Physician Convicted of Fraud, ID Theft

Hospital Owner Could Face Decades in Federal Prison
Physician Convicted of Fraud, ID Theft

A physician who formerly owned several Texas hospitals is facing time in federal prison after being convicted by a jury of several counts of healthcare fraud and identity theft.

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After a four-day jury trial in the federal district court in Tyler, Texas, Tariq Mahmood, M.D., was found guilty on July 24 of conspiracy to commit healthcare fraud and seven counts each of healthcare fraud and aggravated identity theft.

Mahmood faces up to 10 years in federal prison for the conspiracy conviction, 10 years for each healthcare fraud conviction and two years for each aggravated identity theft conviction. A sentencing date has not been set.

The physician owned and operated several hospitals in Texas, including Cozby Germany Hospital in Grand Saline, Renaissance Terrell Hospital in Terrell, Central Texas Hospital in Cameron, Community General Hospital in Dilley, and Lake Whitney Medical Center in Whitney.

According to testimony and evidence presented in court, from January 2010 to April 2013, Mahmood and others carried out a scheme to defraud Medicare and Medicaid through the submission of false and fraudulent claims.

Court papers indicate that Mahmood directly and indirectly instructed hospital personnel to electronically add, change, delete and incorrectly sequence diagnostic codes in a way that did not reflect the actual diagnoses and conditions of patients.

They subsequently electronically submitted false claims to Medicare and Medicaid that resulted in reimbursements of $312,000 to be paid to accounts controlled by Mahmood. He was indicted by a federal grand jury on April 11, 2013.

A Department of Justice spokeswoman says the fraud scheme was uncovered when hospital employees reported their concerns to law enforcement.

Related Case

In a related ongoing criminal case in the same federal court, Joe White, former CFO of now-shuttered Shelby Regional Medical Center, in Center, Texas, is charged with making false statements to the Department of Health and Human Services' Centers for Medicare and Medicaid Services and aggravated identity theft, according to the court documents. Shelby Regional, a 54-bed hospital that was owned by Mahmood, closed last year amidst the legal issues involving Mahmood.

In the indictment against White, federal prosecutors allege that he made false statements and committed aggregated ID theft when submitting to the Department of Health and Human Services' Centers for Medicare and Medicaid Services false attestation for fiscal 2012 that Shelby Hospital was a "meaningful user" of electronic health records under the HITECH Act (see HITECH Act EHR Program Fraud Alleged).

Court documents say the hospital, in fact, relied on paper records throughout the fiscal year and only minimally used EHRs. The fraudulent meaningful use attestation resulted in Shelby receiving payment of $785,655 from CMS, court papers says.

White's defense attorney in the case, Colin Amann, of law firm Ketterman Hedlesten & Amann, PLLC, tells Information Security Media Group that White has pleaded not guilty to the charges.

A pre-trial conference is scheduled for the case on Sept. 4.

Prevention, Detection

Attorney Lee Kim, director of privacy and security at the Healthcare Information and Management Systems Society, says that organizations can take several measures to prevent and detect healthcare fraud and identity theft involving electronic health records and other digital systems.

Those include deploying technologies such as auditing and data loss prevention systems, she says. On the payer side, big data analytics hold the promise to help identify and predict fraudulent behavior, she says. However, while those technologies evolve, workforce training and awareness programs play a vital role, she says.

Just as the Mahmood scheme was uncovered when hospital employees notified law enforcement, the workforce can play an important role for other institutions in the battle against fraud, Kim says.

"It's all about information-sharing," she says. "As the saying goes, "if you see something, say something.' If a staff member sees some activity that doesn't seem right, there needs to be policies in place to report that without fear. Fear is a barrier for information-sharing."

The Mahmood case was investigated by the Texas Office of the Attorney General - Medicaid Fraud Control Unit, the U.S. Department of Health and Human Services - Office of the Inspector General, the Federal Bureau of Investigation and the U.S. Postal Inspection Service.

A spokesman for HHS' OIG, which was involved in the investigations of both Mahmood and White, declined to comment because the White criminal case is ongoing.

An attorney representing Mahmood did not respond to ISMG's request for comment.

About the Author

Marianne Kolbasuk McGee

Marianne Kolbasuk McGee

Executive Editor, HealthcareInfoSecurity, ISMG

McGee is executive editor of Information Security Media Group's media site. She has about 30 years of IT journalism experience, with a focus on healthcare information technology issues for more than 15 years. Before joining ISMG in 2012, she was a reporter at InformationWeek magazine and news site and played a lead role in the launch of InformationWeek's healthcare IT media site.

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