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Clemency for Medicare Fraudster Belies Justice Enforcement Push

Feb. 20, 2020, 10:46 AM

President Donald Trump’s decision this week to commute the 35-year sentence of a Miami woman convicted of defrauding Medicare came amid a 13-year effort by the Justice Department to combat serious health-care fraud.

Since 2007, a DOJ task force has been dedicated to rooting out doctors or clinicians who file false or inflated claims to federal health programs. The program recoups millions in taxpayer money each year.

Trump commuted the sentence of Judith Negron, who was convicted on 24 counts of defrauding Medicare through her mental health care business. She declined a plea deal and in 2011 was convicted by a jury of conspiracy to commit health-care fraud, health-care fraud, conspiracy to pay and receive illegal health-care kickbacks, conspiracy to commit money laundering, money laundering, and structuring to avoid reporting requirements.

Maximum sentencing would have given her life imprisonment as co-owner of a Miami-area health-care company, American Therapeutic Corp.

Negron’s co-owners Lawrence Duran and Marianella Valera both took plea deals and were sentenced to 50 years and 35 years, respectively, for their roles in the scheme. Their sentences weren’t commuted.

Trump’s actions “send a horrible message to the front-line fraud fighters not only at the DOJ, but at the state level,” said Matthew J. Smith, executive director of the Coalition Against Insurance Fraud.

Trump appears to have bypassed the traditional vetting process for commutation in which a request is filed with the DOJ, a department committee evaluates the request on the merits, and then makes a recommendation, said Craig Holman, government affairs lobbyist for Public Citizen.

“He has the authority to do this, but it’s not how it has ever been done before,” he said of Trump.

Holman said Negron should have served more than eight years before she was released Feb. 18. “Not only did she refuse any kind of plea deal in the course of the trial dealing with the 24 counts against her, but her operation caused severe suffering for the patients that she was exploiting,” he said.

The three owners of American Therapeutic Corp. paid bribes and kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to their facility, the DOJ said at the time. They then submitted fraudulent claims to Medicare that included intensive hospital treatment for severe mental illness. They altered patient files and therapists’ notes, prosecutors said.

‘Back-Breaking’ Work

The president has the absolute right to change peoples’ sentences but in doing so supplants the decision of a judge or jury, said Habib Ilahi, a partner at Stinson LLP and former federal prosecutor with the fraud section of DOJ’s Civil Division.

Ilahi said the work of DOJ investigators is back-breaking, and securing a conviction can take years.

Insurance fraud costs consumers $80 billion a year, Smith said. To let Negron “walk out the door after a judicial trial, after a judicial sentence, runs entirely counter to the hard work, dedication and effort that DOJ and state fraud fighters have devoted to cracking down on Medicare fraud.”

The Justice Department did not respond to a request for comment on the commuted sentence. Jennifer Saulino, a partner at Covington & Burling LLP who tried Negron’s case while at DOJ, declined to comment. The Fraud Section’s former acting assistant chief, Benjamin D. Singer, who tried the case with her, didn’t respond to a request for comment. Singer is now a partner at O’Melveny & Myers LLP.

The White House declined to comment on the commutation, but in a press release said Negron’s “clemency is supported by the Clemency for All Non-Violent Drug Offenders, or CAN-DO, Foundation,” a nonprofit that advocates for individuals who were severely punished for taking their case to trial instead of cooperating with prosecutors in a plea deal.

The release also lists former interim Attorney General Matt Whitaker as one of Negron’s supporters, as well as Alice Johnson, who was released from prison after reality star Kim Kardashian helped persuade Trump to commute her sentence on June 6, 2018.

Johnson served time with Negron and two other women whose sentences were commuted by Trump on Feb. 18, said Amy Ralston Povah, founder of the CAN-DO Foundation.

Medicare Fraud Strike Force

The DOJ launched the Medicare Fraud Strike Force in 2007 as a joint initiative between DOJ and HHS to target the worst fraud offenders.

The agency works to spot abnormal billing patterns in geographic “hot spots” with high fraud rates. The unit has charged more than 4,200 defendants who, together, have billed the Medicare program nearly $19 billion. The DOJ runs 15 strike force units that operate in 24 federal districts.

In fiscal year 2018, there were 425 federal health-care fraud offenders, and 73% got a prison sentence, according to the U.S. Sentencing Commission. The average sentence for a federal health-care fraud offender was 30 months in 2018.

The median loss in health-care fraud offenses was more than $1 million, and more than 23% involved losses of more than $3.5 million, the commission reported.

Some 32% of federal health fraud sentences went beyond sentencing guidelines in 2018 because they involved a government health program and losses that exceeded $1 million, the commission reported.

Another 20% of sentences were harsher due to sophisticated means to carry out or conceal the fraud, and 25% received enhanced sentences for taking a lead or supervisory role in the scheme.

The Southern District of Florida alone brought charges against 95 people for federal health-care fraud in 2018.

There’s no question DOJ has been much more aggressive in recent years in going after people who commit white-collar crimes, particularly health care fraud, said Michael Ruggio, a partner at Nelson Mullins Riley & Scarborough LLP, who specializes in health-care fraud.

“The only section of the Department of Justice that generates revenue back into the system is really the health-care fraud area. That’s why so much of the resources are being poured into it,” he said.

“It definitely looks like there may be some inconsistency here, so that’s definitely possible but I want to couch that by saying this is a very, very large sentence. In the context of white-collar and health-care fraud, this is getting up there,” Ruggio added.

Negron’s sentence is definitely above average, but it isn’t the largest imposed on a health fraudster. In 2017 the owner of a Texas home health agency received a 75-year prison sentence for billing Medicare for $13 million services that weren’t necessary. That case also went to trial.

Negron couldn’t be reached for comment.

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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