Federal prosecutors have filed new charges in the U.S. District Court for the Southern District of Texas against Merida Group Owner Rodney Mesquais and CEO Henry McInnis. The criminal complaints allege that the two conspired to violate the False Claims Act by billing Medicare for medically unnecessary hospice care and home health services, totaling $152 million.
Mesquais and McInnis were convicted of previous fraud charges and received prison sentences of 20 and 15 years, respectively. They both face additional prison terms if found guilty of violating the False Claims Act (or FCA).
“Through their respective positions as owner-president and CEO of the Merida Group—the umbrella company for several businesses purportedly offering home health and hospice care — Mesquias and McInnis orchestrated a scheme of certifying patients for home health and hospice care regardless of their eligibility,” prosecutors indicated in a criminal complaint. “They certified all patients who came to their facilities, regardless of eligibility.”
Mesquais and McInnis personally received $124 million of the illegally obtained funds.
U.S. District Court Judges Judith Jones, Catharina Haynes and Gregg Costa cited “overwhelming evidence” in its previous decision that the two Merida Group executives abused Medicare’s reimburse-first-verify-later system between 2009 and 2018.
During that time, the defendants submitted more than 47,000 claims for upwards of 9,000 patients. Roughly 70% to 85% of patients were ineligible to receive home health and hospice care, and were often referred against the advice of their primary care physicians, according to prosecutors.
FCA cases often hinge on the question of patient eligibility for hospice care based on a six-month terminal prognosis. In this case, the conspirators lied to patients about their six-month terminal prognosis and recertified many of them multiple times to allow Merida Group to continue billing for these services.
The combined charges against both executives included six counts of health care fraud, one count each of conspiracy to commit health care fraud and conspiracy to launder money. Mesquais faced an additional charge of conspiracy to pay kickbacks.
Mesquais and McInnis, along with other co-conspirators, “exploited patients” with long-term, incurable diseases such as Alzheimer’s and dementia, often enrolling them in expensive and unnecessary services, according to a local news report.
“They targeted poor and elderly non-English speakers in San Antonio housing projects and used the language barrier to trick them into signing up for hospice care,” according to the complaint. “Defendants also told patients that they had terminal illnesses when they did not. Those lies took a psychological toll. To take an example, one patient who was told that she had less than six months to live began thinking about ending her life so that her family would not have to watch her die slowly.”
One witness in their previous trial testified that they heard Merida Group Medical Director Francisco Peña state that “the way you make money is by keeping [patients] alive as long as possible,” according to the local news report, which also indicated that the company offered physicians tens of thousands of dollars in alcohol and other kickbacks in exchange for patient referrals.
Peña pleaded guilty for his involvement in the scheme and was convicted on one count of health care fraud, obstruction of health care investigations and one count of making false statements to the FBI.
Pena died prior to sentencing.
Other conspirators in the scheme have been charged and convicted for their involvement as well. Operations manager Jose Garza in 2021 was handed a 27-month prison sentence for the recruitment of patients at several Merida locations.
Others who pleaded guilty to the charges included medical directors Jesus Virlar and Eduardo Carrillo.
The conspirators used the illegally obtained revenue to finance lavish lifestyles, with purchases including designer clothing, real estate, season tickets for sporting events, parties and luxury vehicles, according to prosecutors.
One medical director was fired for refusing to refer patients to hospice. Nurses who raised questions were also fired or threatened with termination.
Hospice organizations are under increasing legal and regulatory scrutiny related to medical necessity complaints under the FCA and the closely related anti-kickback statute. FCA suits are among the most prevalent enforcement actions that target hospices in the courts.
The U.S. Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health & Human Services Officer of the Inspector General (HHS-OIG) have been looking closely at matters such as patient eligibility and billing for services deemed unrelated to the terminal diagnosis, among other concerns.
False claims cases have resulted in fines or settlements reaching millions of dollars, and some providers have faced criminal charges and prison sentences, including the Merida Group executives.
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