Detroit Woman Who Opened Clinics to Fraudulently Bill Medicare Sentenced to 96 Months in Prison

Three Clinics Billed Medicare More Than $15 Million in Fraudulent Claims

March 25, 2010 - WASHINGTON—Miami resident Daisy Martinez was sentenced today to 96 months in prison for her role in a series of Detroit Medicare fraud schemes, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Chicago Regional Office. Chief U.S. District Judge Gerald E. Rosen also ordered Martinez to pay $10,765,325 in restitution and to serve three years of supervised release following her prison term.

Martinez, 51, pleaded guilty in the Eastern District of Michigan on Oct. 30, 2009, to one count of conspiracy to commit health care fraud. According to information contained in plea documents, Martinez admitted that in approximately March 2006, she devised a scheme with co-conspirator Jose Rosario to open a clinic that purported to specialize in infusion and injection therapy services in Michigan. In fact, the sole purpose of the clinic was to defraud Medicare. Martinez and her co-conspirators opened Sacred Hope Medical Center Inc., (Sacred Hope) in Southfield, Mich., in October 2006. Martinez was an owner of the clinic, and she also managed the clinic on a day-to-day basis. Martinez and Rosario recruited various co-conspirators into their scheme, including an office manager, Lill Vargas-Arias, to help run the clinic; a physician, purportedly to treat patients at the clinic; and recruiters/drivers, who were in charge of bringing Medicare beneficiaries to the clinic. Rosario pleaded guilty for his role in the scheme on Aug. 18, 2009. Vargas-Arias pleaded guilty on Sept. 2, 2009.

Martinez admitted that during the time Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Martinez admitted she was aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. Martinez also admitted that patients were prescribed medications at the clinic based not on medical need, but on what medications were likely to generate Medicare reimbursements. Martinez, along with Rosario, admitted to helping falsify medical files maintained by the clinic to make the treatments purportedly being given there appear legitimate, when in fact they were not.

Martinez also admitted that Medicare beneficiaries were not referred to Sacred Hope by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited through the payment of kickbacks. In exchange for those kickbacks, Martinez admitted, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for narcotic drugs. Martinez admitted to knowing that co-conspirator Arnaldo Rosario, who also pleaded guilty for his role in the scheme on Aug. 18, 2009, oversaw and facilitated the payment of cash kickbacks to the Medicare beneficiaries.

Martinez also admitted that beginning in approximately November 2006, she and other co-conspirators opened another, almost identical, infusion and injection clinic called Xpress Center Inc. (XPC)., in Livonia, Mich. As with Sacred Hope, XPC’s sole purpose was to defraud Medicare. Martinez and her co-conspirators used the same fraudulent practices to open and then operate XPC as they did with Sacred Hope, including creating fictitious patient files to cover up fraudulent billings to Medicare. Similarly, Martinez admitted she was fully aware that XPC routinely billed the Medicare program for services that were medically unnecessary and in many instances never provided. Martinez also admitted to knowing that the purpose of the clinic was not to provide legitimate health care to patients, but rather to defraud the Medicare program.

Martinez also admitted that her actions at Sacred Hope and XPC were not her first with Detroit-area clinics that purported to specialize in infusion and injection therapy. In particular, she admitted that in approximately March 2006, Martinez became involved in a scheme to recruit Medicare beneficiaries to come to Dearborn Medical Rehab Center (DMRC), a Dearborn, Mich., clinic that operated similar to Sacred Hope and XPC. Martinez, along with other co-conspirators, agreed to recruit and pay Medicare beneficiaries at DMRC in exchange for a percentage of the Medicare reimbursements that these patients generated. Martinez and her co-conspirators sent Arnaldo Rosario to Detroit to oversee payments to patients, and provided the cash to pay the kickbacks. As with Sacred Hope and XPC, DMRC routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided.

Martinez admitted that between approximately March 2006 and March 2007, she and her co-conspirators caused the submission of approximately $15,311,605 in false and fraudulent claims to the Medicare program for services purportedly provided at Sacred Hope, XPC and DMRC. Medicare paid approximately $10,765,325 on those claims.

The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1.1 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.