REMARKS AS PREPARED FOR ASSISTANT ATTORNEY GENERAL FOR THE CIVIL

DIVISION TONY WEST AT THE

AMERICAN THERAPEUTIC CORPORATION PRESS CONFERENCE
MIAMI, FLORIDA
OCTOBER 21, 2010

Thank you all for being here. My name is Tony West, and I’m the Assistant Attorney General
for the Civil Division of the Department of Justice. In that capacity, I oversee much of the federal
government’s civil litigation across the country, including the Justice Department’s efforts to recapture
billions of taxpayers’ dollars lost to fraud, including health care fraud.

Today’s announcement signals the Department’s crackdown on an increasing area of fraud and
abuse in Florida – the delivery of important mental health services provided under Medicare’s Partial
Hospitalization Program at Community Mental Health Centers. In addition to the arrests and criminal
charges that Assistant Attorney General Breuer announced, we are also announcing that we have
obtained a Temporary Restraining Order, or “TRO,” freezing the assets of four corporate entities:
American Therapeutic Corporation, American Sleep Institute, D & V Development, and MedLink
Professional Management Group. As well as four individuals: Lawrence Duran, Marianella Valera,
Judith Negron, and Margarita Acevedo.

Now, we have sought to freeze the assets of these individual and corporate defendants because
we have alleged that they are involved in a scheme to seek Medicare reimbursements for mental health
services that were never provided to people who needed them and for sleep studies that were never
conducted. And to the extent that these defendants profited from this alleged fraud, the TRO seeks to
keep them from transferring, hiding, or otherwise disposing of their assets.

The alleged fraud here involves the Partial Hospitalization Program, a Medicare program that
provides mental health patients with much-needed services in an outpatient setting. The defendants,
we allege, did not offer the services they were required to provide – including care to the elderly and
the severely mentally ill – but instead, they billed Medicare – that is, billed the American taxpayers –
for services that were not covered or that they failed to provide at all. To the extent that the defendants
did offer services to this vulnerable population, those services were worthless, resulting in a failure of
care. In fact, we allege that ATC routinely admitted people suffering from Alzheimer’s or dementia
into their Partial Hospitalization Program just to get Medicare reimbursements even though they knew
these services would not meet the needs of these patients. But the defendants’ unlawful conduct did
not end there. We allege that they engaged in an illegal kickback scheme whereby they paid
individuals to find potentially eligible Medicare beneficiaries and bring them to American Therapeutic
or to ASI, the American Sleep Institute, regardless of whether the people who were referred needed
health services or not.

Often, these “patient recruiters” would find individuals who were in need of a place to stay
overnight and offer them free temporary housing, cash, or other bribes in exchange for agreeing to pose
as patients of ATC and ASI. The defendants would then seek reimbursement from Medicare and line
their own pockets with the profits. Led by Larry Duran, the alleged mastermind of these schemes, we
believe that the defendants engaged in a concerted effort to cover up their crimes by altering medical
records and forging physician signatures to make it appear as if a physician authorized or requested
these services.
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 Finally, and most critical to obtaining the TRO we announce today, the defendants allegedly
made fraudulent transfers of money to bank accounts or walked away with cash to hide their ill-gotten
personal gains.

Today’s enforcement action reaffirms that health care fraud is a top priority for Attorney
General Eric Holder, the Department of Justice, and for those of us at this podium. This case is just
one example of the efforts of HEAT to crack down on health care fraud. And these efforts have paid
off. Since January 2009, the Civil Division has recovered $4.2 billion in health care fraud cases
through use of the False Claims Act, nearly $2 billion more than recoveries in the prior two years.

Before I conclude, I’d like to acknowledge the dedicated attorneys in the Civil Frauds section of
the Civil Division’s Commercial Litigation Branch who worked very hard on this case and for whom I
have the greatest respect; the United States Attorney of the Southern District of Florida, Willy Ferrer,
and his great office, which has been instrumental in our efforts to obtain this TRO; and our law
enforcement partners gathered here today for their tireless work. Together, we will continue our
mission to protect taxpayers and consumers against fraud, waste, and abuse.

Now, it’s my pleasure to introduce Gary Cantrell, HHS-OIG Acting Assistant Inspector General
for Investigations.