Fourteen defendants in the Forest Park Medical Center fraud have been sentenced to a combined 74.5 years in federal prison and ordered to pay $82.9 million in restitution.
Seven of the defendants were part of a 2019 trial and were convicted in April of that year. Ten other defendants pleaded guilty before the trial, and one was granted a mistrial but pleaded guilty after the trial. U.S. District Judge Zack Zouhary sentenced the defendants.
The $200 million scheme was meant to steer patients with high-reimbursing, out-of-network private insurance to the now-closed, doctor-owned hospital in North Dallas. Doctors who drove patients to Forest Park received $40 million in kickbacks disguised in consulting fees or marketing money. The hospital was able to bill out-of-network rates for the surgeries the physicians brought. Forest Park told patients they would pay in-network prices and then wrote off funds they did not collect as bad debt.
Hospital Manager Alan Beauchamp was sentenced to 63 months in prison and pleaded guilty in 2018 to conspiracy to pay healthcare bribes and commercial bribery. He testified for the government during the trial and said Forest Park “bought surgeries” and “papered it up to make it look good.”
The defendants were prosecuted using the Travel Act, a federal statute signed in the 1960s and designed to stop organized crime. The act prohibits interstate or foreign travel or use of the mail to do unlawful activity. Because the fraud in the Forest Park case was committed against private insurance companies rather than a government payer like Medicare, the federal government had to be creative to ensure jurisdiction to prosecute the fraud. The penalty in Texas for this type of kickback is only a misdemeanor, no matter the scam’s size, and this is one of the first uses of the Travel Act for this type of case.
There are doubts about whether the sentencing and conviction will stand on appeal, says Bill Mateja, a partner in the white-collar defense and corporate investigations practice group at Sheppard Mullin. Mateja briefly represented Dr. Shawn Henry, a spinal surgeon who was sentenced to 90 months in federal prison in the Forest Park case. Mateja previously oversaw health fraud enforcement for the federal government. “There aren’t any courts of appeal that I’m aware of that have green-lighted this novel theory. [The law] was not created to try to handle this kind of conduct,” he says. “In fact, you have a very elaborate scheme set up by the federal government for how to handle allegations of kickbacks.”
Despite the sentencing, Mateja believes the defendants will appeal the decision but says the trial serves as a warning to others in this situation.
Mateja says the ruling opens up more opportunities for the federal government to prosecute these cases when there aren’t government payers involved. There could be future conflicts for physicians who enter into legal marketing arrangements. But private payers are applauding the decision, as they now have confidence that the federal government can go after fraudulent activity against them. “While I certainly respect [Judge Zouhary], he was essentially a Mack truck for the federal government, allowing the way for them to be able to do this,” he says.
Anesthesiologist Dr. Richard Toussaint Jr. was the first to plead guilty and described the illegal kickbacks and bribes that eventually took down the hospital system. Twenty other indictments from the federal government followed.
Defendants included hospital founders and managing partners, the owner of a shell company that routed payments, spinal surgeons, physicians, nurses, and other employees. Below, see the rest of the defendants and their sentencing lengths from the release:
Wilton “Mac” Burt, Forest Park’s managing partner, was found guilty on 10 of 12 counts, including one count of conspiracy, two counts of paying kickbacks, six counts of commercial bribery in violation of the Travel Act, and one count of money laundering. He was sentenced Wednesday to 150 months in federal prison.
Jackson Jacob, owner of the shell companies through which some of the bribes were routed, was found guilty on four of 14 counts, including conspiracy and three counts of paying kickbacks. He was sentenced Wednesday to 96 months in federal prison.
Dr. Douglas Won, a spinal surgeon, was found guilty on one of two counts, conspiracy. He was sentenced Thursday to 60 months in federal prison.
Dr. Michael Rimlawi, a spinal surgeon who partnered with Won, was found guilty on three of four counts, including conspiracy and two counts of receiving kickbacks. He was sentenced Thursday to 90 months in federal prison.
Dr. Shawn Henry, a spinal surgeon who invested in FMPC, was found guilty on three of three counts, including conspiracy, commercial bribery, and money laundering. He was sentenced Wednesday to 90 months in federal prison.
Dr. Mrugeshkumar Shah, a pain-management doctor, was found guilty on four of four counts, including conspiracy, two counts of paying kickbacks, and one count of commercial bribery. He was sentenced Thursday to 42 months in federal prison.
Iris Forrest, a nurse who recruited and pre-authorized worker’s compensation requests, was convicted on two of two counts, including conspiracy and paying kickbacks. She was sentenced Wednesday to 36 months in federal prison.
Israel Ortiz, the founder of Kortmed, a company that fills out pre-authorization for worker’s compensation patients, pleaded guilty in February 2017 to conspiracy to pay and receive healthcare kickbacks. He was sentenced Thursday to 12 months in federal prison.
Dr. Wade Neal Barker, a bariatric surgeon who co-founded Forest Park in 2008, pleaded guilty in October 2018 to one count of conspiracy to pay healthcare bribes and one count of paying illegal remuneration in violation of the Travel Act. He was sentenced Thursday to 60 months in federal prison.
Andrew Jonathan Hillman, a co-owner of Hospital Business Concepts, a surgeon brokerage, pleaded guilty in October 2018 to conspiracy to pay and receive healthcare bribes. He was sentenced in December 2019 to 60 months in federal prison.
Dr. Frank Gonzalez, a chiropractor who referred patients to Forest Park in return for bribes, pleaded guilty in August 2018 to conspiracy to pay and receive healthcare kickbacks. He was sentenced Friday to 21 months in federal prison.
Semyon Narosov, a co-owner of Hospital Business Concepts, pleaded guilty in October 2018 to conspiracy to pay and receive healthcare bribes. He was sentenced in July 2020 to 51 months in federal prison.
Dr. Richard Toussaint Jr., an anesthesiologist who co-founded Forest Park in 2008, pleaded guilty in March 2017 to one count of conspiracy to pay healthcare bribes and one count of paying illegal remuneration in violation of the Travel Act. He was sentenced in August 2020 to 60 months in federal prison.
Carli Adel Hempel, who pleaded guilty in July 2019 to conspiracy to misapply property of a healthcare benefit program, was sentenced in October 2020 to three years’ probation.
Kelly Wade Loter and Andrea Kay Smith, who both pleaded guilty to misprision of a felony (failure to report a felony), were sentenced in January 2020 to three and five years’ probation, respectively.
