Largest Medicare Fraud Scheme in 2015: Three Miami residents sentenced

Department of Justice

U.S. Attorney’s Office

Southern District of Florida

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FOR IMMEDIATE RELEASE

Friday, July 29, 2016

Three Miami Residents Sentenced in Largest Medicare Fraud Scheme Loss in 2015

Three Miami residents were sentenced for their role in the largest Medicare fraud scheme loss prosecuted in the Southern District of Florida in 2015.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Shimon R. Richmond, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), Miami Regional Office, made the announcement.  

Jorge Lorenzo, 36, Yahima Pardo, 33 and Roberto De Jesus Alonso, 48, all of Miami, Florida were sentenced by U.S. District Judge William Dimitrouleas to 188 months, 41 months, and 37 months in prison, respectively.  The defendants were also ordered to pay $40,388,943.00 in restitution to the Medicare program.  In addition, forfeiture money judgments were entered against each defendant and the government has seized assets and cash in excess of $2 million.  On May 10, 2016, Lorenzo and Pardo pled guilty to conspiracy to commit health care and wire fraud, and Alonso pled guilty to conspiracy to commit money laundering. 

According to the court record Lorenzo, Pardo, and De Jesus Alonso participated in massive health care fraud, money laundering and kickback schemes, that over the course of approximately four years, resulted in more than $40 million in losses to the Medicare program.  During the course of the criminal conduct, Lorenzo owned and/or controlled eight home health agencies across Miami-Dade County that collectively received more than $40 million in fraudulent claim payments from Medicare.  Lorenzo installed shell owners at his home health agencies whose primary role was to authorize millions of dollars in Medicare claim payments through corporate checks made out to fictitious companies staffed by other co-conspirators.  The co-conspirators then laundered the fraudulently obtained money to Lorenzo.   More than $40 million in Medicare payments were made in response to fraudulent claims for services that were not medically necessary, never rendered and in some instances were linked to prescriptions that Lorenzo counterfeited.  Collectively, these eight home health agencies were operational for an average of only 8 months before being closed at Lorenzo’s direction at the first hint of a Medicare fraud investigation.  Conspirators Pardo and Alonso, were shell owners of two of the eight home health agencies and laundered millions of dollars in Medicare claim payments to Lorenzo.  

Lorenzo also directed co-conspirators to incorporate more than fifteen fictitious shell companies.  The shell companies were used to disguise the flow of more than $25 million in fraudulently-obtained Medicare proceeds for Lorenzo’s personal benefit, including the purchase of real estate, luxury vehicles, artwork and jewelry.  Coconspirator Alonso incorporated at least two of the fictitious companies to launder proceeds which were intended to benefit elderly, blind and disabled patients.

An additional co-conspirator, Sonmy Rodriguez, 45, of Miami, Florida, was sentenced on July 27, 2016 to 22 months in prison.

Mr. Ferrer commended the investigative efforts of the FBI and HHS-OIG.  This case was prosecuted by Assistant United States Attorneys Kevin J. Larsen and Evelyn B. Sheehan.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

U.S. Fracker Produces Oil At $2 A Barrel — Saudis Running Scared

An oil drilling company operating in the Permian Basin shale formation can extract crude for as little as $2 a barrel, meaning it can compete with Saudi Arabia in terms of production costs.

“Definitely we can compete with anything that Saudi Arabia has,” Scott Sheffield, the CEO of Pioneer Natural Resources told Reuters.

“My firm belief is the Permian is going to be the only driver of long-term oil growth in this country,” he said. “And it’s going to grow on up to about 5 million barrels a day from 2 million barrels,” even with oil at $55 per barrel, according to Reuters.

Saudi Arabia has been able to drive dozens of smaller shale oil companies out of business by keeping the price of oil low, but if more companies can do what Pioneer is able to do, the Saudis may be in big trouble.

Pioeneer reported on its second-quarter results that its production costs fell to $2.25 in West Texas. That’s about even with Saudi Arabia’s low cost oil production. It’s a signal that drillers, at least in the Permian Basin, are adapting to a low-price environment.

“The Bakken and the Eagle Ford I think there’s no way they can recover to the levels that they’ve already had,” Sheffield said, skeptical that other shale plays would see such low costs.

American shale drillers have had to weather oil prices hovering at $50 a barrel or less for the past couple of years. When the shale boom took off, oil prices peaked at more than $100 a barrel by summer 2014.

Some North Dakota drillers can afford to drill at oil prices as low as $40 a barrel, but even so, the oil industry was forced to lay off about 170,000 workers since the price plunge in 2014 —though some economists say oil jobs may return soon.

Pioneer seems to be a step ahead of the game. The company has been able to cut costs by “doing much of its oilfield services work in-house,” according to Reuters, and it “has its own sand mine, and uses effluent water from the city of Odessa for frack jobs using pressurized sand, water and chemicals to unlock oil from rock.”

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Made in China: Four horsemen of the iPhone apocalypse

Today it's the $100 value handset. Tomorrow it will be the $200 premium smartphone. There's nothing left for the traditional device OEMs with those kind of margins. Huawei, ZTE, Xiaomi and Lenovo are coming, and Apple and Samsung can't stop them.

This week, Apple posted its Q3 earnings results, with $7.2 billion in profit on $42.4 billion in revenue, or $1.42 a share beating Wall Street estimates of $1.39 on $42.1 billion in revenue.

Impressive, right? Well yes, but iPhone revenue is down 21 percent from a year previous.

Part of this is due to the introduction of the lower-cost iPhone SE, which is effectively the guts of a much more expensive iPhone 6S in the smaller body of the older iPhone 5.

By all accounts, the iPhone SE was a successful product launch. However, that means lower profit margins even if unit sales/volume was high.

The cheaper iPhone SE can't be blamed for all of this, though. While the $400 or $500 iPhone SE is still cheaper than the iPhone 6S and iPhone 6S Plus, it still is considerably more expensive than Android phones being made in China serving its domestic market, which can go for half the price of an iPhone SE, or even less.

You see, China is increasingly important to Apple because it is one of the few smartphone markets that is not entirely saturated and has potential for additional growth. It is a nation of 1.37 billion people, which is roughly seven times that of Western Europe (191 million), or over four times that of the United States (324 million).

In China, the iPhone is a highly coveted luxury that most people cannot afford, In fact, the country is rife with look-alike products that run on Android, many of them actually fairly well-engineered, such as the Meizu Pro 6, which looks like an iPhone 6 and a Samsung Galaxy S6 had a tryst and produced a love child.

But Meizu is not the industry leader in China. Far from it. Huawei, ZTE, and Xiaomi -- and now Lenovo, which owns Motorola's mobile brand -- are the four titans controlling that country's smartphone output and the lion's share of their domestic mobile industry.

Or as I like to call these guys, the generals of the Army of the Freakin' Ice Zombies.

And make no mistake about it -- the phones these companies make at the high-end are almost as good as what Samsung or Apple makes from a component perspective and are on par when it comes to manufacturing quality. And they can do it for half the price.

For example ZTE's Axon 7, which launches globally this month, is a lot of smartphone for $399. It sports a QHD display, a Qualcomm Snapdragon 820 SoC, 4GB of RAM, 64GB of storage with microSD, a 20MP camera with dual LED flash, a fingerprint scanner, and 802.11ac Wi-Fi.

ZTE Axon 7 too rich for your blood? OnePlus, a relatively small boutique manufacturer in China, has produced something almost as good for $300, and our resident mobile maven, Matt Miller, is now questioning why he should spend more money than that on an Android handset, ever.

A comparable unlocked GSM Samsung Galaxy S7 costs over $150 more. An international iPhone 6S 64GB unlocked is about $800.

Eighty percent as good for half the price? If I was Apple, I would be extremely concerned about my prospects in China. And if I was Samsung, LG, or HTC I would be thinking about the longevity of their smartphone business in China overall.

This has Samsung so wound up that they are now at litigation loggerheads with Huawei over patent violations.

Yeah. Good luck with that in China, Samsung.

But, here is the thing -- it doesn't end in China. China's domestic market is just the start of Apple's and Samsung's problems, not to mention those of the also-ran like HTC and LG.

Taiwan-based HTC has recently had to undergo severe price cuts for its flagship device presumably due to pressure from its mainland Chinese competitors.

If the idea of a $400 super-premium smartphone is cause for worry for Apple's investors, then what about a $300 one? Or a $200 one?

Sounds crazy? It isn't.

It starts with the low-end handsets in export markets like the United States, Europe, South America, Africa, and India. A few months ago I was singing the praises of Huawei's Honor 5X, which is a sleek-looking Android handset with entry-level specifications. It costs $200.

Nobody who is used to playing with an iPhone 6 or a Samsung Galaxy is going to fawn over the thing. But that's not the point -- first the low end of the market erodes, and then it eats away at the high-end.

The Honor 5X was selling for as low as $120 on Amazon on Prime Day -- I thought that was a shocking deal, until ZTE announced that it was bringing to market an almost identical Qualcomm Snapdragon 6xx-based phone for $99.

$99 for a 2GB RAM, 32GB storage Android smartphone with a fingerprint scanner.

Unbelievable.

You think Huawei and Lenovo are just going to sit still? And the third largest smartphone company in the world, Xiaomi, hasn't even broken into the US market yet.

If these guys can make an entry-level smartphone for $99, you can bet they can make a high-end device for $199, especially if they use SoCs with domestic designs, like the Mediatek processors and the Kirin 955 that is used in the Huawei P9.

And we haven't even seen what kind of display technology Hon Hai (FoxConn) can produce as a result of their purchase of SHARP yet.

The component and supply chain integration that these Chinese firms can attain by all-domestic sourcing hasn't been fully realized. And yet we are already seeing what they are capable of doing.

Huawei, for example, is already taking lessons learned with their P9 and making a handset, the Honor 8, using similar but somewhat lower-spec components that is almost as good for almost half the price.

The Honor 8 hasn't landed yet in the US -- it's for China's domestic market. But you can bet that we will see something that looks a heck of a lot like the P9 at a $300 price point soon. Very soon.

If it doesn't come from Huawei, ZTE will respond with something similar. Or Lenovo will. Or Xiaomi will when it makes landfall in the US.

The Chinese titans will battle it out, each one-upping each other until there are no margins to be had for the likes of Apple and Samsung.

There will be a $200 premium smartphone. Bet on it. It might not happen for two or three years, but it will definitely happen.

Apple will retain their extremely loyal customer base that will continue to buy their products because of the status it entails. But it won't be able to expand its market, and eventually it will start to shrink. And that's fine, because Apple always ends up moving on to do something else.

Samsung, unfortunately, will be in much worse shape. While you can make a unique value proposition for Apple and iOS and their UX, you can't say so for Samsung, who uses Android.

Yes, the company will always have a big component manufacturing business, but it's unlikely they can stay on top when it comes to worldwide smartphone market share.

The smartphone apocalypse is coming. The four Chinese horsemen are bringing it, and nobody can stop them. I'm looking forward to it, actually.

U.S. Citizenship and Immigration Services

La decisión 4-4 de la Corte Suprema en el caso United States v. Texas del 23 de junio de 2016, no afecta la política existente del 2012 respecto a la Acción Diferida para los Llegados en la Infancia (DACA, por sus siglas en inglés). Las personas que cumplieron con las guías de DACA de 2012 pueden continuar presentando una petición inicial o de renovación de DACA bajo esas guías.  Para más información, vea uscis.gov/es/acciondiferida.   La Corte Suprema significa, sin embargo, que el interdicto que prohíbe la implementación de DAPA (Acción Diferida para Padres de Ciudadanos estadounidenses y residentes Permanentes Legales) y la expansión de DACA permanece en efecto.    USCIS recuerda al público acerca de los riesgos de las estafas de inmigración, en caso de que estafadores traten de sacar provecho de la situación. Obtenga consejos para que puede protegerse y a sus seres queridos en  uscis.gov/avoidscams o en español en  uscis.gov/es/eviteestafas. CONÉCTESE CON USCIS:

The World Is Warming But the Antarctic Is Getting Colder (BW)

A seal rests on an ice floe in the western Antarctic peninsula, on March 5, 2016

• Trend toward warmer temperatures in the region paused in 1990s
• Changes may be in step with natural variation, researchers say

One of the most rapidly warming places on Earth in the past half century actually cooled in the past 20 years, according to research that may be seized on by those who have doubts about global warming.

Temperatures on the Antarctic Peninsula have reversed course, dropping by an average of about 0.5 degree Celsius per decade since the late 1990s while the rest of the world experienced record heat, 10 researchers from the British Antarctic Survey concluded in an article published in the journal “Nature” on Wednesday.

The report’s authors didn’t make a conclusion about what their findings mean for the debate about global warming, saying the changes they noticed could fit at the extreme end of natural climate variations. That suggests it may take years and further research to determine the direction of temperatures in the Antarctic and what they mean for the world. Climate scientists said the report should be treated with caution.

“That a very small part of the planet shows a short-term cooling is not in any way a surprise,” said Ed Hawkins of the National Center for Atmospheric Science at the University of Reading in England. “It’s what we expect from natural variation in the atmospheric circulation interacting with a long-term warming trend.”

The findings will feed the debate about the significance of a slowdown in the pace of global warming seen since 1998. 

The authors noted their study covered 1 percent of the Antarctic continent, a region that has warmed in the spring in the 1970s because of a hole in the atmosphere’s Ozone layer of the atmosphere. That gap now is starting to close, with an uncertain impact.

Not Paused

“This study certainly does not suggest that global warming has been halted,” said Martin Siegert, co-director of the Grantham Institute at Imperial College London.

The authors neglected to mention the role of warmer oceans in melting the peninsula’s glaciers, which would have put the findings into a broader context, said University College London Professor of Climate Science Chris Rapley. This, he said, could give fuel to skeptics who say climate change is overstated. A separate paper also by the British Antarctic Survey published earlier this month in “Science” showed ocean warming is the primary cause of glacier retreat on the western Antarctic Peninsula.

“It is important not to interpret the cooling of this small area of Antarctica as evidence that the climate is not warming,” said Martyn Tranter at the University of Bristol. “The cooling here has very little influence on global climate change. The overwhelming evidence is that the global climate is warming.”

Andrew Shepherd, director of the Center for Polar Observation and Modeling at the University of Leeds in England, said scientists should turn their attention to the warming of the oceans, which “has triggered widespread loss of ice just around the corner in West Antarctica.”

“We should not lose sight of that because there are early signs in the satellite record of similar effects at the Peninsula too,” he said.

Anthem, Aetna Sued by U.S. Seeking to Block Insurer Mergers

• U.S. Sues to Block Anthem, Aetna Insurance Mergers
• Cigna, Humana takeovers would harm consumers by raising costs
• Pair of tie-ups would reduce top insurers to three from five

U.S. antitrust enforcers roundly rejected a pair of proposed deals that would consolidate the nation’s five biggest health insurers into three.

The Justice Department on Thursday sued to block two separate tie-ups -- Anthem Inc.’s $48 billion takeover of rival health insurer Cigna Corp. and Aetna Inc.’s $37 billion bid for Humana Inc. -- saying the deals would raise health-care costs and reduce choice for consumers.

"For most Americans, health insurance is not luxury but a necessity," Attorney General Loretta Lynch said in Washington. "Health insurance can mean the difference between life and death. If the big five were to become the big three, not only would the bank accounts of American people suffer, but the American people themselves."

Fight Lawsuits

Three of the companies said they would fight the lawsuits, which could tie them up in months of litigation, dragging out deals that were announced about a year ago. Cigna said it was reviewing its options under the merger agreement, which contains language that may require it to defend a government challenge. The insurers could also agree to abandon the transactions, potentially sparking a round of new deals. 

The lawsuits continue a string of merger challenges by antitrust enforcers looking to stop industry consolidation, dealing a blow to Anthem and Aetna’s bids to gain scale by snapping up rivals. The actions underpin wider sentiment within President Barack Obama’s administration about the importance of protecting competition among health insurers. By challenging the deals, the administration has seized another opportunity to shape the future of health care -- an effort to safeguard choice and affordable options for consumers -- after passage of the Affordable Care Act.

Earlier this month, Obama himself wrote an essay for The Journal of the American Medical Association in which he emphasized the need for competition to keep health care affordable for consumers. Health and Human Services Secretary Sylvia Mathews Burwell, whose department is closely watching the deals because of their potential impact on the delivery of medical plans under the health care law, also highlighted the importance of competition in insurance markets in an interview with Bloomberg News on July 15.

‘Vigorously Fight’

Aetna and Humana said in a statement that they will “vigorously” fight to complete their deal. Cigna, meanwhile, cast doubt on whether its deal can be completed. Anthem said it’s ready for a court fight, but is also open to a settlement with the Justice Department.

“The DOJ’s action is based on a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated health care landscape and is inconsistent with the way that the DOJ has reviewed past health care transactions,” Anthem said.

Shares of all four companies rose after the lawsuits were filed in federal court in Washington. Humana, which also raised its 2016 financial forecasts Thursday, rose 7.8 percent to $170.81 at 2:15 p.m. in New York, while Aetna was up 2.4 percent to $119.23. Anthem rose 2.9 percent to $139.43, and Cigna climbed 3.7 percent to $138.09.

If Anthem’s bid for Cigna falls apart under antitrust scrutiny, Cigna is owed $1.85 billion, according to the terms of their agreement. Aetna would owe Humana $1 billion should its takeover fail under a U.S. challenge.

Divestiture Proposals

Aetna did present two divestiture plans to the Justice Department in an effort to resolve the government’s concerns and allow the Humana deal to go forward, a person familiar with the matter has told Bloomberg News. Health insurers including WellCare and Centene offered to buy the policies up for sale, which cover about 350,000 people, the person said.

Aetna Chief Executive Officer Mark Bertolini said in an interview that the company was willing to offer more divestitures in an effort to resolve the government’s complaint.

Bill Baer, the Justice Department’s No. 3 official, said at a press conference the proposals offered by companies in both deals fell far short of restoring the competition that would be lost from the mergers, and he signaled it was unlikely any remedy would work for either deal.

"The standard we apply is: Will the status quo be preserved? Will consumers after a divestiture benefit from the same degree of competition that exists today?" he said. "We have zero confidence that the proposals that have been made to us come close to meeting that standard."

The government said in its complaint that Anthem’s deal for Cigna would hurt competition for millions of consumers who receive commercial insurance from national employers as well as large-group employers in at least 35 metropolitan areas, including New York and Los Angeles. Aetna’s planned takeover of Humana would undermine competition in 21 states for Medicare Advantage plans, the government insurance program for the elderly, affecting more than 1.5 million customers, the Justice Department said. Both deals also hurt competition on the health-insurance exchanges under the Affordable Care Act, it said.

After the lawsuits were filed, Humana said it expects to record significant losses in its business selling health insurance to individuals who aren’t covered by Medicare, the U.S. program for the elderly and disabled, and would exit eight of 19 states where it sells individual plans under Obamacare.

If the Anthem-Cigna merger ultimately fails, smaller insurers could become targets for Cigna, including WellCare Health Plans Inc., Centene Corp. and Molina Healthcare Inc. Anthem, meanwhile, has said it would be interested in buying assets from Aetna and Humana if they win approval for their deal conditioned on divestitures. The Justice Department can decide to settle the lawsuits if it finds asset sales by the companies resolve its concerns about the tie-ups.

The Justice Department signaled its opposition to the deals early on. In March, Baer, who is the former head of the antitrust division and the person who decided to bring the lawsuits, told lawmakers the two takeovers are a “game changer” for the industry. He also said a year ago he would assess the industry as a whole, given the surge of deals, to make sure competition is preserved and the mergers don’t lead to higher costs for consumers.

The combinations also faced criticism from the start from consumer groups worried about higher premiums as well as from hospitals and doctors, who risk seeing lower payments from insurers that have more bargaining power. In June, a group of Democratic senators called for the Justice Department to stop the transactions.

If Anthem and Cigna can overcome the government’s challenge, their combination would create the biggest U.S. health insurer by membership, topping UnitedHealth Group Inc., with total revenue of about $115 billion. The bulk of the company’s revenue -- about 66 percent -- would come from administrative services sold to self-insured employers. The combined company would have about 29 percent of that market, according to data compiled by Bloomberg.

Medicare Advantage

If Aetna ultimately is allowed to buy Humana, it would become the biggest provider of Medicare Advantage plans. The combined company would have about 25 percent of that market, according to Bloomberg, with about half its $115 billion in revenue coming from Medicare plans, Aetna has said.

Eight states including Florida and Illinois, plus the District of Columbia, are joining the suit to block the Aetna-Humana deal. Nine states and the District of Columbia joined the U.S. action against the Anthem-Cigna deal, including California, New York and Connecticut, with two more -- Colorado and Tennessee -- later added to the docket.

The cases are U.S. v. Anthem Inc., 16-cv-1493, U.S. District Court, District of Columbia (Washington) and U.S. v. Aetna Inc., 16-cv-1494, U.S. District Court, District of Columbia (Washington).