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Houston Doctor Convicted of Health Care Fraud

In February 2006, Dr. Ira Klein—a 61-year-old Houston-based doctor that specialized in treating patients with hepatitis c—was indicted by a federal court for health care fraud, among other charges.

His scheme involved ordering hepatitis c treatment kits for his patients and breaking them apart into their individual components. One such kit included Ribavirin capsules and Interferon injections. The standard 48-week treatment for hepatitis c includes daily ingestion of Ribavirin and Interferon injections three times a week.

For a reported cost of only $695 per kit, Dr. Klein was billing insurance companies over $3,840 for the components. Moreover, most of the claims filed with insurance companies were for dates when patients were not in his office.

Apart from billing insurance providers over 5.5 times the cost he paid for the medications, Dr. Klein was instructing his patients to self-administer the Interferon injections while he was paid by insurance companies for purportedly doing this himself.

According to court investigations, Dr. Klein saw his patients in his office once a week, administered one Interferon injection, and sent his patients home with two prefilled syringes. Two days after his patients’ visit, he filed a claim for administering the second Interferon injection. Two days after that, he filed a claim for the third injection.

Dr. Klein also billed insurance companies for injecting his patients with two other drugs, even though he sent his patients home with these medications to administer themselves. At a cost of about $125 per unit for one of these medications, Dr. Klein claimed $3,950—over 30 times his cost. The other drug was likewise billed over 17 times the price Dr. Klein paid to obtain the drug.

Part of his billing was the added cost of physician-administering these drugs, which Dr. Klein’s records show to have been falsified. While it’s standard practice for a doctor to maintain notes of a patient’s progress during their treatment cycle, Dr. Klein kept no records detailing their visits.

As evidence produced at Dr. Klein’s trial, patient notes documented uniform readings of a blood pressure of 120/80 and a pulse of 80 beats per minute. Several physicians testified to the impossibility of these readings for many patients.

When insurance companies refused to pay Dr. Klein’s fees, he quit their treatment and told those patients to contact their insurance providers to demand payment.

In Dr. Klein’s trial, it was established that he fraudulently claimed over $17 million from insurance companies. This figure did not take into account the price he paid for medications administered or the cost of those medications he administered himself. The $17 million in losses was only the amount Dr. Klein should not have charged. Of this, he was paid over $10 million.

Dr. Klein also acted as a pharmacy, ordering large quantities of prescription drugs available at a lower cost through a pharmacy.

Following his indictment, Dr. Klein was released on bond. He flew from Texas to Florida, where his wife lived. She intended to divorce him following his indictment. After going to her home and finding that she was not there, he set her house on fire. Whether she may have turned him in or not, Dr. Klein retaliated. He attempted to kill himself while in the burning house, but was captured by police before he could. Dr. Klein was then charged with arson.

Three months after he was initially indicted for insurance fraud, his bond was revoked, and he was placed in a federal detention center to await his trial. While there, he spoke to two inmates about the possibility of hiring a hitman to murder his wife, her parents, a friend, and the prosecutor and FBI agent on his case. These inmates reported the conversation to the FBI.

An undercover agent was placed on the case as the cousin of one of these inmates. He was to be the hitman Dr. Klein wanted. In two recorded conversations, Dr. Klein hired this undercover agent to murder his wife so that she could not testify against him in their upcoming divorce proceedings. He requested that the prosecutor and FBI agent working on his case not be harmed until he directed him to do so in order to avoid raising suspicion. As payment for the murders, Dr. Klein wired the undercover agent $250,000 from his bank account.

The plot to murder his wife and the key figures in his case was taken into consideration by the court, as was testimony from representatives of the Texas State Board of Medical Examiners and the Texas Board of Pharmacy. Ultimately, Dr. Klein was charged with 44 counts of fraud—26 of which were alone for health care fraud.

In November 2006, Dr. Klein was sentenced to 11 years and 3 months by a federal jury. He was also ordered to pay over $11.5 million in restitution to his victims.

He was released from federal custody in November 2016: a broke sixth-time divorcée felon without a medical license.

Dolman Law Group

While cases like this are not common, it’s important to know your rights when dealing with insurance companies and doctors. If you believe you may be the victim of insurance fraud or medical malpractice, call us at (727)451-6900 or email us through our Contact Us page to schedule your free case evaluation. At Dolman Law, we stand for your rights.

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