San Diego Man Pleads Guilty to $51M Medicare Durable Medical Equipment Fraud

A Chula Vista businessman, Fernando Valenzuela Ayub, pleaded guilty to orchestrating a multimillion-dollar Medicare fraud scheme involving durable medical equipment. Valenzuela admitted to paying kickbacks to companies that issued fraudulent prescriptions for items such as back, wrist, and knee braces, which were then billed under Medicare. The total fraudulent billing amounted to approximately $51 million with around $20 million successfully collected.

The U.S. Attorney's Office reported that Valenzuela laundered $14 million from the proceeds and paid $3.7 million in kickbacks for the fake prescriptions. His guilty plea includes conspiring to launder the fraudulent proceeds and a commitment to forfeit over $7 million as part of his plea agreement. Sentencing is scheduled for August.

This case underscores ongoing challenges the Medicare program faces concerning fraudulent durable medical equipment claims, which impact payer costs and regulatory compliance. The involvement of coordinated schemes employing fake prescriptions raises concerns about oversight in the durable medical equipment sector.

The enforcement action illustrates heightened federal scrutiny on Medicare billing practices and highlights the importance of strong compliance measures among medical equipment providers and associated entities. It also serves as a reminder for insurers and regulators to maintain vigilance in detecting and prosecuting fraudulent activities that impose financial burdens on public health programs.

The case is an example of how fraudulent schemes in healthcare can involve complex laundering and kickback arrangements, necessitating coordinated legal and regulatory responses to protect program integrity. Industry professionals should monitor such enforcement outcomes to inform compliance strategies and risk management related to durable medical equipment billing.