Fake penis pump bills lead to Medicare fraud arrests in Florida

Miami HeraldAugust 16, 2010 

MIAMI — It's one thing that a pair of Miami-area companies were fraudulently billing Medicare for penis pumps at $395 a pop to supposedly help male patients combat impotence.

It's quite another that Charlie RX and Happy Trips also billed the federal healthcare program for vacuum erection systems to aid female patients battle erectile dysfunction, authorities say.

And what's even more remarkable: Medicare paid the two medical equipment providers $28,600 after they submitted a total of $63,000 in false claims for the erection pumps, according to charges unsealed Monday in federal court in Miami.

The criminal case highlights, yet again, Medicare's chronic problem of paying bills quickly without first verifying them -- a glaring flaw that has undermined the taxpayer-funded system during the past decade.

Emilio Felipe Lopez, 47, president of Charlie RX, and Orlando Hernandez Estevez, 25, president of Happy Trips, were indicted on charges of healthcare fraud in February. Last week, FBI agents arrested the two Hialeah businessmen, who authorities say were in hiding. They have their first appearances in Miami federal court Monday afternoon.

Both defendants are accused of stealing Medicare patients' numbers and doctors' identifications to submit nearly $2 million in bogus bills to the healthcare program for the elderly and disabled between October and February.

Lopez's company, Charlie RX, billed Medicare a total of $689,853 in phony claims for medical equipment, including $41,000 for penis pumps for both male and female patients, according to authorities. Medicare reimbursed his business $370,853, including $24,000 for the pumps.

Hernandez's company, Happy Trips, submitted $1,188,956 in false claims for inhalation drugs and other medical services, including $22,000 for the erection systems, officials say. Medicare paid his business $364,120, including $4,600 for those systems.

Earlier this year, Medicare shut down payments to both companies after FBI agents discovered a spike in billing activity and reported it to the agency's anti-fraud contractor, Safeguard Services.

According to authorities, medical equipment companies nationwide were paid $2.4 million last year after billing Medicare for vacuum erection systems -- with 90 percent of those payments going to businesses in Florida.

During the past decade, Miami-Dade County has gained the reputation as the nation's capital of Medicare fraud, with an estimated $3.5 billion to $4.5 billion in fraudulent billing activity for medical equipment, infusion drugs, homebound diabetics and physical therapy.

The latest trend, according to the FBI and U.S. attorney's office, is phony billing for mental health services.

Mental health clinics in Florida billed Medicare for $421 million in 2009, according to the agency's records. That's four times more than was billed during the same period by mental health clinics in Texas, and 635 times more than was billed by clinics in Michigan. The only plausible explanation for such a staggering discrepancy in mental-health claims is stealing, authorities say. The FBI is investigating cases in Miami-Dade but has not filed any criminal charges yet against a clinic operator.

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service