Two Miami men convicted after $1.4 billion healthcare scam targeting rural hospitals

Two Miami men were convicted Monday for conning vulnerable addiction treatment patients, rural hospitals and health insurance companies out of $1.4 billion in a healthcare fraud scam that spanned Florida, Georgia and Missouri, according to authorities.

Jorge Perez, 62, and Ricardo Perez, 59, were found guilty of conspiracy to commit healthcare fraud and wire fraud, five counts of healthcare fraud, and conspiracy to commit money laundering of proceeds greater than $10,000. The sentencing date of the pair — who could spend the next few decades in prison — was not immediately known.

The men targeted financially distressed rural hospitals through management agreements and purchases, which provide higher reimbursement rates for laboratory testing, between 2015 and 2018, the Department of Justice said Monday in a news release. The higher rates, according to the department, are a common feature of rural hospital contracts designed to ensure that they can “provide rural communities with much needed care.”

They promised to save the rural hospitals from closure by converting them into laboratory testing sites, but instead billed health insurance companies for fraudulent laboratory testing worth hundreds of millions of dollars in a sophisticated and years-long billing scheme. The plot made it appear that the rural hospitals themselves did the laboratory testing when, in most cases, it was done by testing laboratories controlled by others, the department added.

According to investigators, much of the laboratory testing billed through these rural hospitals involved medically unnecessary urine drug testing for vulnerable addiction treatment patients, often obtained through kickbacks paid to recruiters and providers, frequently at sober homes or substance abuse treatment facilities.

After private insurance companies began to question their billings, they would move on to another rural hospital, leaving the one they took over in the same or worse financial status as before. Three out of four rural hospitals closed shortly after, according to the department.

Two of the four rural hospitals involved in this case were in Florida: Campbellton-Graceville Hospital in Graceville and Regional General Hospital of Williston in Williston. The other two were Chestatee Regional Hospital in Georgia and Putnam County Memorial Hospital in Missouri.

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Roger Handberg, U.S. Attorney for the Middle District of Florida, said in the release that Jorge Perez and Ricardo Perez swindled “distressed medical facilities” across multiple states and defrauded private insurers.

“These defendants preyed on and exploited the vulnerable — vulnerable hospitals, vulnerable underserved communities, and vulnerable patients seeking treatment for addiction — to line their own pockets,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.

“The FBI and our law enforcement partners are dedicated to protecting the healthcare system and shutting down fraudulent billing shells,” said Assistant Director Luis Quesada of the Federal Bureau of Investigation’s Criminal Investigative Division.