Calling it “one of the largest healthcare fraud schemes” ever, the U.S. Department of Justice has charged 24 people over losses amounting to $1.2 billion.
“Today, one of the largest healthcare fraud schemes in U.S. history came to an end thanks to close collaboration and coordination between the FBI and partners including HHS-OIG [U.S. Department of Health and Human Services Office of the Inspector General] and IRS-CI [IRS Criminal Investigation],” said FBI Assistant Director Robert Johnson in a statement.
The investigation, dubbed Operation Brace Yourself, led to charges against CEOs, COOs and others involved in five telemedicine companies, owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, according to DOJ.
The Center for Medicare Services, Center for Program Integrity (CMS/CPI) has also initiated “adverse administrative action” against 130 DME firms who had put in more than $1.7 billion in claims – for which they got more than $900 million.
“These defendants – who range from corporate executives to medical professionals – allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care,” stated Assistant Attorney General Benczkowski, adding that the DOJ “will not tolerate medical professionals and executives who look to line their pockets by cheating our healthcare programs.”
The charges stemmed from “an alleged scheme involving the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that are medically unnecessary,” stated the department.
The scam allegedly involved an international telemarketing network that “lured” hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.
“The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns,” said U.S. attorney Craig Carpenito, explaining, “instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for.”
Doctors were allegedly bribed to prescribe DME “with only a brief telephonic conversation with patients they had never met or seen.”
The ill-gotten gains were then allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the U.S. and abroad.
Charges were brought in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.
Among those charged are:
Creaghan Harry, 51, of Highland Beach, Florida; Lester Stockett, 51, of Deefield Beach, Florida; and Elliot Loewenstern, 56, of Boca Raton, Florida; Dr. Joseph DeCoroso, 62, of Toms River, New Jersey; Willie McNeal, 42, of Spring Hill, Florida; Leah Hagen, 48, and Michael Hagen, 51, of Dalworthington Gardens, Texas; Christopher O’Hara, 54, of Kingsbury, Texas; Dr. Randy Swackhammer, 60, of Goldsboro, North Carolina; Darin Flashberg, 41, of Glendora, California, and Najib Jabbour, 47, of Glendora, California; Andrew Chmiel, 43, of Mt. Pleasant, South Carolina; Neal Williamsky 59, of Marlboro, New Jersey, and Nadia Levit, 39, of Englishtown, New Jersey; Albert Davydov, 26, of Rego Park, New York.
The news comes on the heels of the conviction on April 5 of a South Florida businessman over a billion-dollar-plus Medicare and Medicaid scheme.
Nursing home operator Philip Esformes was found guilty on 20 counts of an 18-year fraud that involved both money laundering and kickbacks. He also bribed his son into the University of Pennsylvania, according to Bloomberg
and the DOJ.
“Philip Esformes orchestrated one of the largest healthcare fraud schemes in U.S. history, defrauding Medicare and Medicaid to the tune of over a billion dollars,” Benczkowski said in a statement.
From 1998 through mid-2016, Esformes led a scheme in which he bribed doctors to admit patients into his network of assisted living facilities and skilled nursing facilities. He then “cycled the patients through his facilities, where they often failed to receive appropriate medical services, or received medically unnecessary services, which were then billed to Medicare and Medicaid,” the evidence showed.
Esformes received more than $37 million from his multi-pronged scheme, according to evidence presented in court and recounted in the Justice Department statement.