Health Care Fraud - over $3.1million

6/6/08 COVINA - FBI and IRS agents arrested a registered nurse Friday on suspicion of running a scam that defrauded Medicare out of about $12million, officials said.

Felcoranenda "Nenda" Estudillo, 50, was arrested at her Covina home, said Thom Mrozek, spokesman for the U.S. Attorney's Office.

"This is the second-largest home health care fraud case that we've had ever," Mrozek said.

The fraud allegedly was carried out from West Covina-based Wescove Home Health Services, a business that Estudillo owned, Mrozek said.

Wescove Home closed its doors in late 2003 after the Los Angeles County Department of Health Services recommended its provider status be terminated and Medicare suspended payments to the business. Since then, investigators have been building a case against Estudillo.

The indictment against Estudillo lists 36 counts, including health care fraud, conspiracy, money laundering, cash structuring and falsifying records, Mrozek said.

The indictment alleges "Wescove billed Medicare for home health services provided to beneficiaries who were not confined to their homes, did not qualify for or need those types of services, or never received services," Mrozek said.

Estudillo allegedly paid "marketers" kickbacks between $300 and $4,800 to help recruit beneficiaries, depending on how much Wescove could bill Medicare for the services solicited.

At least six such marketers were paid more than $3.1 million in such kickbacks,
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authorities said.

Estudillo is the only person indicted in the alleged scheme, assistant U.S. Attorney Consuelo Woodhead said.

However, several major marketers in the scheme are also being investigated, Woodhead said.

Most of Wescove's employees are believed to have been involved in the scheme, Woodhead said. The alleged fraud accounted for the vast majority of the company's business.

Not counting the patients, dozens of employees and marketers were involved. Hundreds of patients were also involved, she said.

The hundreds of patients "vary in their level of culpability," Woodhead said. Some did not understand what was happening and were taken advantage of, she said, while others appeared savvy and knew exactly what they were doing.

Many patients also received kickbacks from Estudillo for participating in the scam, she said.

Estudillo made an initial appearance in federal court in Los Angeles on Friday, Woodhead said. She is due back in court Wednesday for a bail hearing and June 16 for arraignment.