Feds Allege Mass Forest Park Medical Center Kickback Scheme; 21 Indicted

(Credit: Justin Clemons)
(Credit: Justin Clemons)

A federal grand jury has indicted 21 individuals allegedly involved in a massive kickback scheme through the defunct Forest Park Medical Center chain of luxury hospitals, which resulted in “well over half a billion dollars” in billed claims due to illegal bribes.

The 44-page indictment, unsealed Thursday, describes a vast, four-year conspiracy, fueled by $40 million in kickbacks funneled through a number of shell companies—consulting firms, commercial real estate firms, business services organizations—into the pockets of high-powered surgeons, some of whom have their faces on billboards throughout Dallas-Fort Worth.

The 21 suspects include two of the four physician founders of the hospital chain: Dr. Richard Toussaint, the anesthesiologist who is awaiting sentencing on a separate fraud conviction; and Wade Barker, the bariatric surgeon who helped develop the idea for Forest Park. Other early adopters indicted in the scheme include Wilton ‘Mac’ Burt, a consultant who helped run the chain’s affiliated management company until he and his colleague, Alan Beauchamp, were bought out in 2015. Beauchamp was also indicted. The remaining cofounders, David Genecov and Robert Wyatt, were not indicted.

The alleged bribery scheme sailed far outside the doors of Forest Park’s grey and blue flagship at the corner of U.S. 75 and Interstate 635. Also indicted were prominent bariatric surgeons Drs. David Kim and William Nicholson as well as the minimally invasive spine surgeons Drs. Michael Rimlawi, Douglas Won, and Shawn Henry. Won, the DOJ alleges, was paid $7 million for his referrals. Rimlawi is accused of accepting $3.8 million. The feds argue that Kim and Nicholson, both of whom were investors in Forest Park, were paid $4.595 million and $3.8 million respectively. Reads the indictment: “The surgeons spent the vast majority of the bribe payments marketing their personal medical practices—which benefitted them financially—or on personal expenses such as cars, diamonds, and payments to family members.”

In all, the feds say Forest Park collected “in excess of two hundred million dollars in tainted and unlawful claims.” None of those named in the indictment have returned requests for comment. Sheryl Zapata, the chief development officer for the Texas Back Institute where Henry currently practices, said “TBI is not a part of this and we will not be commenting.”

“Medical providers who enrich themselves through bribes and kickbacks are not only perverting our critical health care system, but they are committing a serious crime,” read a statement from U.S. Attorney John Parker. “Massive, multi-faceted schemes such as this one, built on illegal financial relationships, drive up the cost of healthcare for everyone and must be stopped.”

Forest Park Medical Center was a chain of luxury hospitals that sprouted in Dallas, Fort Worth, Southlake, Frisco, and San Antonio. One in Austin was built but never opened, kneecapped due to nearly two dozen construction liens.

The model collapsed in on itself in part because of its reliance on high out-of-network charges that it would bill to insurance companies. The payers eventually balked at the fees, and the patient volumes dried up. The hospitals died one by one, each eventually entering bankruptcy and sold off to a health system—Medical City Healthcare (formerly HCA North Texas), Texas Health Resources, the Methodist Health System, and St. David’s in Austin. Because they were physician owned, they were barred by the Affordable Care Act from billing any public health insurance plan, such as Medicare, for fear of conflicts of interest regarding referrals. And despite this, it twice had to settle claims with the DOJ for paying kickbacks for Tricare patients and injured Department of Labor employees. The indictment alleges that this is exactly what happened: Beauchamp, Barker, and Kim, among others, “also attempted to refer patients with lower-reimbursing insurance coverage, namely Medicare and Medicaid beneficiaries, to other facilities in exchange for cash.”

One of those early settlements required Forest Park to open its books for two years. And many suspect that’s where the investigation found its legs. According to the indictment, the scheme began when the first hospital opened, in 2009, and lasted through 2013, during which the administrators sold the real estate of Dallas and Southlake to separate real estate investment trusts. The feds say the Forest Park employees bribed the outside physicians with a percentage of the anticipated revenue from the referral; usually it was about 10 percent. And they allegedly laundered that money through a slew of outside companies.

Andrea Kay Smith, 37, of Rockwall, was the chain’s referral coordinator. The feds say she owned a “shell entity” called Unique Healthcare, through which the Forest Park affiliates cleaned the money before it was sent off to the outside surgeons for the referrals. According to the indictment, Smith “meticulously tracked referrals and surgeries so bribe and kickback recipients could receive “credit.” Meanwhile, Director of Bariatric Services Carli Hempel, 40, of Plano, allegedly sold Medicare and Medicaid referrals from co-conspirators to facilities outside Forest Park. Remember, Forest Park could not legally bill those entities.

Jackson Jacob, 53, of Murphy, is accused of using shell entity Adelaide Business Solutions to pay surgeons, primary care physicians, chiropractors, lawyers, and worker’s compensation specialists for patient referrals. And finally there was Entity A, a commercial real estate group owned by Toussaint and Barker—the Forest Park co-founders—that the feds say was “used as a conduit for bribe and kickback payments.”

In addition to Forest Park, the founders created a real estate company known as the Neal Richards Group, which took the lead on building the hospitals. The original employees were ousted last year and are not named in the indictment. Nor are those who replaced them.

Forest Park conspirators spread the scheme beyond Dallas-Fort Worth, extending into clinics in East and West Texas. They’re accused of enlisting Gerald Foox, 69, a Tyler-based physician who allegedly rented office space to them in order for East Texas patients to be sent to the Dallas hospital. The feds say they also did this in clinics in Midland and Odessa.

Some of those indicted include office workers accused of coaching patients to call the hospitals upon seeing exorbitant surprise bills, rather than their insurance plans. Others wrote the patient responsibility portion of the fees off as bad debt rather than have them pay it, the documents say. The indictment details emails that recognized the scheme, including one Burt sent to Beauchamp on Feb. 14, 2011: “I would not …send this out in writing to the Southlake docs. I imagine you agree. If it landed in the insurance companies’ hands we may be sorry.” Emails from 2008 show Won and Rimlawi, who at the time were partners at the Minimally Invasive Spine Institute, appear to agree to receive $100,000 for 20 to 25 cases each month: “They would like to understand the levels that can be achieved when they bring in even more cases” to FPMC. the message reads.

Rimlawi and Won were the two neurosurgeons who recruited Dr. Christopher Duntsch to join their practice from Memphis in 2011. Today, Duntsch is awaiting trial on five counts of aggravated assault and one of injury to an elderly person related to the outcomes in his surgical suites. In 2009, the feds say Kim, who frequently appeared on television commercials next to former Dallas Cowboy Nate Newton,  negotiated kickback rates with Beauchamp: “I have a business proposal for you,” he wrote in an email. “I truly believe that you will receive a 9:1 ratio or greater for every dollar you invest in me. I am requesting a marketing budget of $70,000 a month.”

The scheme even wrapped in advertising executive Kelly Loter, who founded the West End firm LevelTwo Advertising. Loter is accused of helping steer Medicare patients outside the system and receiving bribes for doing so. The feds say he even emailed a document entitled “MedicareLeads.pdf” to Barker, Beauchamp, and Hempel along with this: “Here is the process/protocol we wrote up for handling the Medicare going forward … We are ready to get started.” Royce Bricklein, a worker’s compensation lawyer from San Antonio, was also indicted for referring patients injured on the job to Forest Park-affiliated physicians. The feds say he received about $100,000 for doing so.

In addition to money, there were allegedly tickets to sporting events, custom cowboy boots, diamond discounts, free car washes, trips to high-end restaurants—even discounted medical office space. Each hospital had its own medical office building attached. Here are the charges against each of the people mentioned in the above story:

Beauchamp: 10 counts of offering or paying and soliciting or receiving illegal remuneration: Maximum five years in prison, $25,000 fine for each count. Seven counts of violating the Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Two counts of conspiracy to commit money laundering: Maximum 20 years in prison and a $250,000 fine on each count. Maximum if convicted: 125 years in prison, $2.25 million fine.

Jacob: Eight counts of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. Six counts of violating the Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. One count of conspiracy to commit money laundering: Maximum 20 years in prison and a $250,000 fine on each count. Maximum if convicted: 90 years in prison, $2 million fine.

Toussaint: Five counts of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. Four counts of violating the Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Two counts of conspiracy to commit money laundering: Maximum 20 years in prison and a $250,000 fine on each count. Maximum if convicted: 85 years in prison, $1.625 million fine.

Barker: Five counts of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. Four counts of violating the Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Two counts of conspiracy to commit money laundering: Maximum 20 years in prison and a $250,000 fine on each count. Maximum if convicted: 85 years in prison, $1.75 million fine

Burt: Five counts of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. Four counts of violating the Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Two counts of conspiracy to commit money laundering: Maximum 20 years in prison and a $250,000 fine on each count. Maximum if convicted: 85 years in prison, $1.75 million fine

Rimlawi: Two counts of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. Maximum if convicted: 10 years in prison, $50,000 fine

Won: One count of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. One count of violating the federal Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Maximum if convicted: 10 years in prison, $275,000 fine

Kim: One count of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. One count of violating the federal Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Maximum if convicted: 10 years in prison, $275,000 fine

Nicholson: One count of offering or paying and soliciting or receiving illegal remuneration. Maximum five years in prison, $25,000 fine for each count. One count of violating the federal Travel Act and aiding and abetting: Maximum five years in prison, $250,000 fine for each count. Maximum if convicted: 10 years in prison, $275,000 fine

Below is the full list of those indicted in the scheme.

Alan Andrew Beauchamp, 64, of Dallas
Richard Ferdinand Toussaint, Jr., 58, of Dallas
Wade Neal Barker, 51, of Dallas
Wilton McPherson Burt, 61, of Costa Rica
Andrea Kay Smith, 37, of Rockwall, Texas
Carli Adele Hempel, 40, of Plano, Texas
Kelly Wade Loter, 48, of Dallas
Jackson Jacob, 53, of Murphy, Texas
Douglas Sung Won, 45, of Dallas
Michael Bassem Rimlawi, 45, of Dallas
David Daesung Kim, 54, of Southlake, Texas
William Daniel Nicholson IV, 46, of Dallas
Shawn Mark Henry, 46, of Fort Worth, Texas
Mrugeshkumar Kumar Shah, 42, of Garland, Texas
Gerald Peter Foox, 69, of Tyler, Texas
Frank Gonzales Jr., 41, of Midland, Texas
Israel Ortiz, 49, of Dallas
Iris Kathleen Forrest, 56, of Dallas
Andrew Jonathan Hillman, 40, of Dallas
Semyon Narosov, 51, of Dallas
Royce Vaughn Bicklein, 44, of San Antonio, Texas

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