Five More Physicians Indicted in Massive Fraud Case

March 27, 2013

The mastermind behind a massive healthcare fraud scheme centered in Detroit, Michigan, is behind bars, but the roundup of underlings continues with the recent federal indictment of 5 more physicians and 4 more pharmacists in the case.

In February, pharmacist Babubhai "Bob" Patel, RPh, was sentenced in a federal district court to 17 years in prison for running an operation that submitted nearly $20 million worth of fraudulent prescription claims to Medicare, Medicaid, and private insurers over 5 years in addition to illegally distributing millions of opioid painkillers and other controlled substances. Patel bribed physicians to write medically unnecessary scripts and steer patients to fill them at one of his 26 pharmacies, where the guiding principle, in Patel's words, was, "If you are strict, you never make money," according to court records. Patel's "marketers" recruited patients to participate in the scheme and rewarded them with narcotics for their cooperation.

A federal grand jury indicted Patel along with 4 physicians, 1 psychologist, 12 pharmacists, and 9 others in August 2011 on fraud and drug charges. Patel and 5 other defendants were convicted in a jury trial last year, and 15 more have pleaded guilty. That latter group includes Paul Petre, MD, and Mustak Vaid, MD.

Dr. Vaid pleaded guilty to conspiring to commit healthcare fraud, and Dr. Petre pleaded guilty to that charge as well as conspiring to distribute controlled substances. Prosecutors said both physicians also fraudulently billed Medicare for various services in the course of their bogus prescribing. Dr. Petre and Dr. Vaid now await sentencing, with the former looking at possibly 8.5 years in prison and the latter up to 6 months.

The 5 remaining defendants are scheduled to go to trial this summer.

On March 18, a follow-up indictment in the case was unsealed. It levelled the same charges as before as well as a new one — that Patel and his associates bribed physicians and others to refer patients to home health agencies under Patel's control. These agencies, in turn, would bill Medicare for services that were medically unnecessary and sometimes not provided.

Additional physicians named as defendants in the new indictment are Richard Utarnachitt, MD; Ruben Benito, MD; Javaid Bashir; MD; Carl Fowler, MD; and Rajat Daniel, MD. Prosecutors allege that all 5 physicians prescribed medications that were filled at Patel's pharmacies, and that Dr. Fowler and Dr. Daniel also referred patients to the home health agencies.

All the physicians have pleaded not guilty except for Dr. Fowler, who has yet to enter a plea.

"Little to Admire and Much to Condemn"

The case in Detroit fits the familiar pattern of physicians who allow a nonphysician criminal boss to illegally profit from their medical licenses and billing numbers. And Babubhai Patel was a boss, said federal prosecutors in a memorandum to the judge on how he should sentence the pharmacist.

"Babubhai Patel is possessed of substantial ambition, drive, and organizational ability," wrote prosecutors. "One does not start and operate a large chain of independent pharmacies, employing tens if not hundreds of people, and billing over $60 million to various insurers without being a vigorous, disciplined, and capable organizer and businessman."

Patel aimed for a 25% profit margin in his pharmacies, prosecutors said, and took various steps to achieve it. His pharmacies would bill insurers for prescribed noncontrolled drugs that were never dispensed. The drugs would either be returned to wholesalers or sold on the black market. When drugs were dispensed, pharmacists systematically shorted the pill count per bottle by 2 or 3 pills, a practice performed "at the explicit direction" of Patel.

The sentencing memorandum describes Patel as having "controlled" physicians as well as pharmacists. "The doctor is ours," Patel was heard to say during an intercepted telephone call about opioid narcotic prescriptions.

"The exhibits and this case reveal Babubhai Patel displaying a grasping greed (and) a complete disregard for the law," prosecutors wrote. "A realistic assessment of Babubhai Patel's character finds little to admire and much to condemn."

Patel appealed for leniency, presenting the court with a packet of letters from family, friends, and associates that describe him as "a loving father, a respected member of the community, and magnanimous self-made man renown for his generosity." A number of letter-writers spoke of his leadership in a Hindu temple in suburban Detroit. A nephew informed the court that as a mentor, Patel had told him, "If you work hard and follow through with you (sic) goals, you can become anything."

Prosecutors had sought a 30-year prison sentence for Patel. On February 1, US District Senior Judge Arthur Tarnow handed down 17 years.

Patel intends to appeal the sentence.