Merida Group executives receive 35-year prison sentence for $152m hospice fraud

Merida Group owner Rodney Mesquais and CEO Henry McInnis were found guilty of healthcare fraud for more than $152 million, and received prison sentences of 20 and 15 years , respectively.

Texas-based Merida Group operated a network of home care and hospice centers in the state. Mesquais and McInnis were engaged in a scheme to falsely certify patients who were ineligible to receive home health and palliative care services, with approximately 70% to 85% of patients ineligible for palliative care that they were receiving. These patients were often referred to the hospice against the advice of their attending physician.

The combined charges against the two included six counts of healthcare fraud, one count of conspiracy to commit healthcare fraud and conspiracy to launder money. Mesquais faced an additional charge of conspiracy to pay bribes. After a 12-day trial, a Federal Court jury convicted the two on all counts.

US District Court Judges Judith Jones, Catharina Haynes and Gregg Costa cited ‘overwhelming evidence’ in her decision that the two Merida Group executives abused Medicare’s reimbursement-first-check-later system between 2009 and 2018. Defendants submitted more than 47,000 claims for more than 9,000 patients during that time.

Of the $152 million billed to Medicare, Mesquais and McInnis received $124 million.

“The scale of the scheme was matched by its cruelty,” the court said in its report. “Medical directors routinely lied about seeing patients face-to-face as required by Medicare, exaggerated how sick patients were, and made diagnoses to make patients appear eligible for hospice, and fabricated medical records to cover their tracks.”

According to the report, Mesquias was the “driving force” behind the false certifications and doctored medical records, establishing a rule of admitting every patient to the hospice and not dismissing them.

Judges reported that Merida Group executives used a “carrot and stick approach” to vet other parties involved. The “carrots” included financial incentives offered to employees, such as raises and bonuses, for participating in the fraud. The “sticks” involved harsh reprimands and intimidation tactics against staff who pushed back.

“The defendants intimidated their employees into submission,” the judges said in the report. “When employees pushed back on his excesses, Mesquias warned them not to ‘fuck with his money’. McInnis was the executor. He swears[ed] come out’ the skeptical nurses and ‘scream[ed] to staff’ if the patients were not certified. For those who did not follow through, the consequences were severe.

A medical director has been fired for refusing to refer patients to the hospice. Nurses who raised questions were also fired or threatened with dismissal.

Four other people from the Merida group have been charged and convicted for their involvement in the scheme. Operations manager Jose Garza was sentenced in 2021 to 27 months in prison for recruiting patients at several sites in Merida. Three other people who pleaded guilty to the charges included medical directors Jesus Virlar, Eduardo Carrillo and Francisco Pena.

Pena also stood trial and was found guilty on all counts, but died before sentencing. Last year, Pena was convicted of one count of health care fraud, obstruction of health care investigations and one count of making false statements to the FBI.

About Jessica J. Bass

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