Florida man tied to the troubles of Kansas, Missouri hospitals faces fraud charges
Jorge Perez, who touted his ability to save struggling rural hospitals and worked for a time out of a North Kansas City office, was among 10 people charged on Monday by the Justice Department in an allegedly massive $1.4 billion hospital billing fraud scheme.
Federal prosecutors accuse Perez and others of seeking out and gaining control of distressed rural hospitals, including one in Unionville, Missouri, to use as shells through which bogus bills for laboratory tests were submitted to private insurance companies.
The hospital in the north-central Missouri town of Unionville — Putnam County Memorial Hospital — was the subject of a stinging report by Missouri Auditor Nicole Galloway in 2017. The audit detected $90 million worth of questionable billings less than a year after its trustees awarded a management contract to a company run by David Byrns, who is named as a co-conspirator in Perez’s indictment.
“For three years, my office has been working with federal law enforcement agencies in Missouri, Florida and Washington, D.C., to share what we uncovered at Putnam County, and it led to the discovery of a conspiracy of similar schemes at other small rural hospitals,” Galloway said in a statement on Tuesday. “Health care fraud impacts the cost of health care for all of us and affects the viability of hospitals and other health care facilities across rural Missouri. Those responsible for fraud must be held accountable, and my office remains committed to working with federal law enforcement to seek justice in these cases.”
Byrns was charged separately last year with one count of conspiracy to commit mail fraud.
All told, the Justice Department claims, the conspiracy resulted in $1.4 billion in sham billings over just more than two years and caused insurance companies to pay out $400 million in reimbursements.
Perez, whose hospital management company EmpowerHMS was headquartered in North Kansas City, made his first appearance before a magistrate judge in Florida, where an indictment originally filed under seal on June 17 was made public.
Perez is charged with several counts of conspiracy to commit mail fraud, health care fraud and money laundering.
“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, in a written statement. “The charges announced today make clear that the department is committed to dismantling fraud schemes that target our health care system, however complex or elaborate.”
A docket sheet in the Florida court on Tuesday did not list an attorney for Perez. A phone number listed for EmpowerHMS was routed to a law office; Perez could not be reached for comment.
The indictment lists fours hospitals — Putnam County, two in Florida and one in Georgia — that were part of the fraud scheme. Of those, Putnam County is the only one still open, according to the indictment.
Other hospitals in Missouri and Kansas affiliated with Perez and EmpowerHMS have also closed. They include the I-70 Community Hospital in Sweet Springs, Missouri, which had its license suspended by the Missouri Department of Health and Senior Services in February 2019 and has remained closed since then.
In March 2019, the Horton Community Hospital north of Topeka shut down after employees had not been paid in more than a month.
The alleged conspiracy worked like this, according to prosecutors: Perez and his co-conspirators would gain control of struggling rural hospitals and then use those hospitals to submit bills for urine and blood tests. The tests were carried out by laboratories run by or connected to some of the conspirators.
By submitting bills through the rural hospitals, the defendants could receive higher reimbursements, according to the indictment. Sometimes the tests were not even medically necessary and were obtained through a kickback scheme involving substance abuse centers.
EmpowerHMS appears to have vanished from North Kansas City. In 2019, Perez sold the company’s hospital management contracts to a Florida company in exchange for what filings with the U.S. Securities and Exchange Commission described as “success fees.”
This story was originally published June 30, 2020 at 11:28 AM.
