SHERMAN, Texas — Matrix Medical Network, mobile health-bus operator HealthFair, and HealthFair founder Shahriah “James” Ekbatani have agreed to pay a combined $56.5 million to resolve federal allegations that they submitted false and invalid diagnosis codes to the Medicare Advantage program, inflating taxpayer-funded payments for patients who were not as sick as claimed.
Matrix, headquartered in Nashville, Tenn., will pay $36.5 million to settle claims filed in the Southern District of New York. HealthFair will pay $5 million and Ekbatani will pay $15 million to resolve a separate action filed in the Eastern District of Texas. The Justice Department announced the settlements through the U.S. Attorney’s Office for the Eastern District of Texas.
“When healthcare companies report risk-adjusting diagnoses that are invalid, they siphon money from the Medicare Advantage program,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Justice Department remains vigilant in pursuing MAOs, downstream entities, and responsible individuals who do not play by the rules.”
The government alleges that from 2014 to 2019, Matrix knowingly caused Medicare Advantage Organizations to submit false diagnoses of chronic conditions — including proliferative diabetic retinopathy, atrial fibrillation, rheumatoid arthritis, and chronic obstructive pulmonary disease — to the Centers for Medicare and Medicaid Services for risk-adjustment purposes. Those diagnoses lacked sufficient supporting information, did not conform with CMS coding guidelines, and frequently were not confirmed by any other provider who saw the patient during the year of the home visit or in the preceding or subsequent two years.
“Patients should be able to trust that their medical providers are making, documenting, and sending diagnosis information to insurers based on accurate assessment, testing, and what is best for the patient,” said U.S. Attorney Jay R. Combs of the Eastern District of Texas. “It is a breach of trust when providers look to make more money by making their patients appear sicker than they are. Submitting unsubstantiated diagnoses increases costs to the Medicare Advantage program.”
HealthFair, which Ekbatani founded and managed, operated mobile health-care buses staffed by nurse practitioners and medical technicians. From 2015 to 2017, HealthFair providers allegedly diagnosed conditions including HIV/AIDS, metastatic cancer, and myasthenia gravis without documentation confirming the conditions, and diagnosed congestive heart failure and heart arrhythmia despite contradictory electrocardiogram and echocardiogram results. Matrix acquired HealthFair in 2018 and shut down its operations by 2020.
“The allegations in these matters describe conduct that puts profit ahead of patients and undermines the integrity of the Medicare Advantage program,” said Acting Deputy Inspector General for Investigations Scott J. Lampert of the HHS Office of Inspector General. “HHS-OIG will not tolerate efforts to divert taxpayer funded health care dollars for personal or corporate gain.”
Both settlements arose from whistleblower lawsuits filed under the False Claims Act’s qui tam provisions. Nancy Cahill, a former Matrix employee, will receive $7.3 million from the Matrix settlement. Robert Oristaglio Jr., D.O., HealthFair’s former chief medical officer, will receive $3.6 million from the HealthFair and Ekbatani settlement. The administration earlier this year launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to intensify enforcement against waste and abuse in federal programs.