Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.1 Page 1 of 13 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION UNITED STATES OF AMERICA, Plaintiff, v. DR. HORACE JUNIOR DAVIS, Defendant. / INDICTMENT The Grand Jury charges: GENERAL ALLEGATIONS At all times relevant to this Indictment: 1. The defendant, DR. HORACE JUNIOR DAVIS, was a physician licensed to practice medicine in the State of Michigan. He was the sole practitioner and resident agent of Albion Center for Family Medicine, later known as Horace J. Davis DO, P.C., with an office at 1201 E. Broadwell Street, Albion Michigan, and Francis Street Medical Associates, P.C., with an office at 143 Prospect Street, Jackson, Michigan. 2. A fundamental purpose of DR. HORACE JUNIOR DAVIS s medical practices was to write prescriptions for controlled substances that could be filled at pharmacies. The purpose of writing controlled substance prescriptions was not for the legitimate treatment of patients, but rather to (a) bill healthcare benefit programs for services not rendered or services that were billed at a higher rate than the actual level of service provided; (b) promote his patients addiction to opioids so that they would continue returning to see DR. HORACE JUNIOR DAVIS and provide him with a consistent stream of healthcare billings; and (c) provide 1
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.2 Page 2 of 13 secondary benefits such as sexual favors and construction work on his office in exchange for prescription drug controlled substances. 3. DR. HORACE JUNIOR DAVIS knowingly prescribed prescription drug controlled substances outside the course of legitimate medical practice and for no legitimate medical purpose, in furtherance of the health care fraud scheme. The prescriptions were issued during the course of an office visit after either a cursory examination by the defendant or without any examination at all. 4. DR. HORACE JUNIOR DAVIS frequently continued prescribing prescription drug controlled substances ignoring such obvious indications ( red flags ) that patients were abusing, misusing, and distributing the prescribed drugs, such as (a) indications that the patients were addicts; (b) information from other doctors, pharmacists, or the Michigan Automated Prescription System that the patient was receiving the same or similar drugs from other doctors ( doctor shopping ); (c) information from others that the patients were selling prescription drugs; and (d) indications that patients were exhibiting drug-seeking behavior. 5. DR. HORACE JUNIOR DAVIS would pre-sign prescription drug controlled substances which were given to patients by his employees when DR. HORACE JUNIOR DAVIS was out of the office. 6. A prescription drug controlled substance illegally prescribed by DR. HORACE JUNIOR DAVIS was methadone, a Schedule II controlled substance. Schedule II controlled substances are those having a high potential for abuse, acceptable medical use with severe restrictions, and the potential to lead to severe psychological or physical dependence. 7. DR. HORACE JUNIOR DAVIS billed health care benefit programs where possible in order to make money from prescribing drugs to opioid addicts. If a patient had health 2
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.3 Page 3 of 13 insurance, DR. HORACE JUNIOR DAVIS would bill a doctor visit which may or may not have been performed. Billing for a higher level of service than the one actually conducted, referred to as upcoding, also took place. This included the practice of billing for a higher level of doctor visit, for which health care billing guidelines typically require twenty-five minutes of face-to-face time with the patient, a detailed history, a detailed examination, and decisionmaking of moderate complexity, when DR. HORACE JUNIOR DAVIS, on average, would spend less than five minutes with each patient and not conduct a detailed history, a detailed examination, or make complex decisions. DR. HORACE JUNIOR DAVIS also billed for doctor visits which never occurred. 8. DR. HORACE JUNIOR DAVIS falsified, and directed others to falsify, medical records to support his fraudulent health care billings. 9. These general allegations are adopted and incorporated in each count of this Indictment as if fully set forth therein. 3
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.4 Page 4 of 13 COUNTS 1-14 (Unlawful Distribution of Prescription Drug Controlled Substances) 10. On or about the dates set forth below, in the name of the patient whose initials are set forth below, in the Western District of Michigan, the defendant, DR. HORACE JUNIOR DAVIS, knowingly and intentionally distributed the listed Schedule II controlled substances, outside of the course of legitimate medical practice and for no legitimate medical purpose. The defendant committed the listed offenses either personally, by seeing the patient and writing the prescription, or as an aider and abettor, by authorizing his employees to issue the prescriptions to the patient. Count Approximate Date of Controlled Amount Distribution Substance 1 October 11, 2011 L.H. Methadone 240 10 mg pills 2 August 3, 2012 L.S. Methadone 360 10 mg pills 3 August 10, 2012 L.S. Methadone 360 10 mg pills 4 August 28, 2012 L.S. Methadone 360 10 mg pills 5 December 5, 2012 L.S. Methadone 360 10 mg pills 6 December 14, 2012 L.S. Methadone 360 10 mg pills 7 December 21, 2012 L.S. Methadone 360 10 mg pills 8 February 5, 2013 J.T. Methadone 240 10 mg pills 9 April 4, 2013 A.W. Methadone 270 10 mg pills 10 May 2, 2013 A.W. Methadone 270 10 mg pills 11 June 13, 2013 J.T. Methadone 240 10 mg pills 12 June 5, 2013 T.G. Methadone 120 10 mg pills 13 July 11, 2013 T.G. Methadone 120 10 mg pills 14 August 8, 2013 T.G. Methadone 30 10 mg pills 21 U.S.C. 841(a)(1) 21 U.S.C. 841(b)(1)(C) 18 U.S.C. 2 4
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.5 Page 5 of 13 COUNTS 15-28 (Health Care Fraud) The Health Insurance Programs 11. Medicare is a federally-funded program administered by the Centers for Medicare and Medicaid Services ( CMS ), a federal agency within the United States Department of Health and Human Services. Medicare provides health insurance for, among others, persons aged 65 and older, certain younger people with disabilities, and people with end-stage renal disease. Individuals who receive benefits under Medicare are referred to as Medicare beneficiaries. Medicare is a health care benefit program, as defined by Title 18, United States Code, Section 24(b). 12. The Medicare Program includes coverage under two primary components, hospital insurance (Part A) and medical insurance (Part B). Part A of the Medicare Program covers, among other services, certain eligible home health care costs for medical services provided to beneficiaries because of an illness or disability that causes them to be homebound. Part B of the Medicare Program covers the costs of physicians services and other ancillary services not covered by Part A. Wisconsin Physicians Services ( WPS ) is a company that contracts with CMS to process and pay Part A and Part B claims. 13. By becoming a participating provider in Medicare Part B, enrolled providers agree to abide by the policies and procedures, rules, and regulations governing reimbursement. In order to receive Medicare funds, enrolled providers, together with their authorized agents, employees, and contractors, are required to abide by all the provisions of the Social Security Act, the regulations promulgated under the Act, and applicable policies and procedures, rules, and regulations issued by CMS and its authorized agents and contractors 5
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.6 Page 6 of 13 14. Upon certification, the medical provider is assigned a provider identification number for billing purposes (referred to as a PIN ). When a medical provider renders a service, the provider submits a claim for reimbursement to the Medicare contractor / carrier that includes the PIN assigned to that medical provider. When an individual medical provider is associated with a clinic, Medicare Part B requires that the individual provider number associated with the clinic be placed on the claim submitted to the Medicare contractor. 15. Health care providers are given and / or provided online access to Medicare manuals and service bulletins describing proper billing procedures and billing rules and regulations. Providers can submit claims to Medicare only for services they rendered, and providers must maintain patient records to verify that the services were provided as described on the claims. 16. Medicaid is a federally-assisted grant program for the states. CMS administers the federal assistance to Medicaid. At the state level in Michigan, the Department of Community Health, Medical Services Administration, an agency of the State of Michigan, administers Medicaid. Medicaid provides health insurance to Michigan residents who are indigent or otherwise do not have traditional insurance coverage. Physicians, clinics, and other health care providers are able to apply for and obtain a Medicaid provider number. A health care provider who is issued a Medicaid provider number is able to file claims with Medicaid to obtain reimbursement for services provided to Medicaid beneficiaries. A valid Medicaid claim must set forth, among other things, the beneficiary s name, the date the service was provided, the cost of the service, and the name and identification number of the physician or health care provider who ordered the service. Medicaid is a health care benefit program, as defined by Title 18, United States Code, Section 24(b). 6
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.7 Page 7 of 13 17. Blue Cross Blue Shield of Michigan ( BCBSM ) is a health care benefit program, as defined in Title 18, U.S.C., Section 24(b), in that it was a private insurance program, affecting commerce, which provided coverage for eligible costs for services, including psychological services, provided to its subscribers throughout the United States. 18. United Healthcare Community Plan, Meridian Health Plan, and Jackson Health Plans are health care benefit programs as defined in Title 18, U.S.C., Section 24(b). 19. Citizens Insurance is an automobile insurance company providing coverage for health care benefits under Michigan s no-fault insurance program, and was a health care benefit program, as defined in Title 18, U.S.C., Section 24(b), in that it was a private insurance program, affecting commerce, which provided coverage for eligible costs for services, including psychological services, provided to its subscribers throughout the United States. 20. To receive reimbursement from Blue Cross Blue Shield, United Healthcare Community Plan, Meridian Health Plan, and Citizens Insurance, medical service providers submit or cause the submission of claims, either electronically or in writing, to those health care benefit programs for payment of services, either directly or through a billing company. The Scheme and Artifice to Defraud 21. Beginning in at least 2009, and continuing until November 2013, in the Western District of Michigan and elsewhere, the defendant, DR. HORACE JUNIOR DAVIS, aided and abetted by others known and unknown to the Grand Jury, knowingly and intentionally devised and executed a scheme and artifice to defraud health care benefit programs affecting commerce, as defined in Title 18, United States Code, Section 24(b), that is, Medicare, Medicaid, private insurance plans, and Citizens Insurance, and to obtain, by means of materially 7
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.8 Page 8 of 13 false and fraudulent pretenses, representations, and promises, in connection with the delivery and payment for health care benefits, items, and services, money and property owned by, and under the custody and control of, those health care benefit programs. It was part of the scheme that: 22. DR. HORACE JUNIOR DAVIS billed health care benefit programs where possible in order to make money from prescribing drugs to prescription drug controlled substance addicts. DR. HORACE JUNIOR DAVIS submitted, or directed his employees or a billing company to submit, claims to health care benefit programs for visits by patients. The purpose of these billings was to obtain money in the form of health insurance payments from the health care benefit programs. 23. DR. HORACE JUNIOR DAVIS submitted, and caused others to submit, claims to health care benefit programs that he knew were false and fraudulent. DR. HORACE JUNIOR DAVIS falsified, and directed others to falsify, documentation in patients medical files in order to support his fraudulent claims. 24. For some of the claims, DR. HORACE JUNIOR DAVIS submitted, or directed others to submit, bills for a higher level of service than the one actually conducted, referred to as upcoding. This included the practice of billing for a higher level of doctor visit, for which health care billing guidelines typically require twenty-five minutes of face-to-face time with the patient, a detailed history, a detailed examination, and decision-making of moderate complexity, when DR. HORACE JUNIOR DAVIS, on average, would spend less than five minutes with each patient and would not conduct a detailed history, a detailed examination, or make complex decisions. Specifically, on or about the dates alleged below, DR. HORACE JUNIOR DAVIS submitted and caused to be submitted false and fraudulent claims to health care benefit 8
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.9 Page 9 of 13 programs, for services purportedly provided to each of the individuals listed below, with each item set forth below constituting a separate count of this Indictment: Count Approximate Date of Service Code 15 E.A. April 22, 2011 99214 - Office 16 E.A. May 11, 2011 99214 - Office 17 L.S. August 10, 2012 18 L.S. August 25, 2012 19 L.S. December 5, 2012 99214 - Office 99214 - Office 99214 - Office 20 A.W. April 4, 2013 99214 - Office Health Care Benefits Program Jackson Health Plan Jackson Health Plan Medicare / Wisconsin Physicians Service Medicare / Wisconsin Physicians Service Medicare / Wisconsin Physicians Service United Healthcare Community Plan Reason False 9
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.10 Page 10 of 13 Count Approximate Date of Service Code 21 A.W. May 2, 2013 99214 - Office 22 T.G. May 8, 2013 99214- Office 23 T.G. June 5, 2013 99214 - Office 24 T.G. July 11, 2013 99214 - Office 25 T.G. August 8, 2013 99214 - Office 26 J.S. September 6, 2013 99349 - Home Visit for Established Health Care Benefits Program United Healthcare Community Plan Blue Cross Blue Shield Blue Cross Blue Shield Blue Cross Blue Shield Blue Cross Blue Shield Meridian Health Plan Reason False 25. DR. HORACE JUNIOR DAVIS also submitted, or directed others to submit, bills for doctor visits which never occurred. Specifically, on or about the dates alleged below, DR. HORACE JUNIOR DAVIS submitted and caused to be submitted false and fraudulent claims to health care benefit programs, for services not rendered, with each item set forth below constituting a separate count of this Indictment: 10
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.11 Page 11 of 13 Count Approximate Date of Service Code Health Care Benefits Program 99214 Citizens Insurance 27 L.H. October 20, 2011 28 L.H. June 23, 2012 99214 Citizens Insurance Reason False Services Not Rendered Services Not Rendered 18 U.S.C. 1347 18 U.S.C. 2 11
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.12 Page 12 of 13 COUNT 29 (Conspiracy to Use False Documents Involving a Health Care Benefit Program) 26. Paragraphs 11 through 25 are realleged and incorporated herein by reference. 27. From in or about 2011 and continuing through in or about October 2012, in the Western District of Michigan, and elsewhere, the defendant, DR. HORACE JUNIOR DAVIS, combined, conspired, confederated, and agreed with persons known and unknown to the Grand Jury, to knowingly and willfully make and use materially false documents, knowing the same to contain materially false, fictitious, and fraudulent statements and entries in connection with the delivery of and payment for health care benefits, items and services, in violation of Title 18, United States Code, Section 1035(a)(2). Object of the Conspiracy 28. The object of the conspiracy was to make money from fraudulent billings to health care benefit programs and to create false and fictitious records of the defendant s medical practice to support the billing of medical services to health care benefit program programs that were not documented and in many cases had not been provided. Overt Acts 29. In furtherance of the conspiracy, and to accomplish its object and purpose, at least one of the conspirators committed and caused to be committed, in the Western District of Michigan, one or more of the following overt acts: 30. In 2011 and 2012, at DR. HORACE JUNIOR DAVIS s direction, members of his office staff created false and fictitious progress notes for the medical file of patient L.H. by making numerous photocopies of the same progress note and simply changing the date at the top of each progress note. 12
Case 1:16-cr-00045-PLM ECF No. 1 filed 03/09/16 PageID.13 Page 13 of 13 31. On or about December 12, 2011, DR. HORACE JUNIOR DAVIS submitted to Citizens Insurance, or directed his employees to submit to Citizens Insurance, false and fictitious progress notes for services purportedly rendered to patient L.H. in 2011. These false and fictitious progress notes were submitted for the purpose of documenting services purportedly provided to patient L.H. and billed to Citizens Insurance. 32. On or about August 8, 2012, DR. HORACE JUNIOR DAVIS submitted to Citizens Insurance, or directed his employees to submit to Citizens Insurance, false and fictitious progress notes for services purportedly rendered to patient L.H. in 2011 and 2012. These false and fictitious progress notes were submitted for the purpose of documenting services purportedly provided to patient L.H. and billed to Citizens Insurance. 33. On or about August 9, 2012, DR. HORACE JUNIOR DAVIS submitted to Citizens Insurance, or directed his employees to submit to Citizens Insurance, false and fictitious progress notes for services purportedly rendered to patient L.H. These false and fictitious progress notes were submitted for the purpose of documenting services purportedly provided to patient L.H. and billed to Citizens Insurance. 18 U.S.C. 371 18 U.S.C. 1035(a)(2) A TRUE BILL PATRICK A. MILES, JR. United States Attorney GRAND JURY FOREPERSON CLAY STIFFLER Assistant United States Attorney 13