Miami resident pleads guilty on conspiracy to defraud the Medicare program

Miami resident Daisy Martinez pleaded guilty today in U.S. District Court in Detroit to participating in a conspiracy to defraud the Medicare program, Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Terrence Berg of the Eastern District of Michigan; Andrew G. Arena, Special Agent-in-Charge of the Detroit Field Office of the FBI; and Daniel R. Levinson, Inspector General of the Department of Health & Human Services (HHS) announced.

Martinez, 50, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen. At her sentencing, which is scheduled for Feb. 11, 2010, Martinez faces a maximum penalty of 10 years in prison and a $250,000 fine.

In her guilty plea, 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. Martinez admitted that the sole purpose of the clinic was to defraud Medicare. Martinez and her co-conspirators opened Sacred Hope Medical Center Inc. in Southfield, Mich., in October 2006. According to court documents, 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 to her role on Sept. 2, 2009.

Martinez admitted in her guilty plea 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 for which it had billed Medicare. 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 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 to come to the clinic 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. According to court documents, 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 in the same case 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 infusion and injection clinic, Xpress Center Inc. (XPC), in Livonia, Mich. As with Sacred Hope, XPC's sole purpose was to defraud Medicare. Martinez admitted that she and her co-conspirators used the same fraudulent practices to open and then operate XPC as Sacred Hope, including creating fictitious patient files to cover up fraudulent billings to Medicare. As at Sacred Hope, Martinez admitted she was fully aware that XPC routinely billed the Medicare program for services that were medically unnecessary and in many instances were never provided. As at Sacred Hope, Martinez 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's part-ownership of Sacred Hope and XPC was not her first involvement with Detroit-area clinics that purported to specialize in infusion and injection therapy. In her plea, Martinez admitted that in approximately March 2006, she became involved in a scheme to recruit Medicare beneficiaries to visit Dearborn Medical Rehab Center (DMRC), a Dearborn, Mich., clinic that operated in much the same manner as 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 the beneficiaries would generate. Martinez admitted that she and her co-conspirators sent Arnaldo Rosario to Detroit to oversee the payment of the patients, and she and her partners provided the cash to pay the kickbacks. As at 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 $15,312,000 in false and fraudulent claims to the Medicare program for services purportedly provided at Sacred Hope, XPC and DMRC. Medicare paid approximately $10,765,000 on those claims.

The case was investigated by the Detroit offices of the FBI and HHS Office of Inspector General (HHS-OIG). The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division's Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. 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 the inception of Strike Force operations in March 2007 -- Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three) and Houston (Phase Four) -- the Strike Force has obtained indictments of 331 individuals and organizations that collectively have billed the Medicare program for more than $720 million. 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.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to https://www.justice.gov/.

Each of the Strike Force teams across the separate phases is led by a federal prosecutor from the Criminal Division's Fraud Section or the U.S. Attorney's Office. Each team has an agent from the FBI and HHS-OIG.