DME Firm Owner Flees Country Following Fraud Conviction

July 15, 2008

The owner of two south Florida durable medical equipment (DME) companies has fled the country after receiving a 130-month prison sentence for defrauding Medicare.

Gustavo Smith was sentenced in the U.S. District Court for the Southern District of Florida after his companies — Medstar Services and Orthotics Fitters of Miami — submitted more than $4.6 million in fraudulent claims to Medicare, according to the Justice Department.

He also was ordered to serve three years of supervised release following his release from prison, forfeit $287,000 and pay nearly $2 million in restitution to HHS.

Smith left the country after he was placed on home confinement with electronic monitoring. A warrant has been issued for his arrest.

During the trial, Medicare beneficiaries whose names and Medicare numbers Smith used to bill for DME testified they had never heard of him or his companies and that they neither needed nor received the equipment, Justice said.

Doctors whose provider numbers Smith used also testified they had never heard of him or his companies and had never prescribed the items. The products were primarily negative pressure pumps and related wound care supplies.