According to a Department of Justice press release, on March 17, 2017, Richard Ferdinand Toussaint, Jr., founder of Forest Park Medical Center in Dallas, pleaded guilty to his role in a $40 million medical kickback scheme.  Specifically, Toussaint pleaded guilty to one count of conspiracy to pay health care bribes and kickbacks and one count of offering or paying illegal remuneration and aiding and abetting under the Travel Act.

Plea documents filed in the case describe the nature of the kickback scheme, which targeted surgeons performing the most expensive elective surgeries and offered millions in kickbacks to perform their surgeries at Forest Park Medical Center (FPMC) — founded and owned by Toussaint and co-defendant Dr. Wade Barker.  Toussaint and co-defendant Barker founded FPMC in 2008, with a luxury hospital experience as the business model.  The hospital was the anchor of the Frisco Square development, one of the most sought-after commercial areas in North Texas, in the upscale Dallas suburb of Frisco.  Millions of dollars were spent on adding spa-like amenities throughout the hospital, including pumping the scent of fresh linens through HVAC vents.

All surgeries at FPMC were to be elective in nature.  FPMC targeted bariatric and spinal surgeries as these procedures are among the most expensive elective procedures.  FPMC originally attempted to be an in-network provider with major insurance carriers, when possible.  However, FPMC then attempted to negotiate better reimbursement rates and often remained out-of-network to collect higher reimbursements.

Toussaint and other owners of FPMC routinely paid surgeons “marketing fees” in exchange for bringing surgeries to FPMC, particularly focusing on the most expensive out-of-network surgeries.  Kickback payments to various surgeons soon increased from roughly $300,000 per month to $1.2 million per month.   To induce patients with both in-network and out-of-network benefits to come to FPMC and keep the supply of lucrative surgeries consistent, FPMC systematically waived patients’ co-insurance payments or reduced it to in-network levels.  FPMC also systematically concealed this co-pay waiver practice from insurance companies to ensure the insurance companies would continue to pay the expensive out-of-network surgery bills.

FPMC also made bribe and kickback payments to chiropractors to induce them to send their patients that needed surgery to FPMC as opposed to other facilities.

In addition to paying surgeons bribes and kickbacks for cases being performed at FPMC in the form of cash payments, FPMC also offered surgeons the opportunity to invest in FPMC in return for performing surgeries at the hospital.  By offering “investment units” to surgeons, FPMC could further induce surgeons to bring their patients to FPMC. The more surgeries a surgeon could bring to FPMC, the more they were allowed to invest and profit from the hospital’s billings.  Toussaint and the other owners of FPMC often decided how many shares a surgeon should be able to purchase based on the number of surgical cases the surgeon could steer to FPMC.  Surgeon-investors who did not bring enough surgical cases to FPMC were divested or their shares were cut.

Based on his guilty plea, Toussaint faces a maximum statutory penalty of five years in federal prison and a $250,000 fine for each count. Sentencing will be scheduled at a later date.

Co-defendants Andrea Kay Smith, Kelly Wade Loter and Israel Ortiz previously pleaded guilty to their role in the conspiracy. The remaining 17 defendants are awaiting trial scheduled for July 10, 2017.

The cases against Toussaint and his co-conspirators are criminal cases.  However, under the qui tam provisions of the False Claims Act, whistleblowers with information about similar fraud against government healthcare programs may bring a civil case on behalf of the United States. If successful, the government can recover three times the amount the defendants fraudulently billed the government.  The whistleblower, who originally filed the case, is entitled to 15-30% of the government’s recovery as well as their attorneys fees.

The case was investigated by the FBI, the U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration, the U.S. Department of Defense – Defense Criminal Investigative Service, the U.S. Office of Personnel Management Office of Inspector General, and Internal Revenue Service Criminal Investigation, with assistance from the Food and Drug Administration and the U.S. Postal Inspection Service.