Hollywood Pavilion’s Web page boasts that the family-owned psychiatric hospital’s primary goal is to “return a healthier, motivated individual to family and to community.”
In reality, authorities say, the Broward facility’s operators appear to have been guided by a far more sinister objective: ripping off Medicare.
At the crack of dawn Thursday, federal agents arrested Hollywood Pavilion’s chief executive officer, Karen Kallen-Zury, on charges of paying kickbacks to recruiters and patients so that the hospital could bilk Medicare of more than $50 million.
Kallen-Zury, 59, of Lighthouse Point, was among 33 South Florida defendants charged with a variety of Medicare fraud offenses as part of a national takedown announced by the Justice Department Thursday. Collectively, all of the local defendants were accused of submitting about $205 million in phony claims to the taxpayer-funded Medicare program.
“We’re going to fight this indictment,” said Kallen-Zury’s defense attorney, Michael Pasano. “It’s built on the testimony of liars, addicts and people who have cooperation deals with the government.”
Nationwide, an additional 58 suspects were charged in six other cities from New York to Los Angeles. Those defendants filed fraudulent claims totaling $225 million, authorities said.
Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius held a joint news conference to spotlight the Justice Department’s “strike force” arrests by 500 agents with the FBI, HHS and U.S. Postal Inspection Service.
“Today’s enforcement actions reveal an alarming and unacceptable trend of individuals attempting to exploit federal healthcare programs to steal billions in taxpayer dollars for personal gain,” Holder said.
The Obama administration has carried out a series of crackdowns in an effort to stem the estimated theft of tens of billions of dollars a year in Medicare funds earmarked for the elderly and disabled.
Meanwhile, Medicare, with a notorious history of lax oversight, has developed more sophisticated technology to flag suspicious billing patterns.
Medicare’s anti-fraud czar, Peter Budetti, said the agency’s goal is to move beyond its “pay-and-chase model” of targeting fraud offenders after they have already received millions in taxpayer dollars and blown the money. He said Medicare’s objective is to “stop fraudsters before they can successfully bill Medicare.”
The Miami area, where schemes involving home care, mental health and physical therapy fraud have flourished for years, has stood out as the nation’s epicenter of Medicare corruption. And the latest arrests, accounting for one-third of the total nationwide, reinforce that reputation.
Miami U.S. Attorney Wifredo Ferrer called the feds’ fight against Medicare fraud “one of my top priorities,” stressing that offenders not only steal from the government but also the “most vulnerable among us.”
In the Hollywood Pavilion case, Kallen-Zury and two other executives, Daisy Miller and Michele Petrie, all residents of Broward, conspired to pay thousands in bribes to recruiters and patients who did not need the facility’s inpatient or outpatient mental health services, authorities said.
A patient broker from Alabama, Gloria Himmons, was charged with receiving the kickbacks to supply the Medicare beneficiaries.
Kallen-Zury attempted to conceal the kickbacks by creating false documents to make it appear as if the services were legitimate, prosecutors said.
Kallen-Zury’s lawyer, Pasano, described his client as a hard-working woman who took over the 40-year business from her father and has lived an honorable life catering to women and men with psychological illnesses, such as schizophrenia and bipolar disorders.
Over the past two years, the Justice Department has scored dozens of convictions in major mental-healthcare fraud cases against two Miami-Dade based psychotherapy clinics, American Therapeutic and Biscayne Milieu, which fleeced Medicare for tens of millions of dollars. American Therapeutic’s one-time owner, Lawrence Duran, is serving a 50-year prison sentence — the stiffest punishment ever against a Medicare fraud offender.
Cooperating defendants in those and related cases helped prosecutors build their indictment against Hollywood Pavilion, according to court records.
Among the other indictments unveiled in South Florida Thursday were cases against these Miami-Dade medical providers:
Their two businesses submitted $74 million in fraudulent bills to Medicare for purported skilled nursing and physical therapy services, according to an indictment. As a result, the federal program paid out $50 million.
Also charged in the case: Raymond Aday, a recruiter who allegedly received kickbacks from Rodriguez for supplying Medicare patients for the home care businesses.