HOUSTON – Two brothers have been convicted on charges of conspiracy to commit health care fraud, health care fraud and money laundering, announced U.S. Attorney Kenneth Magidson.
Kevin Olufemi Davies, 29, and his brother Melvin Olusola Davies, 28, owned and operated KMD Healthcare Services Inc. (KMD) from their home in a gated townhouse community in Houston. As part of their guilty pleas, they admitted they used stand-in emergency medical technicians (EMT) who were not employees or affiliated with KMD to pass the state inspection necessary for enrollment in the Medicare program.
Medicare and Medicaid only pay for medically necessary ambulance services in vehicles designed and equipped to respond to medical emergencies and for patients who cannot be safely transported by any other means of transportation. Medicare also requires two individuals to staff ambulance transports, including at least one licensed EMT.
The brothers admitted that KMD transported Medicare beneficiaries in private passenger vans and that only one EMT was present. The EMTs wrote up ambulance “run sheets” even though the Medicare beneficiaries did not travel by ambulance and did not need ambulance services. The individuals transported were not bed bound, could walk and routinely used non-ambulance transport in their daily activities. One patient even walked to her own therapy session, but KMD billed Medicare $51,952 for her ambulance transportation.
The brothers admitted they paid a Houston physician $500 per medical necessity order in order to bill Medicare.
KMD billed Medicare, Medicaid and Tricare (another government health program) approximately $6,293,108 in false and fraudulent claims for ambulance services that were not provided and not medically necessary. They received at least $2,201,137 from Medicare, $219,924 from Medicaid and $16,735.29 from Tricare as payment for those claims.
The brothers have agreed to forfeit vehicles they purchased with the fraudulent health care proceeds, including a 2010 Porsche Panamera and a 2012 Mercedes Benz CLS. They have also agreed to pay full restitution to the health care programs.
U.S. District Judge Lynn Hughes accepted the pleas today and has set sentencing for March 13, 2017. At that time, the Davies face up to 10 years in federal prison on each count of conviction as well as a possible $250,000 fine. Both defendants have been in federal custody since their arrest on May 25, 2016, where they will remain pending that hearing.
The FBI, IRS – Criminal Investigation, Texas Office of the Attorney General’s Medicaid Fraud Control Unit conducted the investigation. Assistant U.S. Attorney Julie Redlinger is prosecuting the case.