictment alleges that Hong received $1,640,674 as a result of the fraudulent scheme. Hong is charged with eight counts of health care fraud, nine counts of receiving illegal kickbacks and two counts of aggravated identity theft.

Taxpayers are the ultimate victims and pay the price when superficial claims for treatment are paid to scam artists,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI and our partners rely on the public and the medical community to report fraudulent schemes so that we can hold accountable those who steal funds appropriated for legitimate medical conditions.”

According to court documents, the scheme involving Rehab Dynamics and RSG Rehab ran from early 2008 until early 2014. In some cases, Medicare beneficiaries who went to Rehab Dynamics, RSG Rehab and the other companies involved in the scheme received massages or acupuncture – services that were not covered by Medicare – from practitioners who were not licensed to perform physical therapy. In exchange for patient referrals, the principals in Rehab Dynamics and RSG Rehab paid kickbacks that were about 55 percent of the reimbursement they received from Medicare.“

The OIG and our law enforcement partners will continue to aggressively pursue both licensed providers, such as physical therapists, and the management companies who operate such clinics that steal from the Medicare system,” said Christian J. Schrank, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General.

Previously in this investigation, four other defendants pleaded guilty and are pending sentencing. They are:

• Marlon Songco, 39, of Sylmar, the president of Rehab Dynamics, pleaded guilty in June to conspiracy;

• Eddieson Legaspi, 39, of Lomita, an employee of Rehab Dynamics, pleaded guilty in August to conspiracy to commit health care fraud;

• Ohun Kwon, 49, of Fullerton, the owner/operator of E.K. Medical Management, which referred patients to Rehab Dynamics, pleaded guilty in August to conspiracy to commit health care fraud; and

• Leovigildo Sayat, 39, of Torrance, an employee of RSG Rehab, pleaded guilty in October to conspiracy to commit health care fraud.

The charge of conspiracy carries a statutory maximum sentence of five years in federal prison, conspiracy to commit health care and the substantive health care fraud counts carry a maximum sentence of 10 years in prison, the kickback counts carry a maximum sentence of five years in prison, and aggravated identity theft carries a mandatory two-year sentence.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The investigation in the cases involving Rehab Dynamics was conducted by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services – Office of Inspector General.

CONTACT: Assistant United States Attorney Byron J. McLain Major Frauds Section

Central District of California DOJ / Release No. 16-015 / January 29, 2016

About the Author

Fay Arfa

Fay Arfa has the distinction of being Certified as a Specialist in two separate areas of law – Criminal Law as well as Appellate Law – by the California State Bar, Board of Specialization. The National Board of Trial Advocacy has also awarded her a board Certification in Criminal Trial Advocacy. ...


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