Pills in apothecary bottle

Feds Uncover Health Care Fraud and Drug Dealing Scheme That Brings Down 2 Doctors and a “Patient Recruiter”

On February 11, 2015, Dr. Hussein “Sam” Awada, 45, of Royal Oak, Michigan pleaded guilty to conspiracy to possess with intent to distribute prescription drugs without a legitimate medical purpose, in violation of 21 U.S.C. Sections 841 and 846, and with defrauding a health care program in violation of 18 U.S.C. Section 1347. According to a Department of Justice Press Release, Awada pleaded guilty in United States District Court for the Eastern District of Michigan. According to The Detroit News he is scheduled to be sentenced by Judge Nancy Edmunds on June 4, 2015. Awada faces a maximum sentence of 20 years’ incarceration for conspiracy to commit narcotics trafficking and a maximum sentence of 10 years’ incarceration for health care fraud. As a condition of his guilty plea, Awada agreed to forfeit his ownership interest in his medical clinic and an adjacent Mediterranean café and agreed to voluntarily forfeit his DEA license to write medical prescriptions. Awada also will be banned from future participation in health care programs such as Medicare, Medicaid, and all other federal health care programs. Finally, Awada agreed to cooperate with prosecutors and federal law enforcement in their ongoing investigation.

According to Awada’s plea agreement with the U.S. Attorney’s Office, beginning in December 2010 through February 2012, Dr. Awada conspired with co-defendant James Lyons to distribute unlawful narcotics on the streets. As a part of their scheme, Lyons acted as a “recruiter” and brought patients to Awada’s “Midwest Family Practice” medical clinic in Warren, Michigan. In turn, Dr. Awada would fraudulently bill Medicare, Medicaid, and Blue Cross Blue Shield for health care services that were either not provided at all or were provided but were medically unnecessary. Then, Dr. Awada would write prescriptions for Oxycodone and Roxicodone, which these patients did not need. Lyons then sold these prescriptions on the streets for profit in the illegal drug market. These unlawful prescriptions resulted in 80,000 30mg Oxycodone and Roxicodone pills being illegally sold. Additionally, the fraudulent billings to Medicare, Medicaid, and Blue Cross Blue Shield amounted to $23 million dollars in services that were either unnecessary or not provided. The DOJ reported that Lyons pleaded guilty earlier in the case and was sentenced to 48 months’ incarceration for his role. Finally, Dr. Luis Collazo, 55, of Farmington Hills, Michigan also pleaded guilty to conspiracy to possess with intent to distribute a controlled substance. Dr. Collazo practiced together with Dr. Awada at “Midwest Family Practice.” Dr. Collazo is also scheduled to be sentenced on June 4, 2015.

18 U.S.C. Section 1347 makes it a federal offense to knowingly and intentionally agree with another person to obtain money or property from any health care program by fraud. Fraud is essentially making a material misrepresentation for financial or other pecuniary gain. CNN Money reported that health care fraud costs American taxpayers $100 billion dollars annually. With so many more people now covered by health care insurance as a result of the 2009 Affordable Care Act (ACA), federal prosecutors are cracking down on alleged health care fraud. Dr. Awada and his co-defendants were investigated by the Drug Enforcement Administration (DEA), the Federal Bureau of Investigations (FBI), and the U.S. Department of Health and Human Services Office of the Inspector General (DHHS OIG). In the wake of the passage of the ACA, the DOJ and HHS created the Health Care Fraud Prevention and Enforcement Action Team (HEAT). In FY2013 the HEAT joint task force reported a record breaking $4.3 billion dollars in recovered taxpayer dollars due to alleged health care fraud.

Federal health care fraud charges are serious criminal offenses. Anyone being investigated for or charged with health care fraud faces incarceration, forfeiture of assets, heavy fines, restitution payments, and supervised release after incarceration. Additionally, if convicted of health care fraud, health care providers such as medical doctors, nurses, licensed home health care aid workers, physical therapists, and others could potentially lose their licenses and be banned from future participation in all federal health care programs. Not to mention that a federal felony conviction most certainly would have devastating long term consequences to one’s professional reputation and ability to gain meaningful employment in one’s profession in the future.

Health care providers who suspect they are being investigated for or will be charged with health care fraud related offenses, should consult with an experienced white collar criminal defense attorney, knowledgeable about federal health care fraud prosecutions. If you suspect that an employee in your practice is involved in health care fraud, consider retaining the services of a white collar criminal defense attorney to: (1) conduct a thorough internal investigation, (2) report any wrong doing to management, (3) take remedial and/or disciplinary action, and (4) recommend meaningful compliance programs that will help avoid future instances of health care fraud.

Terry Eaton -
Attorney, Professor & Speaker

Terry Eaton is the Founder and Principal at the Eaton Law Firm, PLLC.  Mr. Eaton focuses his practice defending

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