Hospital exec pleads guilty in $116 million Medicare mental health care fraud scheme

January 24, 2012

A former member of Riverside General Hospital's executive staff pleaded guilty Wednesday for his role in a $116 million Medicare scheme that paid kickbacks to patient recruiters and personal care home owners in exchange for directing residents to Riverside's mental health clinics.

Mohammad Khan, 62, pleaded guilty before U.S. District Judge Sim Lake to one count of conspiracy to commit health care fraud, one count of conspiracy to pay health care kickbacks and five other counts of paying and offering to pay kickbacks. He is being held in custody until his sentencing next month.

Khan's attorney, Wayman Prince, said his client is assisting investigators with the FBI and the U.S. Department of Health and Human Services Office of Inspector General probe into how Medicare patients receive care at Riverside's mental health clinics.

"He is cooperating," said Prince.

Riverside has at least six Houston area clinics and one in Dallas where patients who need intense psychiatric services but not an overnight hospital stay can go. Court records state that Khan, hired by Riverside in 1992, oversaw the hospital's "partial hospitalization program," or PHP, for the mentally ill.

$31.3 million paid out

Between January 2008 and Feb. 8, 2012, Khan steered patients to Riverside from assisted living facilities and personal care homes by paying cash kickbacks to the home owners and patient recruiters. He also paid Medicare recipients cash, cigarettes and coupons to the hospital's "country stores," according to his plea agreement, to enroll in the programs.

Of the $116 million in Medicare claims Khan was involved in submitting, about $31.3 million were actually paid before the federal government began scrutinizing the claims more closely.

"Many of the beneficiaries for whom Riverside submitted claims to Medicare for PHP services did not have severe mental illness and did not need the level of intense treatment provided in a PHP," stated the plea agreement with the government.

Khan attended medical school in the Dominican Republic between 1983 and 1986. A federal health care investigator testified at his initial appearance that records show he opened one of two personal bank accounts using a dead woman's Social Security number.

The woman, a neighbor of Khan's, died in 1992, the year the government says Riverside hired Khan.

Took home $423,809

The government investigator also testified that Khan's Riverside take-home pay was $423,809 over the past five years. They were able to trace all but $215,473. The unaccounted-for cash and his lack of family ties were arguments the government used to keep Khan detained without bond.

FBI spokeswoman Shauna Dunlap said the Riverside investigation is ongoing, but would not comment further.

"Riverside is continuing its cooperation," said Tasha Armstead, a spokeswoman for Riverside General Hospital, located southeast of downtown Houston.

A Houston Chronicle investigation last year documented the flow of federal taxpayer dollars to for-profit mental health clinics even though they require no license to operate in Texas and collect millions from Medicare.

Texas, Louisiana and Florida, which generate 76 percent of all PHP claims to Medicare, are well-known as high-fraud areas to the federal Centers for Medicare and Medicaid Services.

Source: Terri Langford, "Ex-official at Houston hospital pleads guilty in Medicare scam," Houston Chronicle, February 22, 2012.