Doctor Convicted in $77 Million Medicare Fraud Scheme

After just an eight-week jury trial in New York, a Staten Island doctor was convicted in relation to one of the most elaborate and sophisticated Medicare fraud schemes the country has ever seen. Dr. Gustave Drivas, a medical doctor licensed in New York, worked for a clinic in Brooklyn that apparently operated under three separate names: Bay Medical Care PC, SVS Wellcare Medical PLLC, and SZS Medical Care PLLC (the Bay Medical clinic). Dr. Drivas was convicted on counts of healthcare fraud and conspiracy to commit healthcare fraud, as his clinic was responsible for submitting $77 million worth of fraudulent Medicare invoices.

US Attorney Loretta Lynch image from annandridgepublicrelations.com

The Kickback Room

The Medicare Fraud Strike Force had previously exposed the Bay Medical Clinic as what is called a “Medicare Mill.” Bearing a striking resemblance to puppy mills, Bay Medical packed their office with “professional patients” who would line up single-file and make their way into the clinic’s “Kickback Room.”

In a brazen move, Bay Medical actually constructed their own back room within the clinic specifically for the purpose of paying out illegal kickbacks to patients. Aptly christened as the “Kickback Room,” it was marked as “Private” and featured a huge Soviet-era poster with a woman holding a finger to her lips and a Russian caption that translated to “Don’t Gossip…Be on the lookout…In these days the walls talk…It’s not far between gossiping and betrayal.” The FBI went undercover with wiretaps and saw Bay Medical Care’s Kickback Room in operation and bugged the center.

Using a court-ordered audio and video bug planted within the Kickback Room, the FBI gathered hundreds of hours of evidence from April through June of 2010. They recorded conspirators paying out an estimated $500,000 illegal kickbacks to corrupt Medicare beneficiaries, as the clinic believed that paying with cash would prevent a paper trail. Bay Medical clinic patients collected $50 to $100 payments for each bogus visit. In addition, many seniors received an additional $100 bonus if they referred other seniors to the program. The remaining illegal kickbacks were paid out to coax patients into receiving unnecessary medical treatments or to keep it quiet when certain medical services that were not provided were billed to Medicare.

“They should have heeded the warning because the walls had ears and they had eyes,” said Brooklyn U.S. Attorney Loretta Lynch, referring to surveillance recordings by informants. “In these days, the walls do talk.”

The Complex Medicare Fraud Scheme

The scheme at the Bay Medical Clinic involved thousands of Russian “patients.” The clinic actually turned away people of all other ethnicities – black, white and Hispanic – catering specifically to the Russian community. Prosecutors charged 15 of these “patients” with Medicare fraud, including an 82-year-old woman named Valentina Mushinskaya, who signed up for an amazing 3,744 Medicare claims since 2004. That would mean Ms. Mushinskaya had around 1.7 Medicare approved procedures performed every day for six years.

Valentina Mushinskaya’s nephew said his diabetic aunt was clueless about the scam at Bay Medical.

“She feels ashamed, absolutely shocked,” said Vladimir Olshansky. According to Olshansky, Ms. Mushinskaya would never participate in a Medicare fraud scheme and is completely blindsided by the charges. Olshansky only made this public statement after Mushinskaya was released from jail on $30,000 bail.

The Fraudulent Activity Continues

According the FBI, an additional Kickback Room was discovered in another Bay Medical facility. Adding a bizarre twist, the patients attending the Solstice clinic openly bragged about receiving illegal kickback money and encouraged other people to take part in the scam.

Among the patients busted at the Solstice clinic was a man named Evgeny Gil. The 78-year old had apparently received 2,558 Medicare approved medical services while attending the Solstice clinic.

According to Lynch, “Thousands upon thousands of dummied-up claims had been submitted on behalf of professional patients.”

At Bay Medical clinic, federal agents walked away with multiple computers and over 20 boxes of evidence, while the building manager, Carlos Bowen, described what the business looked like on a daily basis.

“They [patients] came by the bus loads,” Bowen said. “Hundreds of them. All of them Russian. They turned away Hispanics, blacks, everybody else.”

 Dr. Drivas’ Sentencing

According to the evidence presented at trial, Bay Medical fraudulently billed Medicare for thousands of services that were medically unnecessary or simply never provided. These included office visits for routine check-ups, physical therapy and lab tests for diagnostic purposes.

Dr. Drivas was called a “no-show” doctor, being absent from the Bay Medical facility for a majority of the supposed services that were provided. Strangely enough, in his absence, Dr. Drivas’ own personal Medicare billing number was used to submit over $20 million of invoices to the Medicare program. Over $12 million of that was paid out to Bay Medical. Dr. Drivas signed the clinic applications to Medicare, was a co-signer on two Bay Medical clinic bank accounts that received the stolen Medicare money and was listed on official bank paperwork as the president of Bay Medical.

At his sentencing, which is scheduled for July 9, 2013, Dr. Drivas faces a maximum penalty of 20 years in prison. He also faces mandatory restitution fines of up to $50 million and a fine of up to $100 million.