St. Louis, Missouri: Dr. Krishnarao Rednam pled guilty to a federal felony charge of obstructing a health care fraud investigation after he destroyed medical records that were the subject of a federal investigation’s subpoena, United States Attorney Catherine L. Hanaway announced today.

“Both the Medicare program and Missouri’s senior citizens expect health care providers to be honest, and have limited financial resources to spend on health care,” said Hanaway.  “We appreciate that Rednam’s employer brought these issues to the Government’s attention, and will continue to devote investigative and prosecutorial resources to catch and successfully prosecute people who cheat the health care system.”

In his plea agreement, Rednam admitted that in January 2007, his employer conducted an audit to determine why the medical practice group’s revenues were significantly higher than expected.  The audit suggested that group’s unexpectedly higher revenue was caused by Rednam purchasing a relatively inexpensive drug (Avastin®) while repeatedly billing it to the Medicare program as a different and significantly more expensive drug (Macugen®).  The audit also suggested that Rednam purchased single use vials of Lucentis® but provided the drug to multiple patients.  All three of these drugs are injectable, and are used to treat macular degeneration in patients’ eyes.

After the audit, the medical practice group notified Rednam that it would be making a voluntary disclosure of the audit’s findings to the Government.  When the Government began an investigation,  it served a subpoena on the medical practice group, seeking, among other documents, the medical files for various patients receiving injections of the drugs discussed above. 

In his plea agreement, Rednam admitted that from April 18, 2007 through May 31, 2007, he remained at his medical office past regular business hours after all other employees left.  While alone in the office, Rednam reviewed patients’ files that were responsive to the Government’s subpoena and disposed of some of those records.  During this time frame, other clinic employees saw him leaving the office with paper bags full of medical records, which he disposed of instead of providing them to his employer for eventual production to the Government. He did this to obstruct the Government’s investigation because these records contained information about Rednam’s injections and corresponding claims to Medicare and other payors. 

Further, in his plea agreement, Rednam admits that late at night in his office, he also retrieved the files of multiple patients who had received injections that were responsive to the Government’s subpoena.  Rednam reviewed these files to determine if they contained any proof that suggested Medicare and other payors had received claims for the wrong drug, specifically Macugen® instead of Avastin®.   He then removed or destroyed patient files that supported the billing for the more expensive drug while containing no proof that the cheaper drug, Avastin®, was actually provided to the patient.         

Rednam also agreed to pay $304,225 to the United States in a related civil settlement agreement, and be excluded from participation in the Medicare program for a period of five years. 

Rednam’s former employer, the St. Louis Eye Clinic, also agreed to pay $251,551 to the United States in a separate civil settlement agreement regarding Rednam’s claims to Medicare for the three drugs.  Both the employer and Rednam also agreed to repay the patient’s co-insurance payments that they made when receiving injections.

“The FBI will continue to vigorously investigate health care fraud and those professionals that defraud the system,” added John Gilles, Special Agent in Charge, FBI St. Louis.

Rednam, 58, Des Peres, Missouri, pled guilty to one felony count of obstruction of a federal health care investigation.  Rednam now faces a maximum penalty of five years in prison and/or fines up to $250,000, when he is sentenced April 11, 2008.

Hanaway commended the work on the case by the Federal Bureau of Investigation and the Office of Inspector General for the U.S Department of Health and Human Services.