Florida psych hospital execs found guilty of Medicare fraud

July 3, 2013

A top executive and three aides who prosecutors say operated a Hollywood psychiatric hospital like a "brothel of fraud" were found guilty Friday of bilking Medicare by submitting false claims for $67 million.

The taxpayer-funded health care program was duped into paying almost $40 million to Hollywood Pavilion, whose chief executive officer and others covered up the "sham" by falsifying patient records and marketing contracts with "dirty" patient recruiters, according to Justice Department prosecutors.

The recruiters, many convicted felons, were paid more than $1 million for the patient referrals, prosecutors said.

On Friday, a 12-personMiami federal jury convicted Hollywood PavilionCEO Karen Kallen-Zury, 59; chief hospital clinical officer Daisy Miller, 44; outpatient facility director MichelePetrie, 64 -- all Browardresidents -- and administrator Christian Coloma, 49, of Miami Beach.

The jury, which began deliberations Wednesday, found them guilty of conspiracy, health care fraud, wire fraud and kickback offenses.

Petrie was the only defendant acquitted of any charges, namely two wire fraud counts.

All four defendants facepotentially lengthy sentencings Sept. 10 before U.S.District Judge Jose Martinez.

A fifth defendant, Gloria Himmons, an Alabama patient broker, pleaded guilty in March to conspiracy and kickback offenses for receiving payments from Hollywood Pavilion for referring Medicare patients with alcohol or drug addictions who did not suffer from mental illness.

"Its whole business model was built on crooked doctors and patient recruiters who brought them patients," prosecutor Robert Zink told the jury during closing arguments Wednesday.

"The defendants would have you believe these criminals pulled the wool over their eyes."

Attorneys representing the four defendants, who were on trial since mid-May, argued their clients never knowingly broke U.S. health care laws over the past decade, maintaining they acted lawfully in their dealings with doctors, patient recruiters and Medicare patients.

"You have a case that doesn't make sense when you put it all together," argued defense attorney Bruce Zimet, who represented Petrie, the outpatient director.

"She was not a member of a 'brothel of fraud,'" Zimettold the jurors Wednesday. "She was a member of a club that wanted to help people."

The prosecution of Hollywood Pavilion's executives was the latest crackdown by the Justice Department and U.S. attorney's office against operators of mental health facilities accused of bilking the Medicare program for the elderly and disabled.

Three previous major prosecutions led to the convictions of about 80 clinic operators, doctors, therapists and patient recruiters at American Therapeutic, Biscayne Milieu and Health Care Solutions Network in South Florida.

Eight of those convicted defendants testified at the Hollywood Pavilion trial, including Dr. Alan Gumer, a former medical director at the Hollywood Pavilion facility who is facing sentencing in August for his crime in the American Therapeutic case, and Keith Humes, a Hollywood Pavilion patient recruiter who is serving a seven-year prison sentence stemming from another Medicare fraud offense.

Zink, the Justice Department prosecutor, noted that Gumer signed off on medical charts for ineligible patients to make the paperwork look like he and other doctors had seen and treated them, when they had not.

Zink said Gumer had $500,000 in gambling debts and had not paid any taxes for years when he was working for Hollywood Pavilion. "He was a weak man," Zink said, "who was willing to sell his license for money."

The prosecutor described Humes as a career criminal who was paid more than $400,000 by Hollywood Pavilion's CEO, Kallen-Zury, for purported "marketing services" to the company. Zink called that contract a "cover-up."

"She knew it was a crime," Zink said. "She paid for it, and she admitted it."

On the witness stand, Kallen-Zury testified about her company's relationship with Humes and other patient recruiters: "Referrals were my business," Kallen-Zury said.

Her defense attorney, Michael Pasano, argued that she believed she was following Medicare policy and that her company's payments to Humes and others were lawful.

In closing, Zink told the jurors a starkly different story, saying that Kallen-Zury and the other defendants exploited vulnerable patients who did not qualify for or actually need psychotherapy treatments under Medicare. As a result, Medicare, a program built on trust, was fleeced for millions, he said.

"That was Medicare's problem," said Zink, who handled the case with prosecutor Andrew Warren. "It trusted Karen Kallen-Zury; it trusted Daisy Miller; it trusted Christian Coloma; and it trusted Michele Petrie.

"The defendants betrayed that trust."

Source: Jay Weaver, "Four who ran Hollywood, Fla., psychiatric hospital found guilty of Medicare fraud," The Miami Herald, June 30, 2013.