Exec of RP-based firm gets 5 years for $100-M scam of US military

MADISON, Wisconsin – A former health care executive was sentenced Tuesday to five years in prison for helping his Philippines based company swindle nearly $100 million from the US military health insurance program.

Thomas Lutz, 41, said in federal court he took responsibility for the six-year scheme in which Health Visions Corp. bilked $99.9 million from the military’s Tricare program through inflated and fraudulent claims.

US District Judge Barbara Crabb said the five-year sentence was modest given the extent of the fraud, but it was the longest she could impose under Lutz’s plea deal.

Health Visions and Lutz were initially charged in a 75-count indictment in 2005. He pleaded guilty in 2006 to a single count of conspiracy to pay kickbacks and agreed to cooperate with prosecutors, a deal Crabb called “a huge break” for Lutz.

“It’s just horrifying that you were able to take as much money as you did,” Crabb told Lutz.

Prosecutors said the company routinely inflated claims by more than 230 percent, operated a phony insurance program and billed for medical services never delivered.

In April, Crabb ordered Health Visions to pay $99.9 million in restitution. Under her order, the company must sell all of its assets, including land, hospitals and office buildings, within 10 months. She said Lutz would be responsible for paying the remainder, including at least 25 percent of his income once he is released from prison.

Crabb gave Lutz until March 18 to report to prison. Prosecutors asked for the nine-month delay so Lutz could help the government recover as much money as possible from the company.

Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers. The company served thousands of US military retirees living in the Philippines, where bases were located until the early 1990s.

The company was reimbursed $163 million by Tricare between 1998 and 2004, and prosecutors believe at least $99.9 million of that was fraudulent.

Lutz, an American citizen, read a brief statement in which he took full responsibility for his company’s actions.

“I would like to apologize to the Department of Defense,” he said. “I am truly sorry for all those who have been affected.”    – AP