Four individuals, including a Texas mayor who was a licensed physician and medical director, and three owners of a health care company, were charged in an indictment unsealed today for their roles in a $150 million health care fraud and money laundering scheme. Three of the defendants were also charged with counts relating to obstructing justice and providing false statements.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office and Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Region made the announcement.
Rodney Mesquias, 47, of San Antonio, Texas; Henry McInnis, 47, of Harlingen, Texas; Jose Garza, 40, of Harlingen, Texas; and Franciso Pena, 82, of Laredo, Texas, were charged in an 11-count indictment filed in the Southern District of Texas. They were each charged with one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. Mesquias and McInnis were charged with six counts of health care fraud, and Garza and Pena were each charged with one count of health care fraud. Pena was also charged with one count of false statements and one count of obstruction of a health care investigation. Mesquias and McInnis were each charged with one count of obstruction of justice.
As set forth in the indictment, from 2009 through the filing of the indictment, Mesquias owned and controlled the Merida Health Care Group (Merida Group), a collection of health care entities located throughout the State of Texas that provided hospice and health care services. McInnis and Garza helped control, manage and oversee Mesquias’s various entities. Pena, a licensed physician, served as the Mayor of Rio Bravo, Texas, and as a medical director for the Merida Group’s affiliated entities.
According to allegations in the indictment, Mesquias, McInnis, Garza and Pena participated in a health care fraud conspiracy that involved over $150 million in Medicare billings for hospice and home health services. Mesquias, McInnis and Garza caused kickbacks and bribes to be paid to medical directors, including Pena, for the Merida Group’s affiliated entities in exchange for certifying that patients qualified for services when, in fact, they did not, and for referring patients for such services. Mesquias, McInnis, Garza and Pena also fraudulently kept patients on hospice services for multiple years in order to increase revenue from Medicare.
The indictment also alleges that the scheme involved laundering the proceeds of the fraud by, for example, using nominees to conceal the identifies of the true beneficial owners of the Merida Group’s affiliated entities, and causing profit distributions to be issued to the nominees to further conceal and disguise control of the fraud proceeds. The indictment further alleges that Mesquias and McInnis used proceeds derived from the scheme to purchase expensive vehicles such as a Porsche, expensive jewelry, luxury clothing from high-end retailers such as Louis Vuitton, exclusive real estate and season tickets for premium seating to see the San Antonio Spurs.
The indictment alleges that Pena gave a false statement to the FBI and obstructed a health care investigation. According to the allegations, a confidential source (CS) who worked in the health care industry met with Pena at City Hall, the Office of the Mayor for Rio Bravo, and elsewhere. During these meetings, the CS allegedly paid Pena a total of $5,000 in cash kickbacks for illegal referrals of hospice patients. In addition, during the course of the investigation, Pena allegedly told a cooperating witness that, with respect to hospice patients, “the way you make money is by keeping them alive as long as possible.” Thereafter, Pena was interviewed by the FBI and denied ever accepting kickbacks in exchange for patient referrals. After the FBI interview, Pena then allegedly contacted the CS and directed the CS to mislead the FBI in the event that the CS was interviewed about the cash kickbacks that Pena received in exchange for the illegal patient referrals.
The indictment also alleges that Mesquias and McInnis obstructed justice by producing false and fictitious records to a federal grand jury. As set forth in the indictment, a federal grand jury issued a subpoena to the Merida Group for specific medical records. In response, Mesquias and McInnis allegedly instructed their co-conspirators to manufacture false records and provide them to the federal grand jury in order to obstruct the grand jury’s investigation.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the HHS-OIG’s McAllen Field Office, the FBI’s San Antonio Division, including the Laredo and McAllen Resident Agency Offices, and the Texas Health and Human Services Commission. Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Andrew Swartz of the Southern District of Texas are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.