HOUSTON – John Edward Perry III, 47, of The Woodlands, and Kate Ose Olear, 43, a Nigerian national residing in Houston, pleaded guilty conspiracy to commit health care fraud, U.S. Attorney José Angel Moreno announced Friday.

HOUSTON – John Edward Perry III, 47, of The Woodlands, and Kate Ose Olear, 43, a Nigerian national residing in Houston, pleaded guilty conspiracy to commit health care fraud, U.S. Attorney José Angel Moreno announced Friday.

Olear, the owner of Sefan Medical Supply (Sefan), a durable medical equipment provider in Houston, and Perry, the medical director of Sefan, were scheduled to begin a jury trial Monday. Instead, they decided to plead guilty. Olear pleaded guilty Thursday before U.S. District Judge David Hittner, while Perry pleaded guilty Friday morning before U.S. District Court Judge Gray H. Miller. Olear was ordered into federal custody immediately after the hearing pending sentencing Sept. 15. Perry has been permitted to remain on bond pending his sentencing Sept. 17. Each faces a maximum of 10 years in prison, a fine of up to $250,000 or twice the financial gain or loss (whichever is greater) and up to three years supervised release for the health care fraud conspiracy conviction. Restitution is mandatory in both cases.

According to court documents, the scheme orchestrated involved Sefan, through Olear, billing Medicare for medically unnecessary durable medical equipment and supplies that were either not provided to Medicare beneficiaries or a lesser product from what was billed to Medicare was provided. Olear billed Medicare for arthritis kits for more than 683 beneficiaries – some of whom were deceased. Perry in many instances was the physician who authorized the arthritis kits. All the kits included a knee adjustment with air chamber, rigid frame back brace, elbow with joint, ankle gauntlet, flex glove with elastic finger, heat lamp with stand and a wrist brace. Sefan would order these items for both the left and right side. If the beneficiaries received the items, they did not receive the rigid brace items billed to Medicare, instead they would receive neoprene sleeves, which was not covered by Medicare. Additionally, none of the beneficiaries interviewed knew of Sefan, Olear or Perry. Between December 2005 and July 2009, Olear submitted more than $2.8 million worth of claims for the arthritis kits and was paid more than $1.7 million for those claims.

The investigation into Olear and Perry is part of the Medicare Fraud Strike Force and was the result of a joint investigation by agents of the Department of Health and Human Services, Drug Enforcement Administration Diversion Division, Texas Attorney General Medicaid Fraud Control Unit, United States Railroad Retirement Board and the FBI. Assistant United States Jennifer Lowery and Special Assistant United States Attorney Justin Blan prosecuted the case.