(HOUSTON, Texas) - Michael D. Kim, M.D., indicted by a federal grand jury for conspiracy, health care fraud and money laundering in a scheme to defraud Medicare of $29 million, was taken into federal custody today by investigating agents.  The criminal charges are the result of a joint investigation conducted by agents of the U.S. Department of Health and Human Services - Office of Inspector General, FBI and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office into what has become known as the "motorized wheelchair fraud scheme."

The indictment was returned by a federal grand jury in Houston, Wednesday, Sept. 26, 2007.   This morning, Kim surrendered to investigating agents and is expected to make an initial appearance in federal court before a U.S. Magistrate Judge later today.

The “motorized wheelchair fraud scheme,” as described in the allegations of the indictment, involved the payment of kickbacks by Durable Medical Equipment (DME) companies to recruiters, who solicit Medicare beneficiaries to acquire motorized wheelchairs.  Recruiters referred and transported beneficiaries to physicians to secure a false or fraudulent Certificate of Medical Necessity (CMN) necessary to bill Medicare for a motorized wheelchair, and the physician would allegedly bill Medicare for the unnecessary office visit and medical services.  The DME companies would then use the fraudulent CMNs to bill Medicare for the medically unnecessary wheelchairs.  The indictment alleges that DMEs paid kickbacks to a physician for the fraudulent CMNs and delivered a much less expensive scooter to the beneficiary.  Medicare pays the DME substantially more for a motorized wheelchair ($4,200) than for a scooter ($1,700).

The thirty-one-count criminal indictment charges Kim, 67, with conspiracy to defraud the Medicare program of $29 million and seventeen separate counts of health care fraud.  Kim is also charged with thirteen counts of money laundering.  Kim is accused of fraudulently approving thousands of Medicare beneficiaries for motorized wheelchairs in return for a cash payment of $200 per beneficiary.  According to the indictment, thousands of Medicare beneficiaries were brought by recruiters to Kim’s medical clinic located on 6400 block of Hillcroft in Houston between April 2002 and October 2003 for the purpose of securing a false or fraudulent CMN.  Kim routinely approved wheelchairs for 20-60 patients a day who clearly did not meet the Medicare guidelines to receive such a device, according to the indictment.

The indictment also seeks to forfeit approximately $13 million from Kim alleging that sum constitutes the proceeds of the fraudulent scheme.

Upon conviction, each of the health care fraud counts carries a maximum penalty of 10 years in a federal prison and a $250,000 fine.  The conspiracy carries a penalty of five years imprisonment and a $250,000 fine.  The money laundering counts carry either a 10 or 20-year maximum penalty and as much as a $500,000 fine.  Parole has been abolished in the federal prison system.  This case will be prosecuted by Assistant United States Attorneys Al Balboni and Jason Varnado.

An indictment is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless and until convicted through due process of law.

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