COLUMBIA — State Auditor Nicole Galloway on Tuesday lauded her 2017 audit of Putnam County Memorial Hospital as the catalyst for a federal investigation that has resulted in the indictment of the former manager of the Fulton Medical Center and nine others for their role in a scheme that used rural hospitals to submit $1.4 billion in illegitimate insurance claims.
60-year-old Jorge Perez, who ran the Fulton Medical Center between September of 2017 and February of last year, faces 23 federal charges including money laundering and conspiracy to commit health care fraud and wire fraud.
The Justice Department says Perez was part of a scheme to use failing rural hospitals across the country as shells for fraudulent insurance claims for laboratory testing.
The lab work would get done elsewhere, but billed through the small hospital to take advantage of a higher rate of reimbursement.
Further, the Justice Department alleges that the lab tests were often not even medically necessary. The conspirators allegedly would obtain urine specimens and other samples for testing through kickbacks paid to recruiters and health care providers, often sober homes and substance abuse treatment centers. The indictment also alleges that the conspirators engaged in sophisticated money laundering to promote the scheme and to distribute the fraudulent proceeds.
Galloway says the group submitted $90 million in lab billings through Putnam, a hospital with just 15 beds.
The Justice Department says Perez and other conspirators collected $400 million for themselves in a scheme that submitted $1.4 billion in illegitimate claims.
“This was allegedly a massive, multi-state scheme to use small, rural hospitals as a hub for millions of dollars in fraudulent billings of private insurers,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.