Texas physician, hospital administrator convicted in $20 million fraud scheme

A federal jury convicted a Texas physician and former hospital administrator of running a $20 million healthcare fraud scheme that involved billing insurers for unnecessary medical tests, some of which were not even performed.

The U.S. Department of Justice's Criminal Division announced the conviction late last week of internal medicine physician Dr. Harcharan Narang and Dayakar Moparty of one count of conspiracy to commit healthcare fraud, 17 counts of healthcare fraud and three counts of money laundering. They face up to 10 years in federal prison for each count of healthcare fraud and up to 20 years for each count of money laundering.

During the trial, prosecutors described how 50-year-old Narang, who owned and practiced at North Cypress Clinical Associates in Cypress, and Moparty, who ran the now-closed Red Oak Hospital in Houston, illegally made money by submitting fraudulent claims for medical tests that were not medically necessary, not provided, or both and then billed insurers using Red Oak Hospital's higher reimbursement rate, according to the Justice Department.

The pair also falsified home health patient assessment documents to make patients appear sicker in order to receive higher reimbursement rates from insurers like Blue Cross and Blue Shield, Cigna and Aetna. Moparty instructed his employees to falsely bill for medical services at Red Oak Hospital and other entities associated with Moparty, when in fact, the patients never received services from that hospital or the other entities, the government said.

During the trial, patients testified they had a Groupon coupon for weight loss shots, but that after meeting with Narang, they were told they needed a battery of medical tests that they either didn't need or never received. Insurers paid Red Oak Hospital about $3.2 million. Moparty then covertly paid about $3 million to various entities Narang owned. Their co-conspirator, 67-year-old Dr. Gurnaib Sidhu, of Houston, is awaiting sentencing.

Narang and Moparty are on bond with ankle monitoring pending their sentencing hearing, set for June 20.

Since it was created in March 2007, the Justice Department's Medicare Fraud Strike Force has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion, according to the department. The department maintains 14 strike forces in 23 districts.