CINCINNATI--Ohio company Active Solutions of Worthington conspired to defraud Medicare and Medicaid through a "bait-and-switch" scheme that selectively targeted people who wanted portable scooters, according to a federal indictment unsealed Wednesday.
Filed in U.S. District Court for the Western District of Virginia, the indictment accused the company of deceptively billing the government programs for power wheelchair claims totaling $25.9 million from 2002 through 2005.
Michael Cowen, one of Active Solutions' two owners, was charged under the indictment with 32 criminal counts, including conspiracy to commit health care fraud, conspiracy to launder money, mail fraud, telemarketing fraud and obstruction of justice.
According to the indictment, the company advertised lightweight portable scooters on television, implying the cost would be covered by Medicare and Medicaid, to interest beneficiaries. Once they called for more information, beneficiaries were screened to see if their diagnosis would qualify them for a power wheelchair.
If so, company sales reps would set up a three-way call with the beneficiary and their physician to obtain a prescription for a "power chair scooter." The reps would then prepare a power wheelchair CMN for the doctor to sign.
The indictment alleged Cowen coined the term "power chair scooter" to confuse both beneficiaries and physicians, knowing that the scooters featured in Active Solutions' ads are considered convenience items and are not routinely covered by Medicare and Medicaid.
On delivery, "most beneficiaries were dissatisfied, since they were expecting to receive a lightweight, portable power scooter as shown on the television advertisement and not the heavier and less transportable motorized wheelchair," the indictment said, noting that some of the units were placed in basement apartments or mobile homes where limited space made it impossible for the PWCs to maneuver freely.
The indictment alleged that, in anticipation of beneficiary complaints, Active Solutions' delivery staff "learned how to close the sale by providing information, some of which was false and misleading, including: power scooters tend to tip over easily; the motorized wheelchair is what your doctor ordered and your doctor knows your physical situation best; the motorized wheelchair is paid for and costs you little or nothing at all; Medicare will not pay for scooters;" and "your physician is looking at the future as well as the present."
In addition, during DMERC audits and appeals of denied claims, files sent to the auditors and Administrative Law Judges "were 'seeded' with documents, such as the CMN instruction sheet, which was never provided to the physicians during the sales process," the indictment charged.
Cowen and others enjoyed the proceeds of the scheme, according to the indictment, through the purchase of various vehicles, investing in securities and leasing a Cessna Citation jet for $1.09 million, among other things.
Cowen has been arrested in Florida and will be extradited to Virginia, prosecutors said.
Jan Michael Bliwas, Active Solutions' other owner, pleaded
guilty in September to conspiracy to commit health care fraud,
telemarketing fraud, mail fraud and money laundering. Bliwas is
scheduled to be sentenced Dec. 20 in the Roanoke federal
court.