Monday, December 10, 2018

Former Owner of Sleep Study Businesses Sentenced for Fraud

ALEXANDRIA, Va. – A Sterling woman was sentenced today to 7 years in prison for health care fraud and tax charges for operating a fraudulent sleep study clinic in Northern Virginia.

According to court documents and evidence presented at trial, Young Yi, 44, a citizen of South Korea, defrauded Medicare, Tricare, private insurance, and the IRS of more than $10 million during the conspiracy. Yi formed the primary entities she used to commit the crimes, 1st Class Sleep Diagnostic Center and 1st Class Medical, in 2005. Using those and other entities, Yi directed her employees to solicit patients who had been referred to her clinic for legitimate sleep studies for supplemental but medically unnecessary studies. To conceal the scheme, Yi instructed employees not to send the results of the fraudulent studies to the patients’ doctors, lied to patients by telling them they did not have to pay copays or coinsurance, and cross-billed using her different entities both to conceal the repetition from the insurance companies and to get out-of-network payments for in-network services. Yi also used the original referring doctors’ names and identifying information on health insurance claims without their permission, the evidence showed.

In addition to the medically unnecessary sleep studies performed on patients who had been referred by doctors to 1st Class Sleep Diagnostic Center, Yi also encouraged her own employees to have sleep studies that were then billed to insurance, the evidence showed.  Those included claims charged in the indictment for three employees who did not have sleep apnea but nonetheless received at least 27 sleep studies between them in less than three years. The employees received payments for undergoing the sleep studies, and in some instances, the employees were organized into teams for “races” to see who could refer the greatest number of friends and family members for the fraudulent studies.

According to the evidence presented at trial, Yi used her business bank accounts to purchase personal luxury goods and real estate that she nonetheless booked as business expenses.  Those falsely booked purchases included a $25,000 Rolex watch, $10,500 in mink coats, several luxury vehicles, and a $1.1 million home in Sterling. Yi also used the proceeds of her crimes to purchase five condominiums worth more than $2.8 million in McLean, Chicago, and Honolulu, Hawaii. After law enforcement searched the 1st Class premises in February 2014, Yi formed a purported charity, the “New Covenant Foundation,” and transferred millions of dollars in office properties into the foundation to protect them from recovery from law enforcement.  United States District Judge Liam O’Grady ordered that the properties be turned over to the United States as part of Yi’s sentence, and her advisory Guidelines range was enhanced for obstructing justice related to that conduct.

G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division, Matthew J. DeSarno, Special Agent in Charge, Criminal Division, FBI Washington Field Office, Kelly R. Jackson, Special Agent in Charge of IRS-Criminal Investigation, Washington D.C. Field Office, Thomas W. South, Deputy Assistant Inspector General for Investigation for the Office of Personnel Management, Robert E. Craig, Special Agent in Charge for the Defense Criminal Investigative Service’s Mid-Atlantic Field Office, and Maureen Dixon, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), made the announcement after sentencing by Judge O’Grady. Assistant U.S. Attorneys Katherine L. Wong and Ryan S. Faulconer, and Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section prosecuted the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:17-cr-224.

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