By Terry Baynes
(Reuters) - A former business partner of the man who inspired the movie "The Wolf of Wall Street," about a high-profile stock fraud scheme in the '90s, has been sued for alleged Medicare fraud.
The complaint, filed on February 10, claims that Danny Porush and five other leaders of privately held Med-Care Diabetic & Medical Supplies Inc and an affiliated company participated in a "deceitful, high pressure telemarketing" scheme to sell unneeded medical equipment to patients.
Porush said in an email that he works as a manager at Med-Care and that the company never engaged in the activities alleged in the complaint.
Porush and Jordan Belfort, the main character in "The Wolf of Wall Street," led defunct brokerage firm Stratton Oakmont Inc, a boiler room that pumped up stocks. In the film, Belfort's right-hand business partner is named Donnie Azoff and played by Jonah Hill.
The lawsuit was brought by Tiffany Bumbury, who worked for three months as a telemarketer at a Med-Care affiliate until she was terminated around November 2010.
Bumbury sued under the whistleblower provisions of the False Claims Act, which makes it illegal to submit false claims to Medicare. She stands to earn up to 30 percent of any recovery.
Belfort pleaded guilty in 1999 and Porush in 2002 to charges of securities fraud and money laundering in connection with Stratton Oakmont. Porush was sentenced to four years in prison and released on probation in 2004.
Bumbury's lawsuit claims that during his probation Porush "began engaging in and/or directing deceitful, high-pressure telemarketing activities through Med-Care and/or its affiliates."
Med-Care, which is based in Boca Raton, Florida, has over 500 employees and serves more than 350,000 patients, according to the company. It does not publicly disclose its revenue.
MED-CARE VS MEDICARE
In April 2013, Med-Care came under congressional scrutiny over its marketing and billing practices.
Steven Silverman, the president of Med-Care who is also named as a defendant in the complaint, testified at the time that in 2012 Med-Care received around $35 million from Medicare for supplying patients with medical products. The company sells items including diabetes supplies, breathing and oxygen equipment.
A memorandum prepared for the hearing by congressional staff maintained that 68 percent of a sampling of Med-Care claims to Medicare were found to be improper.
Senator Claire McCaskill of Missouri, who organized the hearing, asked Silverman to provide additional information by February 17. A spokeswoman for McCaskill said the office has not received the requested documents.
Bumbury's lawsuit alleges that Porush and the leaders of Med-Care used telemarketers to cold-call patients to push products later billed to Medicare. Making unsolicited calls to Medicare patients is largely prohibited by federal law.
Telemarketers were instructed to say whatever was necessary to make a sale, Bumbury alleged in the complaint. For example, they pronounced the name Med-Care like "Medicare"; offered products for free; and said they were calling on behalf of the "Christian Healthcare Network" or the "Christian Diabetic Network" and that proceeds would be donated to charitable causes, she said.
In response to Bumbury's charges, Med-Care's Silverman said Medicare, Medicaid and private insurance companies closely monitor the company.
He called the lawsuit a "totally frivolous" act of a disgruntled former employee.
"This is just a private individual looking to shake us down," he said.
Silverman said Bumbury's allegation of its telemarketers cold-calling was a "bald-faced lie" and the company only contacted people who had given their express consent to be called. The company also does not offer any products for free or waive patient co-payments, he said.
As for the name Christian Healthcare Network, Silverman said the company at one time used the name when it was doing some charity work with churches, but has not used it in years.
Bumbury's lawsuit alleges that Porush is paid both as a payroll employee and as an undisclosed owner. The complaint said that Med-Care transferred over $258,000 to a company registered in his wife's name and located at the couple's alleged residence at a Boca Raton country club. It also cited a $12,000 a month Rolls Royce lease in that company's name.
Porush declined to comment on the alleged payments but said that his tax returns have been audited. He denied having any undisclosed ownership of the company.
(Reporting by Terry Baynes in New York; Additional reporting by Michael Pell in New York; Editing by Bernard Orr)