Fraud conviction lands cardiologist 78 months in prison

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A New Jersey cardiologist received a 6 ½-year prison sentence and agreed to pay full restitution of $19 million in a healthcare fraud scheme.

Jose Katz, MD, founder, CEO and owner of two medical services in New Jersey and New York, had pleaded guilty in April to one count of conspiracy to commit healthcare fraud and one count of Social Security fraud. He had been accused of exposing thousands of patients to unnecessary tests and treatments, using unlicensed or untrained personnel and giving his wife a “no show” job to make her eligible for Social Security benefits.

“Katz prized illegal profits over patients to a staggering degree, committing record-breaking fraud and compromising care,” said New Jersey U.S. Attorney Paul J. Fishman in a statement. “Prison is an appropriate consequence for ripping off the government and insurance companies through the shocking exposure of patients to unneeded or untrained treatment.”

Fishman said that between 2004 and 2012, Katz conspired to bill insurers for unnecessary tests and unnecessary procedures based on false diagnoses and for medical services by unlicensed practitioners. Katz had admitted to falsifying patient charts and falsely diagnosing Medicare and Medicaid patients with coronary artery disease and angina. The diagnoses allegedly were made to justify prescribing and administering enhanced external counter pulsation; in some cases, the treatments were prescribed despite contraindications, the U.S. Attorney’s Office had argued.

Medicare and Medicaid were charged more than $75 million for services from 2005 through 2012, and paid Katz more than $15.6 million for enhanced external counter pulsation treatments, according to court documents.

The events involved Katz’s companies, Cardio-Med Services and Comprehensive Healthcare & Medical Services, which provided cardiology, internal medicine and other medical services. The companies had offices in Union City, Paterson and West New York, N.J., and Manhattan and Queens in New York City.  

Katz also was accused of filing false W-2 forms to make his wife eligible for Social Security benefits by adding her to Cardio-Med’s payroll.

Katz agreed in plea bargaining that the billings to Medicare, Medicaid and other insurers totaled $19 million. Federal records indicated that “the loss amount suffered by the victims is the largest recorded in New Jersey, New York and Connecticut for an individual practitioner convicted of healthcare fraud.” 

According to the Associated Press, Katz apologized at his sentencing hearing in Newark, N.J., on Nov. 20, telling U.S. District Court Judge Jose L. Lenares, "I didn't do it for money for myself. I wasn't thinking properly."

In addition to the prison term and restitution, Katz was sentenced to serve three years of supervised release. He is scheduled to begin his prison term Jan. 13.