Agents Raid 7 Companies in Medicare Fraud Probe

The Tampa Tribune

TAMPA Prosecutors accuse 25 medical supply companies of sapping Medicare of at least $7.3 million in bogus claims.

By SARAH HUNTLEY of The Tampa Tribune

Armed with warrants and a two-year pile of evidence, state and federal agents raided seven medical supply companies Thursday, hoping to shut down what authorities are calling a massive fraud scheme.

As the investigators gathered documents that could result in felony charges, a federal judge froze the accounts of 25 businesses and 21 individuals.

The dual investigations – one criminal, the other civil stem from allegations that the businesses swindled Medicare and other tax-supported insurance programs out of at least $7.3 million. As the probe continues, prosecutors expect the number to grow.

Authorities say the elaborate scheme, which included businesses in Pasco, Pinellas and Hillsborough counties, was carried out through door-to-door sales in low-income and elderly neighborhoods throughout Florida.

In the typical scenario, as outlined in court papers, salesmen promised residents motorized wheelchairs costing about $6,000, but either delivered nothing or swapped out the chairs for less pricey scooters.

In addition to overbilling for the scooters, which cost about $4,300 less than the wheelchairs, the sales reps are accused of plying recipients with power lift seats, pressure mattresses and hospital beds they didn*t need.

Hoping to avoid scrutiny, investigators said, the companies paid some doctors and beneficiaries kickbacks. In other instances, the companies are accused of forging papers that said the supplies were medically necessary.

Although the claims were submitted under several different provider numbers, investigators traced many back to the same two companies: Goldstar Medical Services of Tampa and Bay Area Medical Products of Largo. Several other corporations were set up under the names of relatives, authorities said.

Agents with the FBI, the federal Department of Health and Human Services and the state’s Medicaid Fraud Control Unit began looking into the operation after receiving complaints from some recipients.

In August 1997, former Goldstar salesman Gary Flewelling filed a false claims complaint in U.S. District Court. Originally sealed, the case was made public for the first time Thursday.

State and federal prosecutors have joined Flewelling’s complaint which seeks reimbursements plus fines of up to $10,000 for each phony submission. The Federal False Claims Act allows whistleblowers such as Flewelling to collect up to 25 percent of any money the government receives. Neither he nor his attorney could be reached for comment.

No one had been arrested Thursday evening, but prosecutors are exploring fraud and money laundering charges, both of which carry hefty penalties.

“The United States is committed to ensuring the integrity of our health care system, and we will aggressively prosecute violators,” U.S. Attorney Charles Wilson said.

Two of the people linked to the corporations under investigation have prior criminal records. In 1993, the FBI and the Polk County Sheriffs Office accused Ernest Sleeth of Goldstar Medical Services and the TransCapital Investment Group of illegally selling obscene materials. He pleaded no contest to racketeering charges.

Barry Haught, who operates TransCapital with Sleeth, was also charged. The outcome of his case was not available Thursday.

Neither Sleeth nor Haught could be reached for comment.

Authorities say Thursday’s case is just one example of a growing – and costly – problem.

An audit released in July 1997 found that $23 billion, or 14 percent, of the previous year’s Medicare payments were questionable or improper.

The whistleblower in this case is represented by Nolan & Auerbach, P.A., a law firm located in Ft. Lauderdale, FL.

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.


Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.


Bruce A. Moilan Sr.

$27 Million

Bruce Moilan was a seasoned hospital systems expert by the time he contacted our Firm. At the time he decided to file his qui tam lawsuit, he was employed by South Texas Health System as a System Director for Materials Management. In this position, he oversaw $24 million in annual purchases of supplies and equipment and helped determine budget, reduction and cost analysis throughout the contract bidding and negotiations process. His job was to insure proper implementation for purchasing, receiving and management of inventory, for McAllen Hospitals, L.P.


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