JACKSONVILLE, FLA. — A Miami, Kansas man and his brother were charged Monday, June 27, in federal court with fraudulently billing insurance companies more than $1.4 billion, and in the process bankrupting a dozen rural hospitals, including Oswego Community Hospital.
Jorge Perez was the mastermind behind the plot to take over failing rural hospitals in Missouri, Kansas and other states and use them as fronts for the insurance fraud scheme. The men claimed charges for laboratory testing services that were conducted offsite, according to a story by Dan Margolies of KCUR News.
A 2017 audit by Missouri Auditor Nicole Galloway found that over a 10-month period Putnam County Memorial Hospital in Unionville received more than $90 million in insurance payments for lab work conducted at other hospitals.
A follow-up audit by Galloway found that between July 2017 and April 2018, the hospital paid more than $20 million to Perez’s Hospital Partners and its affiliates for their lab billing services.
The vast majority of the billings were for patients who had not been treated at the hospital. Instead, the hospital acted as a shell company for other labs by submitting bills for their services and funneling the insurance payments through the hospital.
“That’s the danger of the rural hospital space: You’ve got regular citizens trying to contribute to the community, and they can get taken advantage of just because of the sophistication of people like Jorge Perez,” said Joe Benar, an attorney who represented Putnam County Memorial Hospital’s board of trustees in litigation over the case.
According to Margolies’ reporting, of the 12 hospitals that Perez and his brother, Ricardo, either owned or co-owned, all have filed for bankruptcy and eight have closed, leaving many small towns without their only hospital and hundreds of employees without jobs.
The Ricardo brothers were charged with conspiracy to commit health care fraud following a 24-day trial in Jacksonville.
