VOL. 125 | NO. 197 | Monday, October 11, 2010
Owner of Cordova Company Admits Medicare Fraud
By Tom Wilemon
Michael E. Cohen, the owner of a Cordova orthotics company, has pleaded guilty to defrauding Medicare and is scheduled for sentencing in December.
He waived his right to indictment and entered into a plea agreement last month. U.S. Attorney Larry Laurenzi filed a charge against Cohen on July 23, following a more than year-long investigation.
Cohen, the owner of Stat Diagnostic Inc. and NewGen Advance Orthotics Laboratory, was charged with defrauding Medicare and Medicaid from 2006 to 2009 in a scheme involving shoe inserts for diabetics.
Cohen violated federal law by hiring unlicensed people in Tennessee, Florida and Texas to measure and fit diabetic patients with the shoe inserts.
The fraudulent claims totaled almost $650,000.
As part of the plea agreement, Cohen forfeited $650,000. The money was in a bank account and an investment account that the U.S. government seized in August 2009.
Prosecutors have agreed to recommend that no fine be imposed in consideration for the restitution.
Another $77,578 that was in the accounts will be returned to Cohen.
His sentencing is set for 1:30 p.m. on Dec. 9.
The government investigation began after Medicare beneficiaries called a fraud hotline in 2007 to file complaints.
Investigators talked with numerous customers, employees and former employees of the company.
The investigation was conducted by the U.S. Postal Inspection Office in conjunction with the U.S. Department of Health and Human Services Office of the Inspector General.
U.S. Postal Inspector Marcus C. Ewing in an affidavit said the scheme was connected to telemarketing.
“The investigation has revealed that Cohen knowingly billed the Medicare program for products and services sold as a result of illegally telemarketing Medicare beneficiaries and also illegally provided medically unnecessary products,” Ewing stated in the affidavit.
The Tennessee Department of Health also conducted an investigation in March 2009 that determined an employee was practicing orthotics and pedorthics without a license.
One former employee told the postal agent that when state investigators came to the business, Cohen instructed employees to hide documents in the trunk of a car.
Some former employees have sued NewGen, Cohen and other company officials for allegedly violating the Fair Labor Standards Act.
In the federal civil suit, which is a separate matter from the criminal case, four former employees contend that they were misclassified as independent contractors and are owed unpaid wages.
Their lawyer has asked the judge to grant conditional class certification, which would allow other former employees to join the suit.