US v. Fang, Civil PJM 96-2354.

• Decision Date: 12 September 1996
• Docket Number: No. Civil PJM 96-2354.,Civil PJM 96-2354.
• Citation: 937 F. Supp. 1186
• Parties: UNITED STATES of America, Plaintiff, v. Mary Huey Wei FANG Chang, M.D. a/k/a Hui Fang, Mary Fang and Mary Chang and Peter Chang, Defendants.
• Court: U.S. District Court — District of Maryland

937 F. Supp. 1186

UNITED STATES of America, Plaintiff, v. Mary Huey Wei FANG Chang, M.D. a/k/a Hui Fang, Mary Fang and Mary Chang and Peter Chang, Defendants.

No. Civil PJM 96-2354.

United States District Court, D. Maryland.

September 12, 1996.

COPYRIGHT MATERIAL OMITTED

Kathleen McDermott, U.S. Attorney's Office, Baltimore, Maryland, for Plaintiff.

Michael Schatzow, Venable, Baetjer & Howard, Baltimore, Maryland, for Defendants.

OPINION

MESSITTE, District Judge.

I. INTRODUCTION

On July 29, 1996, pursuant to 18 U.S.C. § 1345(a), the United States filed a Verified Complaint for Injunctive Relief and Motion for Temporary and Preliminary Injunctive Relief against Defendants Mary H. Fang, M.D. and her husband Peter Chang. The Government alleges that Defendants are engaged in an ongoing or likely to reoccur scheme to defraud health care insurers in the submission of claims for reimbursement for medical services and supplies in violation of the federal mail fraud statute, 18 U.S.C. § 1341. Among other things, the Government seeks a freeze on a substantial portion of Defendants' assets. Pursuant to Fed. R.Civ.P. 65, the Court issued a temporary restraining order freezing all of Defendants' assets¹ and scheduled a hearing on the Government's request for a preliminary injunction for August 6, 1996. Defendants, through counsel, filed an opposition to the motion.

At the preliminary injunction hearing, the Government called several witnesses and offered a number of exhibits. Defendants, while present, did not testify, but through counsel introduced certain exhibits.

The Court has determined to grant preliminary injunctive relief to the Government, subject to the following findings of fact and conclusions of law.²

II. FINDINGS OF FACT

1) Defendant Mary Huey Wei Fang Chang, M.D. is an internist licensed to practice medicine in the State of Maryland under the name Mary H. Fang.

2) Defendant Peter Y. Chang is Dr. Fang's husband.

3) The couple resides at 10931 Martingale Court, Potomac, Maryland.

4) Dr. Fang's medical practice and business office are located at 121 Congressional Lane, Suite 310, Rockville, Maryland.

5) Mr. Chang is an active participant in Dr. Fang's medical billing practices and from their home prepares claims for insurance reimbursement submitted to private and government health insurers.

6) In her dealings with various insurance companies, Dr. Fang has submitted claims for reimbursement under the names of Mary Fang, Hui Fang, and Mary Chang. Additionally, she has on occasion used the address of Mr. Chang's parents at 4514 Westbrook Lane, Kensington, Maryland, to receive insurance reimbursement payments.

7) In the course of investigating allegations of prescription and insurance fraud, Detective Carol Allen of the Montgomery County, Maryland, Special Investigations Unit, participated in an undercover operation posing as an insured named "Karen Montgomery." She arranged four appointments with Dr. Fang held on January 25, 1996; February 9, 1996; February 28, 1996 and April 18, 1996. Each of the appointments lasted approximately 20 minutes, none involved physical examinations, and at the conclusion of each Dr. Fang provided Detective Allen with a prescription for drugs.

8) In connection with providing medical services to "Karen Montgomery," Dr. Fang caused to be submitted to the Alliance Insurance Company four claims for reimbursement in which she represented that medical examinations up to 45 minutes had occurred. Government Exhibit 1. For two visits, Dr. Fang submitted a claim under the name Mary H. Fang, giving provider number XXX-XX-XXXX; a third claim submitted under the name Hui Fang gave as a business address the residence of Dr. Fang's in-laws; and a fourth claim submitted under the name Hui Fang and provider number XXXXXXXXX billed for a March 20, 1996 office visit that never occurred. On none of the four claims were the correct code procedures utilized. All the claims were apparently designed to enhance reimbursement. Government Exhibit 7.

9) Subsequent to the undercover operation, a search and seizure warrant was obtained from the Montgomery County Circuit Court. Government Exhibit 2. On July 10, 1996, the warrant was executed at the residential premises of Defendants, 10931 Martingale Court, Potomac, Maryland; at Dr. Fang's medical office; 121 Congressional Lane, Rockville, Maryland; and at her inlaws' residence, 4514 Westbrook Lane, Kensington, Maryland.

10) During the course of the search at the residential premises, thousands of insurance claim forms were found both in the name Mary Fang under provider number XXX-XX-XXXX and in the name of Hui Fang under provider number XXXXXXXXX. Other claim forms were found in the name of Mary Chang. Defendant Peter Chang advised Detective Allen at the time that he prepared all Dr. Fang's reimbursement claims and that the names Mary Fang and Hui Fang were used because insurance companies deemed Mary Fang's claims excessive. In order to receive payment, he stated, the name Hui Fang also had to be used.

11) At the residential premises, patient medical and billing files were found throughout the house, including in the master bathroom. As of that time, Dr. Fang maintained no patient or insurance files at her medical office.

12) John Siarkas, Senior Supervisor, Special Investigations Unit for Mid-Atlantic Alliance of Medical Services (MAMSI), an organization representing several health maintenance organizations in Maryland, testified that the "Karen Montgomery" claim forms improperly achieved enhanced revenue. He indicated that his HMOs would not have paid the claims had they known the true circumstances. He explained that, while Mary H. Fang is a member provider of MAMSI and subject to reimbursement rates under the MAMSI contract, Hui Fang is not a participating provider and would be reimbursed at a higher rate than Mary Fang. He further testified that MAMSI has received a total of 513 claims in the amount of $51,525.70 under the name Hui Fang. Government Exhibit 8.

13) Mr. Siarkas testified that a participating physician submitting claims under a different name and provider number and designating her status as "non participating physician" would be difficult to detect or monitor in an insurer's billing system. His company only learned of the problem in the present case after being alerted by the law enforcement authorities.

14) Mr. Siarkas further testified that he personally compiled from Defendants' records a list of 30-40 insurance companies that have received claims from Defendants. He indicated that he was aware that the full list compiled by investigators reflects approximately 67 insurance companies that have received claims from Defendants.

15) Mary Hammond, an auditor with the U.S. Attorney's Office, testified that she reviewed four (4) of ten to twelve (10-12) boxes of claims seized from Defendants' residence. In the time available, she was able to determine that 1324 claims in the name of Hui Fang or Mary Chang, totaling $175,326.83, had been submitted and paid by various insurance companies. Government Exhibit 10. Ms. Hammond further testified that she had requested information from approximately 20 insurance companies regarding claims paid to Mary Fang, Hui Fang and Mary Chang. In response, Prudential Healthcare reported payments to Hui Fang, M.D. in the amount of $167,979.50 for the years 1993, 1994, and 1995. (No 1996 data were available.) Graphic Arts Benefits reported claims paid under the Hui Fang provider number of $6,540.65.

16) On July 10, 1996, insurance checks payable to Hui Fang were seized. These checks totaled $4,999.51. The dates for the checks ranged from June 4, 1996 to July 5, 1996 and were issued by eleven (11) different insurance companies. Government Exhibit 11.

17) Special Agent Kelly Johnstone of the Food and Drug Administration's Office of Criminal Investigations testified that her agency investigated allegations that Dr. Fang was selling free drug samples to patients and billing insurance companies for the samples. She testified that her limited review of insurance claim forms showed that Dr. Fang had submitted claims for drugs for which there was no record of purchase by Dr. Fang. She testified that Dr. Fang's medical office was primarily stocked with free drug samples and that the only non-samples she observed were vitamin supplements.

18) Special Agent Johnstone testified that Dr. Fang told her she sometimes sold free drug samples to patients for $10.00 and at other times provided them for free. Dr. Fang admitted that she billed the insurers for drug samples.

19) Special Agent Johnstone also testified that Dr. Fang acknowledged that she sometimes billed for services she had not in fact rendered and also billed under the name Hui Fang in order to get around the insurance companies. Dr. Fang admitted that she has been engaged in this practice since 1992. Dr. Fang stated that her husband, Peter Chang, prepares all insurance claim forms at their home. She and her husband use the name "Hui" instead of Dr. Fang's legal name "Huey" because it looks better. Huey is the name on Dr. Fang's medical diploma and on certain insurance forms submitted on her behalf to her husband's insurance company. Government Exhibit 3. Insurance claim forms using the name Hui Fang have also carried the designation "non-participating physician."

20) Special Agent Johnstone testified that she conducted a review of the check registers of several financial accounts belonging to or controlled by Mary Fang and/or Peter Chang. She noted that proceeds from insurance companies were deposited into an account in the name of Mary Fang ("the Business Account") and then transferred to a joint account in the name of Mary and Peter Chang ("the Chang Joint Account"). Money from the Business Account was also transferred to the parties' joint Janney Montgomery Scott investment accounts. The Chang Joint Account reflects $299,000 in...