Therapy Clinic Operator Convicted of Health Care Fraud for Role in Occupational Therapy Fraud Scheme

A federal jury found a Brea, California, woman guilty yesterday of fraud charges for her role in a $6 million Medicare fraud scheme involving billing for occupational therapy services that were not medically necessary and not actually provided.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division made the announcement.

After a five-day trial, Grace Hong, 53, was convicted of one count of conspiracy to commit health care fraud and three counts of health care fraud.  Sentencing has been scheduled for July 29, 2019 at 8:00 a.m. before U.S. District Judge George H. Wu of the Central District of California, who presided over the trial.

According to evidence presented at trial, from 2009 to 2012, Grace Hong and her husband, Simon Hong, 57, operated a therapy clinic in Walnut, California, known as JH Physical Therapy, Inc.  As part of the scheme, Grace Hong and her co-conspirators provided uncovered services like acupuncture and massage to Medicare beneficiaries.  Even though the beneficiaries did not receive actual occupational therapy, Grace Hong and her co-conspirators billed Medicare for physical and occupational therapy services that had not been provided, and then funneled most of the Medicare reimbursements to companies owned by Simon Hong.  Grace Hong also directed co-conspirator therapists in falsifying medical records to make it appear as if the services billed had been provided, the evidence showed.

Through this scheme, Grace Hong and her co-conspirators billed Medicare from October 2009 until December 2012 approximately $6,014,281 in false claims, and received approximately $3,981,014, the evidence showed.

Grace Hong was charged along with Simon Hong and Keith Canlapan, 40, of West Covina, California, in an indictment returned on June 16, 2016.  Charges against Henry Penaranda, 39, formerly of Pasadena, California, were added in a superseding indictment returned on July 11, 2017.  Simon Hong pleaded guilty to one count of conspiracy to commit health care fraud on Dec. 15, 2016, and was sentenced on March 6, 2017, to 63 months in prison.  Canlapan pleaded guilty on Oct. 24, 2016, to one count of health care fraud conspiracy and is awaiting sentencing. Penaranda is a fugitive.  In a related case, Roderick Concepcion, 44, of Anaheim, California, pleaded guilty to health care fraud on April 4, 2016, and is awaiting sentencing.         

This case was investigated by HHS-OIG and the FBI. Assistant Chief Niall M. O’Donnell and Trial Attorney Emily Culbertson of the Criminal Division’s Fraud Section are prosecuting the case. 

The Medicare Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.