Fraudulent Medical Billing
and Administrative Services Opportunities
This Is Going To Hurt A Little
You are considering buying a business opportunity which consists
of a system for processing and submitting medical claims on behalf
of doctors and dentists.
The sellers of the opportunity say that there's a crisis in the
health care system due partly to the overwhelming task of processing
paper claims; that electronic claim processing is the solution, and
that because only a small percentage of claims are transmitted electronically
the market for billing centers is wide open.
They also tell you that many doctors who process claims electronically
want to "outsource" or contract out their billing services
because it will save them money. They promise that you can earn a
substantial income working full or part-time, providing services
like billing, accounts receivable, electronic insurance claim processing,
and practice management to doctors and dentists.
They follow-up by sending you promotional materials that typically
include a brochure, application, sample diskettes, a licensing agreement,
disclosure document, and in some cases, testimonial letters, video
cassettes and reference lists.
The "system package" also includes a two-day training
session on how to use the software, marketing tips, a "lead" list
of doctors and dentists in your area to whom you should attempt to
market your billing services, and an assurance of follow-up support
from them regarding marketing, sales tips, software-related questions,
and business development.
They say you can reasonably expect to achieve a level of earnings
between $18,000 and $23,000 per year by working just 28 minutes per
day at home. "Put a bit more time in and earn in excess of
$50,000."
You decide to buy the package for $6996 but soon find the earning
levels unrealistic because the physicians and dentists that they
recommend are not ready and willing to purchase your medical billing
services. You also discover that the package consists of medical
billing software which can be purchased at a retail cost of $69.
You find they no longer care to provide the promised "significant
and valuable assistance" in the operation of your business with
the formerly promised training and comprehensive follow-up support
and technical assistance.
You are unable to find clients, start a business, and generate revenues,
let alone earn a substantial income and recover your investment,
because competition in the medical billing market is very strong
among a number of large and well-established firms.
Who Better to Teach Consulting?
Knowing you should be trained to run such a business you decide
to take a "consultant" training course you see advertised
that will also set you up as an associate. The opportunity ads might
be for a "Capital Loan Broker" or a "Medical or Tax
Recovery Service".
The courses and affiliations are to consist of a two-day training
session, class manuals, computer software, a newsletter, one-year
of support and a national network of independent business consultants.
The first field of endeavor, in capital acquisition consulting,
is where you apply for bank loans on behalf of clients and then keep
a percentage of each loan as a fee. The second is expense reduction,
where you help clients identify areas where money can be saved and
then keep a percentage of the savings as a fee.
They say you can earn consulting fees from operating such a business,
full-time or part-time, resulting in a six-figure or "doctors'
income" from just one or two projects per month. The price for
training and association is $12,900 payable by certified check at
the beginning of the training session.
They lament that they lose money on the $12,900 fee they collect,
but that they will make a profit participating with you on joint
ventures, described as larger consulting projects, which you can
work together on and split a large consulting fee.
The promoters provide you with promotional literature, a videotape
and a reference list which they encourage you to phone before making
a purchase decision. They say these references are typical affiliates
who have paid for and attended the training session, are now operating
their own consulting businesses, are earning high incomes from consulting
fees and are willing to share their success stories with prospective
purchasers such as yourself without compensation.
They also say that you can easily attract clients and that you need
no business, medical, or other specialized background or experience
in order to succeed as an affiliate.
After taking the course you will find it hard to even generate any
revenue let alone recoup the $12,900 fee. They do not work with you
on joint ventures or split large consulting fees and it will turn
out to be their spouses, shills or singers, not actual purchasers
who gave you such glowing references.
03/03 - California - Three people were sentenced in federal court
in connection with a purported "work at home" telemarketing
scheme that bilked thousands of people out of about $4.4 million.
Louis Ramirez III, 27, and Daniel Eugene Carr, 35, were each
sentenced to 41 months and ordered to pay $1.7 million in restitution. Marcel
Travers, 42, was sentenced to four years and to repay $2.3
million.
Deborah Karen Leicht, 52, Jason Robert Wilkey, 30, Patrick Donald
Wire, 45, and Joseph Randy Etheridge, 38, are set for sentencing
shortly. Bryan D'Antonio, 36, is serving a four-year sentence
and has been ordered to repay $2.6 million.
The eight people were employees of a boiler-room operation called
Data Medical Capital, Data-Jed or Medco which solicited victims through
ads in classified newspaper sections across the United States from
July 1998 until it was closed on Oct. 1, 1999.
When victims called the toll-free number, Medco telemarketers told
them that, for a fee of about $400, they would receive computer software,
instructions, technical support and, most importantly, the names
of doctors interested in hiring someone to process medical bills
electronically.
Victims were told to act quickly, because the company had a limited
number of positions available in any one area.
Medco sent software, instructions and a generic list of doctors
- not a list of interested prospects.
No "technical support" was provided, and people who tried
to enter the business did not learn that they would have to spend
more money to actually start processing bills.
Ramirez and Travers were convicted of mail and wire fraud after
a two week trial. The other defendants pleaded guilty to two counts
of fraud each.
Man Gets 3 Years In Medical Billing Software
Scam
02/07 - (CBS) LOS ANGELES A man who used telemarketers
to dupe some 30,000 people into spending $400 on software in the
hope of setting up a home-based medical billing business was sentenced
Monday to three years in federal prison.
Andrew Rubin was the general manager of Van Nuys firm Medicor LLC, according
to the government.
Authorities say Medicor's telemarketers told victims that they could
make $5 to $7 per claim processed, which added up to $20 to $45 per hour.
Medicor also placed advertisements in newspapers and other publications
claiming that a person could earn $20 to $40 an hour from home by doing
medical billing, according to a spokesman for the IRS' criminal investigations
division.
In pleading guilty last year to charges of engaging in transactions with
criminally derived property, Rubin admitted that he and his brother,
Matthew Rubin -- who authorities say was part of the scam -- knew that
these assertions were false.
Andrew Rubin also admitted knowing that the telemarketers would mislead
customers by telling that they would receive a list of doctors who needed
their services, and by telling them that they did not have to do any
work to obtain the doctor clients.
From July 1999 to March 2001, Medicor sold more than 30,000 Kwic-Claim
medical billing software packages for about $400 each.
Andrew Rubin had agreed to split the profits from Medicor 40-60 with
his brother, according to the government.
When the two learned the business was under investigation, Andrew Rubin
funneled nearly $300,000 of his profits to a bank account that was held
by a trust of which his brother was a beneficiary, according to the IRS.
Matthew Rubin also pleaded guilty, but failed to appear in court for
a January sentencing hearing, court records show.
Andrew Rubin was sentenced by U.S. District Judge Gary Klausner, who
ordered that he begin serving his sentence immediately.
In addition to the criminal charges, the Federal Trade Commission obtained
a $16 million judgment against the Rubins, according to court papers
filed by prosecutors.
Federal
Trade Commission v. Electronic Medical Billing, Inc., et al.
The Federal Trade Commission announced the settlement of this matter.
The settlement bars the defendants from selling any work-at-home business
opportunity and requires payment of $50,000 for consumer redress. The
complaint in this matter alleged that the defendants used deceptive means
to market and sell medical billing work-at-home business opportunities
to consumers. This case was originally filed as part of "Operation
Dialing for Deception."
Federal
Trade Commission v. Healthcare Claims Network, Inc., et al.
The Federal Trade Commission announced the settlement of this matter.
The settlement bans the defendants from promoting or selling work-at-home
business opportunities. The settlement also requires one defendant to
pay $10,000 and prohibits both defendants from making any deceptive claims
in connection with the sale of any goods or services. This case was originally
filed as part of "Project Busted Opportunity."
Federal
Trade Commission v. Physicians Healthcare Development, Inc.,
et al.
The Federal Trade Commission announced the settlement of this matter.
The complaint in this matter alleged that the defendants deceptively
pitched a work-at-home medical billing opportunity to consumers. The
settlement order bars the defendants from selling any business venture,
employment opportunity, or work-at-home opportunity. It also requires
the defendants to provide the FTC with approximately $65,000 in frozen
assets and it requires the defendant to post a bond before engaging in
telemarketing activities in the future. The order further requires the
defendants to cease all collection efforts and return any uncashed checks
they collected to consumers. This case was filed as part of "Dialing
for Deception."
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