Probe health insurance fraud in Olongapo-Subic
DOJ confirmed that the medical care group found responsible for the fraud operated in Subic
Return $100 M, US court orders RP health firm
MADISON, Wisconsin – A federal judge has ordered a Philippine company to pay back $100 million it swindled from the US military’s health insurance program.
Health Visions Corp., which pleaded guilty to mail fraud, was ordered to liquidate all assets within 10 months and give the proceeds to the US government.
Federal prosecutors say the company bilked the military’s Tricare program out of $99.9 million between 1998 and 2004.
The program insures 9.2 million current and retired US servicemen and dependents worldwide.
In the Philippines, Malacañang expressed “sadness” over the scandal and said it would leave it up to US authorities to investigate the case further.
“This case happened outside the country and any violations will have to be prosecuted by laws of the US. We have nothing to do with that,” Press Secretary Ignacio Bunye said.
“But we would want to express sadness because many Filipinos became famous (for) their achievements and they are overshadowed by this incident,” he said.
Health Visions routinely inflated claims by more than 230 percent, operated a phony insurance program and billed for medical services never delivered, court records showed, and the Pentagon moved slowly to uncover the scheme.
Assistant US Attorney Peter Jarosz described Health Visions as the biggest violator yet in a long-running investigation into Tricare fraud in the Philippines.
“This is basically a death sentence for the company. It will no longer exist and that will protect the Tricare program since it was the biggest violator,” he said after the hearing. “We got what we needed out of this prosecution.”
The US closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained.
Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers.
On top of the $99.9 million in restitution, US District Judge Barbara Crabb ordered the company to forfeit an additional $910,000 and pay a $500,000 fine.
Health Visions will be required to sell off land, office buildings and hospitals in the Philippines and an airplane and houses in the US under Crabb’s order.
The company has run into problems selling hospitals because of ownership disputes, and Jarosz said it was uncertain whether the US government would ever recover the full amount.
The company’s lawyer, Christopher Kelly, declined to comment. He told Crabb he had nothing to add beyond a plea agreement, which was unsealed on Thursday.
Health Visions and its former president, Thomas Lutz, were hit with a 75-count indictment in 2005.
Lutz, a US citizen who turned 41 on Thursday, has pleaded guilty to his role in a kickback scheme and could face up to five years in prison when he is sentenced. A date for that hearing will be scheduled shortly now that the company has been sentenced, Jarosz said.
The case has been an embarrassment to the Pentagon, where different branches have blamed one another for allowing the company’s fraud to slip through the cracks.
The fraud was so extensive that claims from the Philippines increased by 2,000 percent between 1998 and 2003 even as the number of Tricare beneficiaries remained the same. Payments to the country went up from less than $3 million to more than $60 million during that time.
The Office of Inspector General has criticized Tricare’s managers for waiting years to cut off payments to Health Visions after suspecting the company of fraud.
William Winkenwerder, former assistant secretary of defense for health affairs, said Thursday that the inspector general’s office was partly to blame because it refused his requests to send additional investigators to the country. He said he worked hard to stop the problems after they came to his attention in 2003.
Asked how the company was able to defraud the program of $100 million, Winkenwerder said: “There were some very deceptive practices that were occurring. The fact that this was a faraway location did add to the challenge of uncovering problems. And they didn’t get away with it ultimately, which is the good news.”
The investigation has been handled by prosecutors in Wisconsin because WPS Health Insurance, a Madison company, is the subcontractor that handles most overseas claims. About three dozen others have been indicted, mostly US military veterans and Philippine doctors.
NBI tags 2 in scam
In the Philippines, the National Bureau of Investigation (NBI) said it is hunting a doctor and a patient believed to be involved in the scam.
Claro de Castro Jr., chief of the NBI Interpol, said warrants of arrest have been issued against the two suspects who are of Filipino descent. He declined to name the two or the US-accredited hospitals they dealt with. But De Castro said the hospitals are outside Metro Manila.
Sources said the doctor connived with his patient in padding the latter’s medical expenses. They then divided the reimbursements from the US health program with the patient getting 35 percent and the doctor getting 65 percent.
The expenses are reimbursed through mail, which explains why they were also indicted for mail fraud, considered a federal offense.
De Castro said he could not ascertain how many more similar cases are being pursued by the Department of Justice in the Philippines.
A source who declined to be named said, however, that five or six more people – patients and doctors – are under investigation.
“Once identified, a request would be forwarded to the NBI for warrants of arrest against them. The NBI is the law enforcement agency that would implement a court’s warrants of arrest,” a source said.
The Filipinos involved in the scam were former civilian employees of the US armed forces in the mainland or in the Philippines, which used to host two US bases until 1992.
‘Shameful,’ says DOH
The Department of Health (DOH) deplored yesterday the involvement of some Philippine hospitals in the fraud but committed to help in the investigation if asked.
“This is shameful both here and in the international community. Our doctors conniving with veterans in scam,” DOH Secretary Francisco Duque III said in a telephone interview.
The DOH, he said, is ready to help in the US investigation but it needs a formal request for help.
“We have not received any reports from the US about that so we want to know if the US already coordinated with the NBI-Interpol. We want to know who are involved here,” he said.
Duque maintained that even the Philippine Health Insurance Corp. or Philhealth is beset by problems of fraudulent claims.
“It’s also happening here. Actually, there’s no perfect system. It is also happening anywhere in the world. But we want to control this by strengthening the monitoring system of Philhealth,” he added.
Two groups of hospital owners – the Philippine Hospital Association (PHA) and the Private Hospital Association of the Philippines – have also expressed intention to help investigate the anomaly.
But according to PHA president Dr. Tiburcio Macias, the accusation should not be “generalized” because not all hospitals in the Philippines are involved.
He said that Tricare, the Pentagon-run program, has accredited hospitals in the country. “There used to be Tricare hospitals in Olongapo City, in Angeles, Pampanga, in Iloilo and, I think, in Naga. But I think they are already closed.”
Macias said that PHA’s offer to assist in the investigation is part of its mission to “police our own ranks.”
“It’s actually an old issue,” PHAP president Dr. Rustico Jimenez said of the health scam. “Maybe, because there is a recession in the US so they are looking into it (spending) so this issue was brought up,” he said.
“It’s actually the patients who filed their reimbursement so the payments are given directly to them. They claim that they pay their premium in the US anyway. The US can identify those involved because there is a paper trail, especially since payments are not made in cash but in checks,” he added. - Sheila Crisostomo, Sandy Araneta and AP
The Philippine authority on Friday said they are investigating individuals and the companies that allegedly participated in defrauding a U.S. military health insurance program for 100 million U.S. dollars.
Lawyer Claro de Castro, chief of the National Bureau of Investigation's Interpol division, said a physician and an American veteran are now under the surveillance in connection with the scam, Philippine TV network ABS-CBN News reported.
The two, whose identities are not revealed to media, were probed following a U.S. judge ordered a Philippines-based firm Health Vision Corporation to liquidate its assets to pay back the swindled 100 million U.S. dollars.
The firm was charged with cheating the U.S. Department of Defense health care program, TRICARE, with inflated bills, a sham insurance program and fake claims between 1998 and 2004, local reports said.
TRICARE is the U.S. Department of Defense worldwide health care program for active duty and retired uniformed service members and their families. American veterans living in the Philippines have allegedly conspired with doctors, hospitals and clinics to defraud TRICARE through fraudulent claims.
Justice Secretary Raul Gonzalez on Friday confirmed that the medical care group found responsible for the fraud operated in Subic, north of Philippine capital Metro Manila.
He said the Philippines will cooperate with the U.S. in prosecution even in cases of extradition, which though might demand a lengthy procedure.
Health Secretary Francisco Duque said the incident has tarnished the reputation of Filipino medical professionals and the authority might have the licenses of the doctors involved in the scam revoked. Comtex Business
Lawyer Claro de Castro, chief of the National Bureau of Investigation's Interpol division, said a physician and an American veteran are now under the surveillance in connection with the scam, Philippine TV network ABS-CBN News reported.
The two, whose identities are not revealed to media, were probed following a U.S. judge ordered a Philippines-based firm Health Vision Corporation to liquidate its assets to pay back the swindled 100 million U.S. dollars.
The firm was charged with cheating the U.S. Department of Defense health care program, TRICARE, with inflated bills, a sham insurance program and fake claims between 1998 and 2004, local reports said.
TRICARE is the U.S. Department of Defense worldwide health care program for active duty and retired uniformed service members and their families. American veterans living in the Philippines have allegedly conspired with doctors, hospitals and clinics to defraud TRICARE through fraudulent claims.
Justice Secretary Raul Gonzalez on Friday confirmed that the medical care group found responsible for the fraud operated in Subic, north of Philippine capital Metro Manila.
He said the Philippines will cooperate with the U.S. in prosecution even in cases of extradition, which though might demand a lengthy procedure.
Health Secretary Francisco Duque said the incident has tarnished the reputation of Filipino medical professionals and the authority might have the licenses of the doctors involved in the scam revoked. Comtex Business
= = =
Return $100 M, US court orders RP health firm
MADISON, Wisconsin – A federal judge has ordered a Philippine company to pay back $100 million it swindled from the US military’s health insurance program.
Health Visions Corp., which pleaded guilty to mail fraud, was ordered to liquidate all assets within 10 months and give the proceeds to the US government.
Federal prosecutors say the company bilked the military’s Tricare program out of $99.9 million between 1998 and 2004.
The program insures 9.2 million current and retired US servicemen and dependents worldwide.
In the Philippines, Malacañang expressed “sadness” over the scandal and said it would leave it up to US authorities to investigate the case further.
“This case happened outside the country and any violations will have to be prosecuted by laws of the US. We have nothing to do with that,” Press Secretary Ignacio Bunye said.
“But we would want to express sadness because many Filipinos became famous (for) their achievements and they are overshadowed by this incident,” he said.
Health Visions routinely inflated claims by more than 230 percent, operated a phony insurance program and billed for medical services never delivered, court records showed, and the Pentagon moved slowly to uncover the scheme.
Assistant US Attorney Peter Jarosz described Health Visions as the biggest violator yet in a long-running investigation into Tricare fraud in the Philippines.
“This is basically a death sentence for the company. It will no longer exist and that will protect the Tricare program since it was the biggest violator,” he said after the hearing. “We got what we needed out of this prosecution.”
The US closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained.
Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers.
On top of the $99.9 million in restitution, US District Judge Barbara Crabb ordered the company to forfeit an additional $910,000 and pay a $500,000 fine.
Health Visions will be required to sell off land, office buildings and hospitals in the Philippines and an airplane and houses in the US under Crabb’s order.
The company has run into problems selling hospitals because of ownership disputes, and Jarosz said it was uncertain whether the US government would ever recover the full amount.
The company’s lawyer, Christopher Kelly, declined to comment. He told Crabb he had nothing to add beyond a plea agreement, which was unsealed on Thursday.
Health Visions and its former president, Thomas Lutz, were hit with a 75-count indictment in 2005.
Lutz, a US citizen who turned 41 on Thursday, has pleaded guilty to his role in a kickback scheme and could face up to five years in prison when he is sentenced. A date for that hearing will be scheduled shortly now that the company has been sentenced, Jarosz said.
The case has been an embarrassment to the Pentagon, where different branches have blamed one another for allowing the company’s fraud to slip through the cracks.
The fraud was so extensive that claims from the Philippines increased by 2,000 percent between 1998 and 2003 even as the number of Tricare beneficiaries remained the same. Payments to the country went up from less than $3 million to more than $60 million during that time.
The Office of Inspector General has criticized Tricare’s managers for waiting years to cut off payments to Health Visions after suspecting the company of fraud.
William Winkenwerder, former assistant secretary of defense for health affairs, said Thursday that the inspector general’s office was partly to blame because it refused his requests to send additional investigators to the country. He said he worked hard to stop the problems after they came to his attention in 2003.
Asked how the company was able to defraud the program of $100 million, Winkenwerder said: “There were some very deceptive practices that were occurring. The fact that this was a faraway location did add to the challenge of uncovering problems. And they didn’t get away with it ultimately, which is the good news.”
The investigation has been handled by prosecutors in Wisconsin because WPS Health Insurance, a Madison company, is the subcontractor that handles most overseas claims. About three dozen others have been indicted, mostly US military veterans and Philippine doctors.
NBI tags 2 in scam
In the Philippines, the National Bureau of Investigation (NBI) said it is hunting a doctor and a patient believed to be involved in the scam.
Claro de Castro Jr., chief of the NBI Interpol, said warrants of arrest have been issued against the two suspects who are of Filipino descent. He declined to name the two or the US-accredited hospitals they dealt with. But De Castro said the hospitals are outside Metro Manila.
Sources said the doctor connived with his patient in padding the latter’s medical expenses. They then divided the reimbursements from the US health program with the patient getting 35 percent and the doctor getting 65 percent.
The expenses are reimbursed through mail, which explains why they were also indicted for mail fraud, considered a federal offense.
De Castro said he could not ascertain how many more similar cases are being pursued by the Department of Justice in the Philippines.
A source who declined to be named said, however, that five or six more people – patients and doctors – are under investigation.
“Once identified, a request would be forwarded to the NBI for warrants of arrest against them. The NBI is the law enforcement agency that would implement a court’s warrants of arrest,” a source said.
The Filipinos involved in the scam were former civilian employees of the US armed forces in the mainland or in the Philippines, which used to host two US bases until 1992.
‘Shameful,’ says DOH
The Department of Health (DOH) deplored yesterday the involvement of some Philippine hospitals in the fraud but committed to help in the investigation if asked.
“This is shameful both here and in the international community. Our doctors conniving with veterans in scam,” DOH Secretary Francisco Duque III said in a telephone interview.
The DOH, he said, is ready to help in the US investigation but it needs a formal request for help.
“We have not received any reports from the US about that so we want to know if the US already coordinated with the NBI-Interpol. We want to know who are involved here,” he said.
Duque maintained that even the Philippine Health Insurance Corp. or Philhealth is beset by problems of fraudulent claims.
“It’s also happening here. Actually, there’s no perfect system. It is also happening anywhere in the world. But we want to control this by strengthening the monitoring system of Philhealth,” he added.
Two groups of hospital owners – the Philippine Hospital Association (PHA) and the Private Hospital Association of the Philippines – have also expressed intention to help investigate the anomaly.
But according to PHA president Dr. Tiburcio Macias, the accusation should not be “generalized” because not all hospitals in the Philippines are involved.
He said that Tricare, the Pentagon-run program, has accredited hospitals in the country. “There used to be Tricare hospitals in Olongapo City, in Angeles, Pampanga, in Iloilo and, I think, in Naga. But I think they are already closed.”
Macias said that PHA’s offer to assist in the investigation is part of its mission to “police our own ranks.”
“It’s actually an old issue,” PHAP president Dr. Rustico Jimenez said of the health scam. “Maybe, because there is a recession in the US so they are looking into it (spending) so this issue was brought up,” he said.
“It’s actually the patients who filed their reimbursement so the payments are given directly to them. They claim that they pay their premium in the US anyway. The US can identify those involved because there is a paper trail, especially since payments are not made in cash but in checks,” he added. - Sheila Crisostomo, Sandy Araneta and AP
Labels: Health Visions, medical fraud, subic bay freeport, tricare, veterans
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