FORMER OWNERS OF DME WHOLESALE COMPANY ARRESTED FOR ALLEGED MEDICARE FRAUD

FROM: U.S. DEPARTMENT OF JUSTICE

Thursday, October 11, 2012
Former Owners of Los Angeles DME Wholesale Company Arrested and Charged with Participating in $16.6 Million Medicare Fraud Scheme

WASHINGTON – The former owners of a durable medical equipment (DME) wholesale company located in Ontario, Calif., were arrested late yesterday at Los Angeles International Airport in connection with a DME fraud scheme that resulted in the submission of over $16.6 million in false claims to Medicare and are expected to appear this afternoon in Los Angeles federal court.

The arrest was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); and Timothy Delaney, Special Agent in Charge of the FBI’s Los Angeles Field Office.

Rajinder Singh Paul, 69, and his wife, Baljit Kaur Paul, 65, were arrested on conspiracy and health care fraud charges at the airport as they returned from a trip abroad. According to the indictment unsealed upon their arrests, Rajinder and Baljit Paul owned and operated a DME wholesale supply company called Major’s Wholesale Medical Supply Inc., which was located in Ontario. Between 2002 and 2009, according to the indictment, when they were terminated from Major’s after selling its assets to a new owner, Rajinder and Baljit Paul sold primarily high-end power wheelchairs to DME supply companies for approximately $850 to $1,000 per wheelchair. The DME companies, many of which were allegedly fraudulent, billed these power wheelchairs to Medicare at a cost of $3,000 to $6,000 per wheelchair.

According to the indictment, in order to attract and keep the DME companies’ business and prevent Medicare from withholding money that the companies would use to pay Major’s, Rajinder and Baljit Paul provided over 170 DME companies with backdated, altered, and fabricated invoices which reflected that the companies had purchased power wheelchairs and DME from Major’s earlier than they had. Rajinder and Baljit Paul also allegedly provided the DME companies with false invoices for DME that the companies never purchased from Major’s. Rajinder Paul, Baljit Paul, or employees acting at their direction, allegedly created these false invoices using invoice numbers from old invoices or serial numbers from DME that Major’s had already sold or not yet received from its manufacturers. The DME companies then allegedly used these backdated, altered, and fabricated invoices to defraud Medicare or thwart Medicare audits.

In addition, the indictment alleges that the Pauls provided the DME companies with false inventory purchase agreements that showed the companies had credit limits with Major’s which were higher than the credit limits that Major’s actually extended to the companies. The DME companies then submitted these false inventory purchase agreements to Medicare to meet one of the Medicare regulations necessary for the companies to obtain and maintain their Medicare billing privileges, namely, that the companies had contracts with DME wholesalers and other parties to purchase the DME that they billed to Medicare.

The indictment alleges that as a result of this scheme, the Pauls and the owners and operators of certain of the companies that Rajinder and Baljit Paul provided with fraudulent invoices submitted approximately $16,662,143 in false claims to Medicare, and received approximately $9,743,609 on those claims.

Rajinder and Baljit Paul are each charged with one count of conspiracy to commit health care fraud and one count of making false statements. The conspiracy count carries a maximum potential penalty of 10 years in prison, and the false statements count carries a maximum potential penalty of five years in prison. Each count also carries a maximum $250,000 fine.

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, HHS-OIG, and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.


The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Since its inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.