A New York-based healthcare executive has pleaded guilty to participating in a substantial kickback conspiracy that defrauded Medicare of millions of dollars by incentivizing doctors to order medically unnecessary brain scans.
James Rausch, 57, of Port Jefferson Station, N.Y., admitted in a Boston federal court to his role in a long-running scheme. As the director of operations and sales for a mobile medical diagnostics company, Rausch was involved in a conspiracy to pay doctors for ordering transcranial doppler (TCD) scans, which measure blood flow in the brain.
The Anatomy of the Fraud
From March 2015 to September 2020, Rausch and his co-conspirators arranged to pay doctors for each TCD scan they ordered. To disguise these illegal kickbacks, they created sham agreements. These documents falsely claimed the payments were for legitimate services, such as renting office space or administrative support, and were based on fair market value. In reality, the payments were directly tied to the number of tests ordered, a clear violation of the Anti-Kickback Statute.
The Staggering Cost
This elaborate scheme resulted in approximately $70.6 million in fraudulent bills submitted to Medicare. The federal health insurance program ultimately paid out about $27.2 million for these fraudulent claims.
The Consequences
Following his guilty plea to one count of conspiracy, Rausch faces a potential sentence of up to five years in prison, three years of supervised release, and a fine of up to $250,000. His sentencing is scheduled for July 10, 2025.
The case was brought to light through the collaborative efforts of several federal agencies, including the U.S. Department of Health and Human Services, the FBI, the IRS, and the Department of Labor, highlighting a significant crackdown on healthcare fraud. The U.S. Attorney's Office in Boston is prosecuting the case, sending a strong message that such abuses of the healthcare system will not be tolerated.
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