JURY CONVICTS LOCAL PHYSICIAN OF DEFRAUDING INSURANCE COMPANIES OF $10 MILLION

HOUSTON, Texas – A federal jury convicted Dr. Ira Klein of 44 counts of mail fraud and health care fraud in connection with a scheme to defraud various insurance companies of $10 million, U.S. Attorney Don DeGabrielle announced today. The guilty verdicts, announced late this morning, were followed by a forfeiture hearing and the jury’s finding that Klein should forfeit $10 million as proceeds of his illegal scheme.

Klein, indicted in February 2006, was a physician who specialized in treating patients diagnosed with Hepatitis C. He billed insurance companies for services not provided to patients and misrepresented services that were actually provided. The fraudulent scheme involved ordering large quantities of medications used to treat Hepatitis C and providing medications to patients to self administer at home and then billing the insurance companies as if the injections had been administered by him or his staff in his office.

During the three-week trial, the evidence detailed the scheme Klein executed between January 2005 and Dec. 9, 2005. Dr. Klein initially met with patients to discuss treatment option after tests confirmed that they in fact had Hepatitis C, a disease that affects the liver. Klein told his patients that they would be required to make weekly office visits to receive medications to treat the condition, but assured them he would accept whatever their insurance would pay, and they would not be required to pay any out-of-pocket expenses.

However, instead of writing prescriptions for his patients to purchase interferon, ribavirin, neupogen and epoetin, drugs used in the treatment of Hepatitis C, Klein ordered large quantities of these medications and dispensed to his patients to self administer at home. Documents presented at trial proved that Klein ordered kits containing both interferon and ribavirin at a cost of $695 each, but would unbundle the kit and submit claims to the insurance company for more than $3,840 for the components of the kits. The majority of the claims filed for services provided were for dates when patients were not in his office.

Klein also billed insurance companies for injecting his patients with the prescription drugs epoetin and neupogen during office visit, but again the evidence proved no office visit had occurred, and his patients were, in fact, self administering those medications at home. Klein purchased epoetin at a cost of approximately $1,246 for 10 units of medication, but in turn billed insurance companies $39,500 for the same 10 units. The Nuepogen was purchased at a cost of $1,885 for 10 units of medication, yet Dr. Klein billed insurance companies $32,700 for the same 10 units. Former patients testified that when their insurance company refused to pay Klein the exorbitant fees, he cutoff their treatment or told them to contact their respective insurance companies and demand that Dr. Klein be paid.

Patient files introduced during the trial showed Klein did not have doctors’ notes for the majority of the claims submitted for reimbursement, that almost uniformly the blood pressure and pulse recorded for every patient was the same – 120/80 and 80 beats per minute. Several physician testified that this was virtually impossible.

Representatives from the Texas State Board of Medical Examiners and the Texas Board of Pharmacy testified that Klein violated board rules and state law by acting as a pharmacy and ordering large quantities of prescription drugs that were available by prescription from a pharmacy. As a result of his fraudulent scheme, Klein billed insurance companies over $16 million and was paid $10 million.

At sentencing, which is scheduled for Feb. 2, 2007, Klein faces a maximum of 20 years in prison for each of the 18 mail fraud counts of conviction and a maximum of 10 years in prison for each of the 26 health care fraud counts of conviction.

The investigation leading to the charges against Klein was conducted jointly by the FBI, the Texas Department of Insurance, Fraud Unit and the U.S. Office of Personnel Management, Office of Inspector General. This case was tried by Assistant U.S. Attorneys Samuel J. Louis and Vernon Lewis.