Western District of Kentucky

– Hugh “Stan” Curtis charged with stealing $183,354 in donations and failing to report $553,891.67 in personal income from USA Harvest
– Curtis used funds to allegedly pay for personal expenses including meals, entertainment, and travel

LOUISVILLE, Ky. – USA Harvest, Kentucky Harvest, and Blessings in a Backpack founder, Hugh “Stan” Curtis was charged in a seven-count federal indictment today, with one count mail fraud, two counts money laundering and four counts filing false income tax returns with the Internal Revenue Service, announced David J. Hale, United States Attorney for the Western District of Kentucky.

According to the indictment returned today by a federal grand jury meeting in Louisville, from September 2005 through September 2007, defendant Curtis, 63, of Louisville, Kentucky, allegedly stole approximately $183,354 in donations that he solicited on behalf of USA Harvest, a non-profit, I.R.C. 501 (c) organization. Of these stolen donations, Curtis deposited $164,620 into his personal account and personally cashed donation checks totaling $18,734 – and thereafter used the funds for his personal benefit. The $164,620 includes an August 29, 2007, donation for $20,000 from Play Like the Pros, LLC and a September 5, 2007, donation for $25,000 from Richemont North America, Inc. In addition, Curtis did not report the $183,354 as income with the Internal Revenue Service.

Further, from 2005 through 2008, it is alleged in the federal indictment, that Curtis failed to report to the Internal Revenue Service approximately $553,891.67 in personal income he received from USA Harvest. The amount includes the $183,354 in stolen donations and $370,537.67 in personal travel expenses that he charged to USA Harvest. More particularly, Curtis used approximately $370,537.67 in USA Harvest funds to pay for personal meals, personal entertainment expenses, and personal travel. In addition, Curtis fraudulently deducted approximately $353,165 in unreimbursed USA Harvest travel expenses on his 2005 through 2007 returns.

Counts four through seven of the indictment charge Curtis with filing false returns with the Internal Revenue Service. In 2005, Curtis failed to report approximately $160,549.56 in income and falsely deducted approximately $134,623 in unreimbursed travel expenses from USA Harvest on his 2005 federal income tax return filed on April 15, 2006. For the year 2006 Curtis failed to report approximately $217,085.18 income and falsely deducted approximately $130,739 in unreimbursed travel expenses from USA Harvest on his 2006 federal income tax return filed on May 9, 2007. For the year 2007 Curtis failed to report approximately $97,264.48 and falsely deducted approximately $87,803 in unreimbursed travel expenses from USA Harvest on his federal income tax return filed on April 15, 2008. For the year 2008 Curtis failed to report approximately $78,992.45 in income from USA Harvest on his 2008 federal income tax return filed on October 16, 2009. The return was filed by Curtis and signed under the penalty of perjury.

At sentencing, Curtis faces a combined maximum term of 52 years in prison, a combined maximum fine of $1,150,000, and a three-year term of supervised release.

This case is being prosecuted by Assistant United States Attorney Bryan Calhoun and was investigated by the Internal Revenue Service, Criminal Investigations Division.

– Sleep diagnostic tests were performed by individuals who lacked required credentials

LOUISVILLE, Ky. – The United States Department of Justice, the United States Attorney’s Office for the Western District of Kentucky, and the Office of Inspector General of the Department of Health and Human Services, today announced a $15,301,341 settlement with American Sleep Medicine, LLC (ASM) to resolve claims that the company improperly billed Medicare and other federal healthcare programs for sleep diagnostic services that were not eligible for payment.

“Pursuing health care fraud is a priority of my Office and the Department of Justice. We will continue to work with the Department of Health and Human Services and the public to ensure that fraudulent claims are investigated and those responsible are required to pay,” stated David J. Hale, United States Attorney for the Western District of Kentucky. “Medical providers who overbill Medicare defraud the taxpayers and drive up the cost of health care for us all. Recovering taxpayer dollars lost to fraud helps keep strong those critical public health care programs so many people depend on,” stated Hale.

“Medicare patients and military families deserve to be treated by appropriately credentialed professionals when seeking medical care,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “When companies providing those services seek to skirt the rules, there will be a steep price to pay.”

According to the agreement between ASM and the United States, ASM agreed to pay and has paid $15.3 million to settle claims arising from reimbursement requests for sleep diagnostic testing services, which ASM submitted or caused to be submitted to Medicare Part B, TRICARE, and the Railroad Retirement Medicare Programs. The United States contended that the reimbursement claims submitted during this period were false because the diagnostic testing services were performed by technicians who lacked the required credentials and/or certifications. The alleged improper billing covered by the settlement agreement occurred between January 1, 2004, and December 31, 2011.

ASM, headquartered in Jacksonville, Florida, owns and operates 19 diagnostic sleep testing centers throughout the United States, including Kentucky. The company’s primary business is to provide testing for patients suffering from sleep disorders such as obstructive sleep apnea (OSA). The most common tool used to diagnose sleep disorders, particularly OSA, is polysmnographic diagnostic sleep testing. Federal program requirements for the reimbursement of sleep disorder testing require that initial sleep studies be conducted by technicians who are licensed or certified as sleep test technicians. As a result of ASM’s conduct, Medicare and other federally funded healthcare programs were routinely billed for, and paid, technical and professional fees for diagnostic sleep study services that were not properly payable.

In agreeing to the settlement, ASM made no admission of liability. No issues concerning quality of patient care were raised as part of this settlement.

This matter arose as a complaint for damages and other relief under the qui tam provisions of the Federal False Claims Act. The relator, Daniel Purnell, a former employee of ASM, filed a qui tam action on February 4, 2010, in the United States District Court for the Northern District of California. In April, 2011, the lawsuit was transferred to the United States District Court for the Western District of Kentucky. Purnell will receive $2,601,228 as part of today’s settlement.

The matter was handled by Assistant United States Attorney L. Jay Gilbert of the U.S. Attorney’s Office for the Western District of Kentucky, and the Department of Justice Commercial Litigation Branch. The investigation was conducted by the Office of Inspector General of the U.S. Department of Health and Human Services with assistance from the Federal Bureau of Investigation, Defense Criminal Investigative Service and the Office of Inspector General of the Railroad Retirement Board.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.