CEO, CFO and VP Convicted in Nationwide Worker’s Compensation Fraud Scheme
HOUSTON – Several officials with Team Work Ready (TWR) have been convicted of conspiracy, health care fraud, wire fraud and money laundering, announced U.S. Attorney Kenneth Magidson. TWR had clinics in five states including Federal Work Ready in Houston, Alamo Work Ready in San Antonio and Bayou Work Ready in New Orleans, Louisiana.
The federal jury deliberated for 14 hours following a 16-day trial before convicting CEO Jeffrey Eugene Rose Sr., 54, chief financial officer Pamela Annette Rose, 55, along with the clinic’s vice president of operations Frankie Lee Sanders, 55. The verdicts were returned late yesterday.
Today, the same jury heard evidence on forfeiture matters and returned a special verdict forfeiting $220,807, an annuity contract and real property.
During the criminal trial, the jury heard testimony from 38 witnesses including former patients of TWR clinics, former employees of TWR clinics, various experts and special agents from the U.S. Postal Service – Office of Inspector General (USPS-OIG) and IRS – Criminal Investigation (CI). According to testimony, TWR submitted approximately $9.6 million in false and fraudulent claims from four of its clinics for physical therapy services that were not provided. The claims were submitted under the Federal Employees Compensation Act (FECA) health care benefit program which is administered by the Department of Labor – Office of Worker’s Compensation Program (DOL-OWCP).
DOL-OWCP’s chief fiscal officer explained to the jury at the start of the trial that FECA does not pay for professional services performed by unlicensed aides which is why DOL-OWCP requires the enrollment of all licensed professionals providing services to injured federal employees, including copies of professional licenses. He testified that the FECA program only considers chiropractors as physicians when they treat spinal subluxation. Otherwise, chiropractors are considered equivalent to physical therapists and may provide physical therapy under the direction of, and as prescribed by, a medical doctor. Specifically, in relation to this case, the DOL-OWCP would not have paid millions of dollars for the physical therapy services billed by TWR if they had known that the services were not provided as described in the claims submitted to DOL-OWCP.
The claims TWR submitted falsely and fraudulently described skilled one-on-one physical therapy services provided by a licensed chiropractor. Patients from four TWR clinics testified that they did not receive the one-on-one physical therapy services paid for by DOL-OWCP under FECA. Rather, they stated that they exercised independently on treadmills, bicycles and elliptical machines with the Nintendo Wii game and with other pieces of exercise equipment. The San Antonio clinic also had an electronic massage chair for patients. One patient from Houston testified that she felt that some of the exercises she was asked to do had nothing to do with her carpal tunnel wrist injury, specifically the treadmill. Another patient from the San Antonio clinic testified that unlicensed staff told him to do exercises on both of his arms, although he only injured his left elbow and to use the electronic massage chair and the treadmill for his injury.
The jury also heard testimony from 11 former TWR employees, including unlicensed therapy technicians from the Houston and New Orleans clinics, a case manager and two licensed chiropractors. The employees reported 30 – 60 patients a day at the Houston clinic and said there were times when they did not know what the patients were doing in the main treatment area because they were busy in the back doing massages, electrical stimulation treatments and ultrasound treatments. The employees testified that they did not perform all the one-on-one services documented on patient treatment notes and admitted they frequently completed the patient treatment notes at the end of the day by following a “cheat sheet” and asking each other and the patients what activities had been done. Patients at the New Orleans clinic were instructed to go back to the therapy room to begin doing exercises by themselves. Various individuals described the treatment as “like a gym.”
The jury also heard from two federal agents who went undercover as “injured federal employees” at the Houston and New Orleans clinics. The jury watched portions of video recordings covertly made by the undercover agents that showed patients independently exercising and receiving care from unlicensed and obviously untrained staff.
One of the licensed chiropractors testified that she began covertly recording meetings with the defendants in December 2012. The jury heard several of the recordings, including one in which the defendants tried to coerce the chiropractor to order medically unnecessary treatment so TWR could make a profit.
TWR’s former chief operating officer (COO) testified about a phone call he received from CFO Rose on July 11, 2013 – the day federal agents executed search warrants at TWR clinics in Houston and New Orleans. The COO said CFO Rose instructed him to meet her and CEO Rose at a local Chase bank where they moved money out of the TWR accounts to hide it from the federal government. An IRS-CI special agent traced the $700,000 transferred out of TWR bank accounts, into a transportation company account owned by Mr. and Mrs. Rose and then out of that account via a cashier’s check in the name of two “shell” businesses not associated with TWR but also owned by Mr. and Mrs. Rose.
Sanders and Jeffrey Rose have been in custody where they will remain pending sentencing, set for January 2017. Pamela Rose was permitted to remain on bond.
The possible punishment for a conviction of conspiracy to commit health care fraud, health care fraud and engaging in a monetary transaction in criminally derived property is up to 10 years in federal prison and a $250,000 fine. They also face a maximum of 20 years in prison for the wire fraud and money laundering convictions.
This case was the result of a joint investigation with the USPS – OIG, DOL – OIG, IRS – CI, Department of Veterans Affairs – OIG, and Department of Homeland Security – OIG. Assistant United States Attorneys (AUSA) Julie Redlinger and Daniel Rodriguez prosecuted the case. AUSA Kristine Rollinson handled the forfeiture matters.