Okemos man scammed federal health programs out of almost $1 million, charges say

Kara Berg | Lansing State Journal

OKEMOS — When Babubhai Rathod got out of prison in 2016 for bribing physicians to refer clients to him, the first thing he did was get back into the business, a federal prosecutor said.

The former Okemos man was banned from being involved in health care programs for 20 years, so he used fake names and persuaded other people to buy four health care entities for him, Assistant U.S. Attorney Adam Townshend said. Three of the entities have Okemos locations.

Two years later, Rathod was charged with health care fraud for scamming Medicare and Medicaid out of money. He also was charged with aggravated identity theft. He pleaded guilty Aug. 20, a week after charges were filed.

His attorney, David Dodge, did not respond for comment Tuesday.

Rathod maintains that the four businesses — Advanced Medical Services, Sleep Diagnostics, EZ Sleep and Paramount Home Care — were legitimate medical providers, according to the plea agreement.

"We took issue with the fact that they were owned and controlled by a convicted felon," Townshend said. "Had (Medicare and Medicaid) known he was the one owning and controlling the businesses, they wouldn't have paid out anything."

A month after Rathod was released from prison, he solicited other people to organize and operate Advanced Medical Services and Sleep Diagnostics under his direction and control, according to charges. Rathod identified others as owners, managers and registered agents in order to hide his own involvement.

Combined, Medicaid paid the two businesses more than half a million dollars between July 2016 and May 2018. Some of that money went directly into Rathod's pockets, Townshend said.

In March 2017, Rathod bought EZ Sleep Supplies through a person acting on behalf of a shell company Rathod directed another person to organize. Rathod conducted EZ Sleep business using aliases, according to charges.

Rathod used an alias to buy Paramount Home Care and solicited his wife to act as the owner. His wife, however, was not involved in the business, according to charges. Medicaid paid the company about $250,000.

On Monday, Rathod pleaded guilty to stealing someone's identity to obtain a $69,200 loan to operate Advanced Medical Services.

Rathod faces up to 10 years in prison and a $250,000 fine for the health care fraud charge and will have to pay any restitution ordered. In addition, the aggravated identity theft charge carries a mandatory two-year consecutive sentence.

He also will have another 20-year ban from working with federal health care programs, to run consecutively with his original 20-year ban.

Rathod was sentenced in 2013 to four years in prison and two years of supervised release for bribing health care practitioners to refer patients to his clinics for at least five years. He also had to pay $950,000 in restitution.

He paid the practitioners in cash and checks designed as bonuses, mileage reimbursements and payments for consulting services that were never performed.

One of his clinics, Lakeshore Home Health Care Inc., was based in Lansing.

Contact Kara Berg at 517-377-1113 or kberg@lsj.com. Follow her on Twitter @karaberg95.