GUILTY PLEA IN $40 MILLION HOME HEALTH CARE FRAUD

A registered nurse who owned what were the two largest home health agencies in California has pleaded guilty to defrauding Medicare out of $40 million and to filing false tax returns that concealed her ill-gotten gains, United States Attorney Debra Wong Yang announced today.

Lourdes "Lulu" Perez pleaded guilty October 4, 2004, but the documents outlining the case and documenting her cooperation with the government were unsealed only recently. Perez, 53, is a registered nurse who formerly lived in Glendale and currently resides in San Diego. Perez owned and operated Provident Home Health Care Services, Inc. in the Eagle Rock section of Los Angeles, and Tri-Regional Home Health Care, Inc. in San Dimas.

According to the criminal information and plea agreement that were unsealed last month, Perez and people working with her defrauded Medicare by knowingly a) paying illegal kickbacks for Medicare referrals, b) billing Medicare for patients who were not homebound and did not medically need home health services, c) billing Medicare for services that were not rendered, and d) creating false medical records to support the fraudulent claims submitted to Medicare. The scheme ran from at least October 2002 until September 2003, when Medicare suspended payments to Provident and Tri-Regional, and federal authorities seized more than $20 million in assets. Since that time, a total of almost $34 million has been recovered from Perez.

Perez is scheduled to be sentenced by United States District Judge Stephen V. Wilson on October 16. At sentencing, Perez faces a statutory maximum penalty of 59 years in federal prison.

A second registered nurse involved in the scheme, Margaret Tan, 29, of Santa Monica, who for a time was the director of nursing at Provident, has agreed to plead guilty to health care fraud charges. Tan is expected to appear in court on October 23. Both Perez and Tan are cooperating with law enforcement in an ongoing investigation into Provident, Tri-Regional and a number of other home health agencies.

The scheme being run out of Provident and Tri-Regional came to light in April 2003 when a payroll clerk at Provident, Marietta Diaz, filed a "whistleblower" lawsuit against Perez, her husband, and the two home health agencies. Specifically, the complaint alleged that from October 2001 through April 2003 Perez and her employees systematically billed the Medicare program for thousands of home health care visits that never occurred. Morever, the lawsuit alleged, the scheme was executed by paying illegal kickbacks to patients, nurses, marketers and physicians, who were paid to participate in and disguise the fraudulent scheme.

The government, Diaz, and the defendants last year entered into a settlement agreement that led to $33,872,626.03 being repaid to the government. As a result of her whistleblower status, Diaz received 20.75 percent of that recovery. The case remained under seal during the ongoing investigation, and was unsealed last Tuesday.

United States Attorney Debra Wong Yang, who serves on the Attorney General's Advisory Committee Working Group on Health Care Fraud, stated: "The cases against Perez and Tan represent a major step in this Office's home health fraud initiative. Provident and Tri-Regional were the epicenter of home health fraud in Southern California. The cooperation we have obtained from key figures in this fraud has assisted us in recovering a particularly large amount of fraudulently obtained proceeds and should enable law enforcement to proceed against others involved in the scheme."

Earlier this year, three individuals were convicted and sentenced in a similar scheme at a smaller home health agency called Community Home and Health Care Services. Nida Campanilla, a 45-year-old Los Angeles resident, who owned Community was sentenced in May to two years in federal prison after making restitution of $608,000. For further information on this case, see: http://www.usdoj.gov/usao/cac/pr2006/060.html.

The investigation of Provident and Tri-Regional is being conducted by the Federal Bureau of Investigation's Health Care Fraud Unit in Los Angeles; IRS Criminal Investigation Division; and the Department of Health and Human Services' Office of Inspector General, Office of Investigations.