Mississippi hospital owner defrauded Medicare of $10.8M, jury finds

The owner of a 25-bed critical access hospital in Gulfport, Miss., cheated Medicare out of more than $10 million, a federal jury found March 12, according to the Sun Herald.

The government alleged Ted Cain and his wife, Julie Cain, used Stone Creek Hospital to defraud Medicare of $10.85 million through fraudulent annual Medicare cost reports from 2004-15, according to the Department of Justice.

Most of the damages resulted from Mr. Cain's compensation, which was billed to Medicare through the hospital and his business Corporate Management. From 2004 to 2015, Corporate Management's CFO, Tommy Kuluz, and Mr. Cain allegedly requested $17.7 million in compensation for Mr. Cain despite no evidence that he did any work for the hospital that qualified for Medicare reimbursement. Medicare reimbursed Stone County Hospital $11.8 million for Mr. Cain's compensation, according to the Justice Department. 

Ms. Cain fraudulently received more than $704,000 as an administrator of the hospital from 2003 to 2012, and more than $149,000 for consulting work she never performed for the hospital, according to the Justice Department.

After a nine-week trial, the jury returned guilty verdicts against Mr. Cain, Ms. Cain and Mr. Kuluz for violating the False Claims Act.

The 13-year-old lawsuit was originally filed under the qui tam, or whistleblower, provisions of the False Claims Act.

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