'Largest Health Care Fraud Case in Indiana History' Leads to Indictments

It was not white collar but "white coat" crime that was the focus of what federal law enforcement officials called the largest healthcare fraud takedown operation in United States history. The operation netted the indictments of more than 400 healthcare workers nationwide, including two people who were once allegedly associated with a now-shuttered pain clinic, Med 1st. The alleged fraud and "pill mill" scheme has been labeled as the largest healthcare fraud case in Indiana history, according to law enforcement sources.

More than 410 healthcare workers nationwide have been deemed responsible for more than $1.3 billion in fraud losses, according to federal law enforcement officials. The indictments of those individuals has culminated in the largest healthcare fraud enforcement action in the history of the Department of Justice.

At a press conference Thursday morning in Louisville, John Kuhn, the United States attorney for the Western District of Kentucky, announced the indictments of Karen Poeling and Mitchel Stukey, both of whom were allegedly associated with the operations of Med 1st. In February 2013, federal agents as well as investigators from the Indiana Attorney General's Office executed a search warrant at Med 1st. The pain clinic has been closed ever since.

According to law enforcement sources, Poeling is the widow of Marvin Poeling, the now-deceased owner of Med 1st. Stukey was the office manager of Med 1st as well as a chiropractor, sources said.

The law enforcement sources requested anonymity because they were not authorized to speak to the media.

According to a release from Kuhn's office, the charges against Karen Poeling and Stukey stem from their role in a scheme to defraud health insurance providers, including the Medicaid programs for both Indiana and Kentucky, as well as other insurance providers. Med 1st is alleged to have directed staff to falsely bill medically unnecessary injections; billing for sedation which was never performed; providing back braces that were not medically necessary as well as performing unnecessary tests.

Additionally, Stukey allegedly conspired with others to illegally distribute controlled substances, namely pain-killers. Stukey directed Med 1st staff to evaluate patients and to use pre-signed prescription pads to order to prescribe medications. Stukey and Poeling were also charged with laundering the proceeds.

Stukey was federally indicted on charges of conspiracy to commit health care fraud;  two counts of health care fraud; conspiracy to violate the controlled substance act and conspiracy to commit money laundering. Poeling is charged with conspiracy to commit money laundering and conspiracy to commit health care fraud.

All told, the scheme that once allegedly operated with impunity for years defrauded insurance providers and taxpayers of $5,000,000, law enforcement sources said.

"Make no mistake, healthcare fraud is costing each and every one of us in the form of significantly higher health insurance premiums and more tax dollars required for public health care programs," Kuhn said at Thursday's press conference.

Even though Med 1st once operated in Evansville, the cases against Stukey and Poeling will be prosecuted by Kuhn's Louisville-based office.

"I grew up in an era where people used to basically talk about two types of crimes: street crime and white-collar crime. We're now in an era of white coat crime," said Kentucky Deputy Attorney General J. Michael Brown. "People who have sworn an oath to do no harm but instead they seem to ignore all the harm that they do."

On Feb. 26, 2013, Med 1st was bustling with activity as state and local agents served a search warrant at the Washington Ave. business, located roughly a block away from Bosse High School. Agents could be seen removing several boxes full of records from the business.

However, the activity that day was nothing compared to the usual, day-to-day activity at Med 1st.

According to pictures obtained by Eyewitness News, people would line up outside Med 1st before it typically opened at 8 a.m. The lines sometimes included two to three dozen people. Law enforcement sources said the fraud scheme adhered to a strict schedule. The business would sometimes see more than 100 patients per day but rarely would they spend more than just a couple of minutes at Med 1st, sources said.

"Physicians are our most trusted professionals. It is heart-breaking that we have over 27 doctors charged nationwide in cases involving distribution of opioids," said Derrick Jackson of the Department of Health and Human Service's Office of Inspector General.

According to law enforcement sources, more than a dozen former patients of Med 1st died of opiod-related overdoses during the time the business was in operation. However, none of those deaths resulted in charges, sources said.

While he did not explicitly state whether Vanderburgh County's exponential increase in fatal heroin overdoses is in any way related to the alleged 'pill mill' at Med 1st, Kuhn stated studies suggest that four out of every five heroin or opioid addicts started with misusing prescription opioids and other pain-killers.

"We're seeing that those committing healthcare fraud are doing more harm than merely stealing money," Kuhn said.

The situation at Med 1st might have resulted in the indictments of two additional people if not for their recent deaths. Marvin Poeling, the former owner of Med 1st, passed away in 2016. Additionally, the business' only physician, Dr. Dianne Crowley, passed away in March 2016. Three months after the raid in February 2013, Crowley had her medical license revoked by the state medical board.

Dennis Wichern, the special agent in charge of Chicago's Field Division of the DEA, said the investigation into Med 1st was time and labor-intensive, requiring investigators to pour over hundreds if not thousands of pages of records.

"The investigations here today are an outstanding example of outstanding law enforcement partnerships and dogged police work by a multitude of agencies, all by tireless public servants," Wichern said. "I want to thank all of the unnamed agents, investigators, detectives and prosecutors all over the city of Louisville and Kentucky who worked behind the scenes day after day, hour after hour with little recognition -- they're usually found in the back of the room -- for making this city and this state a safer and better place.

According to law enforcement sources, attorneys representing the United States government will seek restitution of $1 million from Marvin Poeling's life insurance policy.

Facebook Live of Thursday's Press Conference

(This story was originally published on July 13, 2017)

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