Texas Physician Sentenced for $10 Million Scam

Texas Physician Sentenced for $10 Million Scam

News and Commentary | Fraud Cases | Physician Fraud Cases | Prescription Drug Fraud

Press Release
The United States Attorney’s Office
Southern District of Texas

August 6, 2007

LOCAL PHYSICIAN SENTENCED TO PRISON FOR DEFRAUDING INSURANCE COMPANIES OF $10 MILLION

(HOUSTON) Dr. Ira Klein, a physician who specialized in treating Hepatitis C patients, has been sentenced to more than 11 years in federal prison, without parole, for health care and mail fraud, United States Attorney Don DeGabrielle announced today.

A federal jury convicted Dr. Ira Klein, 61, of Houston, Texas, in November 2006 of 18 counts of mail fraud and 26 counts of health care fraud in connection with a scheme to defraud various insurance companies of $10 million. Today, U. S. District Judge David Hittner sentenced Dr. Klein to 135 months in prison to be followed by a three-year term of supervised release. Klein was also ordered to pay $11,590,784 in restitution.

At this morning’s hearing, the Court found Dr. Klein had obstructed justice when he allegedly conspired with jailhouse inmates to murder the Assistant United States Attorney prosecuting the case, one of the Federal Bureau of Investigation Special Agents investigating the case and his wife. The court found that while in federal custody Klein met three inmates to discuss his plan. Later, Klein met with an individual and discussed the payment of $250,000 to kill his wife and the payment of an undetermined amount at a later date to kill the agent. Klein wired $250,000 from a bank account to the individual. What Dr. Klein did not know at the time was that the individual he discussed ad sent payment to was a federal undercover agent. Prior to pronouncing sentence, Judge Hittner noted that the state of Florida has a pending indictment against Klein accusing him of arson in an alleged attempted to murder his wife and that Klein could face possible federal charges for the alleged plot to murder the prosecuting AUSA and the FBI agent.

Indicted in February 2006, Dr. Klein specialized in treating patients diagnosed with Hepatitis C and billed insurance companies for services he did not provide to patients and misrepresented services that were actually provided. The fraudulent scheme involved ordering large quantities of medications used to treat Hepatitis C and providing medications to patients to self administer at home and then billing the insurance companies as if the injections had been administered by him or his staff in his office. Trial evidence proved Klein ordered Hepatitis C treatment kits containing both interferon and ribavirin at a cost of $695 each, but would unbundle the kit and submit claims to the insurance company for more than $3,840 for the components of the kits. The majority of the claims filed for services provided were for dates when patients were not in his office.

Klein also billed insurance companies for injecting his patients with the prescription drugs epoetin and neupogen during office visit, but again the evidence proved no office visit had occurred, and his patients were, in fact, self-administering those medications at home. Klein purchased epoetin at a cost of approximately $1,246 for 10 units of medication but in turn billed insurance companies $39,500 for the same 10 units. The Nuepogen was purchased at a cost of $1,885 for 10 units of medication, yet Dr. Klein billed insurance companies $32,700 for the same 10 units.

Former patients testified that when their insurance company refused to pay Klein the exorbitant fees, he cut off their treatment or told them to contact their respective insurance companies and demand that Dr. Klein be paid.

Patient files introduced during the trial showed Klein did not have doctors notes for the majority of the claims submitted for reimbursement. Moreover, where notes existed they uniformly documented the same blood pressure and pulse recorded for every patient — 120/80 and 80 beats per minute – a virtual impossibility according to several physician’s who testified at the trial.

Representative from the Texas State Board of Medical Examiners and the Texas Board of Pharmacy testified Klein violated board rules and state law by acting as a pharmacy and ordering large quantities of prescription drugs that were available by prescription from a pharmacy. As a result of his fraudulent scheme, Klein billed insurance companies over $16 million and was paid $10 million. Today, U. S. District Judge David Hittner, who presided over the three-week trial in November 2006, also entered a final order directing Dr. Klein forfeit $10 million to the United States.