A federal grand jury in Texas last month indicted 21 individuals involved in a massive bribery and kickback scheme for referring certain patients to physician-owned Forest Park Medical Center in Dallas.

The indictment, unsealed Dec. 1, describes a four-year conspiracy, resulting in the payment or receipt of $40 million in bribes and kickbacks for referring certain patients to out-of-network hospital Forest Park Medical Center (FPMC). These payments were funneled through various shell companies into the pockets of surgeons and physicians, as well as owners of healthcare clinics, hospital consulting companies, and more.

“[T]he government will not tolerate corrupt practices by medical providers motivated by greed,” Dallas FBI Special-Agent-in-Charge Thomas Class, said in a statement. “The FBI will continue to work with our law enforcement partners to identify those who manipulate and defraud our healthcare system and to seek their prosecution.”

According to the indictment, the referred patients were primarily those with high reimbursing out-of-network private insurance benefits or benefits under certain federally funded programs. FPMC’s owners, managers, and employees also attempted to sell patients with lower reimbursing insurance coverage, namely unwitting Medicare and Medicaid beneficiaries, to other facilities in exchange for cash.

As a result of the bribes and kickbacks, from 2009 to 2013, FPMC billed such patients’ insurance plans and programs over half of a billion dollars and collected over $200 million in paid claims. These bribes and kickbacks included more than $10 million to the Department of Defense healthcare program TRICARE, more than $25 million to the Department of Labor FECA healthcare program, and more than $60 million to the federal employees’ and retirees’ FEHBP healthcare program, and FPMC collecting more than $200 million in tainted and unlawful claims.

FPMC was founded by Alan Beauchamp; Richard Toussaint; Wade Barker; Wilton Burt, and others as an out-of-network hospital; as such, it was free to set its own prices for services and was generally reimbursed at substantially higher rates than in-network providers. “FPMC’s strategy was to maximize profit for physician investors by refusing to join the networks of insurance plans for a period of time after its formation, allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement,” according to the Justice Department.

Toussaint and Barker co-owned FPMC; Beauchamp and Burt managed it. Beauchamp was FPMC’s chief operating officer and was an investor in FPMC. Toussaint was the president of FPMC’s board of directors. Barker, a surgeon, was on FPMC’s board of directors. Burt was a managing partner of FPMC and was also an investor in FPMC.

FPMC’s referral coordinator, Smith, owned a shell entity—Unique Healthcare—that the co-conspirators created to funnel bribe and kickback payments to surgeons in exchange for those individuals referring patients to FPMC. Smith tracked surgeries and referrals so surgeons and referral sources could receive “credit.” 

Another FPMC employee, Carli Hempel, was FPMC’s director of bariatric services; she led efforts to sell Medicare and Medicaid referrals from certain coconspirators to a non-FPMC facility.

Jackson Jacob owned a shell entity known as Adelaide Business Solutions that he and others used to funnel bribe and kickback payments to surgeons, primary care physicians, chiropractors, lawyers, worker’s compensation preauthorization specialists, and others in exchange for those individuals referring patients to FPMC or to surgeons who used the hospital’s facilities to perform certain medical procedures, including surgeries.

Another company, Entity A, co-owned by Toussaint and Barker, was a commercial real estate group that provided commercial real estate services to FPMC and was used by the coconspirators as a conduit for bribe and kickback payments. Kelly Loter owned an advertising agency that received bribe and kickback payments on behalf of physicians. 

Others who received bribe and kickback payments in exchange for referring patients to FPMC include surgeons, David Kim and William Nicholson, investors in FPMC, who received $4.6 million and $3.4 million respectively. Three other surgeons—Douglas Won, Michael Rimlawi, and Shawn Henry—also received bribe and kickback payments in exchange for referring their patients to FPMC. The indictment alleges that Won received $7 million and Rimlawi received $3.8 million in bribe and kickback payments. Henry was also an investor in FPMC.

“The surgeons spent the vast majority of the bribe payments marketing their personal medical practices, which benefitted them financially, or on personal expenses—such as cars, diamonds, and payments to family members,” the Justice Department said.

Other physicians who received bribe and kickback payments in exchange for referring patients to FPMC or to surgeons who performed medical procedures at the hospital include:

Mrugeshkumar Shah, a pain management doctor;

Frank Gonzales, a chiropractor, received approximately $385,000 in bribes and kickbacks;

Gerald Foox, who owned an orthopedic clinic, received approximately $500,000 in bribes and kickbacks. 

Iris Forrest, a worker’s compensation preauthorization specialist, received approximately $450,000 in bribe and kickback payments;

Royce Bicklein, a worker’s compensation lawyer, received approximately $100,000 in bribe and kickback payments; 

Israel Ortiz owned a clinic that received approximately $1.1 million in bribe and kickback payments;

Andrew Hillman and Semyon Narosov, who controlled a hospital consulting company, received approximately $190,000 in bribe and kickback payments;

According to the indictment, as part of the conspiracy, certain co-conspirators also paid bribes and kickbacks of $500 per month to approximately 40 primary care physicians and practices to refer patients to the hospital or to surgeons associated with the hospital.  In addition to paying surgeons and primary care physicians, certain co-conspirators also paid a host of others, including FECA beneficiaries, workers’ compensation preauthorization specialists, lawyers, businesses, runners, and chiropractors. 

Certain coconspirators also “rented” space in doctors’ and chiropractors’ offices in outlying cities, including Foox’s clinic in Tyler, and clinics in Midland and Odessa, Texas, in exchange for patients being referred to FPMC or to surgeons who performed medical procedures at the hospital.

Charges levied

Each of the 21 defendants is charged with one count of conspiracy to pay and receive health care bribes and kickbacks; the maximum statutory penalty upon conviction is five years in federal prison and a $250,000 fine.

Beauchamp is charged with 10 counts of offering or paying and soliciting or receiving illegal remuneration, in violation of the federal Anti-Kickback Statute, and aiding and abetting. Toussaint, Barker, and Burt are each charged with five counts of this offense.  Jacob is charged with eight, Shah with three, Rimlawi with two, and Won, Kim, Nicholson, Gonzales, and Forrest each with one count of this offense.  The maximum statutory penalty upon conviction is five years in federal prison and a $25,000 fine.

Beauchamp is also charged with seven counts of violating the federal Travel Act and aiding and abetting.  Jacob is also charged with six counts of this offense; Toussaint, Barker, Burt, and Jacob are also each charged with four counts of this offense; Foox is also charged with two counts of this offense; and Won, Kim, Nicholson, Henry, and Gonzales are also each charged with one count.  The maximum statutory penalty upon conviction is five years in federal prison and a $250,000 fine.

Beauchamp, Toussaint, Barker, and Burt are also each charged with two counts of conspiracy to commit money laundering.  Jacob and Henry are also each charged with one count of this offense.  The maximum statutory penalty upon conviction is 20 years in federal prison and a $250,000 fine.

The indictment also includes a forfeiture allegation that would require the defendants, upon conviction, to forfeit to the United States any property, real or personal, which constitutes or is derived from proceeds traceable to the offenses. Restitution could also be ordered.

The case was investigated by the FBI, the U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration, the U.S. Department of Defense - Defense Criminal Investigative Service, the U.S. Office of Personnel Management Office of Inspector General, and Internal Revenue Service Criminal Investigation, with assistance from the Food and Drug Administration and the U.S. Postal Inspection Service. 

Assistant U.S. Attorneys Andrew Wirmani, Kate Pfeifle and Mark Tindall are prosecuting the case.

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