Feds announce charges in alleged billion-dollar healthcare fraud bust

Two dozen individuals were charged in a landmark investigation historic in breadth.

“A million dollars isn’t cool,” remarked pop star Justin Timberlake in the Oscar-winning 2010 film The Social Network, portraying entrepreneur Sean Parker as he advises a young Mark Zuckerberg and his associates in a nightclub amid the fledgling years of Facebook.

“You know what’s cool?” Timberlake asks. “A billion dollars.”

Federal investigators with oversight of the nation’s healthcare industry would seem to agree.

In news that reverberated across the airwaves, radio signals, and the Internet nationwide, federal authorities announced earlier this week that they were charging two dozen individuals for their roles in alleged healthcare fraud schemes that amounted to a staggering $1.2 billion in losses.

“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 (the U.S. Department of Health and Human Services Office of Inspector General) and IRS-CI (Internal Revenue Service-Criminal Investigation),” FBI Assistant Director Robert Johnson said in a statement accompanying a press release. “Healthcare fraud causes billions of dollars in losses, it deprives real patients of the critical healthcare services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity. Through today’s coordinated national effort, we put an end to this egregious and costly healthcare fraud scheme, and the public can rest assured the FBI will continue to make healthcare fraud investigations a top priority.”

The defendants in the case include the CEOs, COOs, and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals. Their arrests coincided with the coordinated execution of more than 80 search warrants in 17 federal districts. 

In addition, the Center for Medicare Services, Center for Program Integrity (CMS/CPI) announced that it took “adverse administrative action” against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

The announcement was made jointly by a who’s who of some of the nation’s top federal law enforcement officials, including Johnson, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Sherri A. Lydon of the District of South Carolina, U.S. Attorney Craig Carpenito of the District of New Jersey, U.S. Attorney Maria Chapa Lopez of the Middle District of Florida, HHS-OIG Deputy Inspector General for Investigations Gary Cantrell, IRS-CI Chief Don Fort, and Deputy Administrator and Director of CPI Alec Alexander of the CMS/CPI.

“The charges announced today target 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,” the government’s press release read, in summarizing the allegations. “Some of the defendants allegedly controlled an international telemarketing network that lured over 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 allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.” 

Describing a scene calling to mind the inner workings of a sophisticated globetrotting drug cartel, investigators explained that the considerable proceeds of the alleged fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad.

“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 healthcare,” Benczkowski said in a statement of his own. “This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our healthcare programs. I commend the Criminal Division prosecutors and our partners from U.S. Attorney’s Offices and law enforcement agencies across the country for their unrelenting efforts to stop this alleged fraud before more money was stolen from American taxpayers.”

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” Fort added. “The conspiracy described in this indictment was not perpetrated by one individual. Rather, it details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants. We all suffer when schemes like this go undiscovered and I’m proud of the work our agents did in working with our partners to uncover this complex scheme.”

According to allegations in court documents, some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries. 

The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. 

Some of those charged included, in the District of New Jersey:

• Creaghan Harry, 51, of Highland Beach, Florida
• Lester Stockett, 51, of Deefield Beach, Florida
• Elliot Loewenstern, 56, of Boca Raton, Florida
• Joseph DeCoroso, M.D., 62, of Toms River, New Jersey
• Neal Williamsky 59, of Marlboro, New Jersey
• Nadia Levit, 39, of Englishtown, New Jersey
• Albert Davydov, 26, of Rego Park, New York

In the Middle District of Florida:

• Willie McNeal, 42, of Spring Hill, Florida

In the Northern District of Texas:

• Leah Hagen, 48, of Dalworthington Gardens, Texas
• Michael Hagen, 51, of Dalworthington Gardens, Texas

In the Western District of Texas:

• Christopher O’Hara, 54, of Kingsbury, Texas

In the Eastern District of Pennsylvania:

• Randy Swackhammer, M.D., 60, of Goldsboro, North Carolina

In the Central District of California:

• Darin Flashberg, 41, of Glendora, California
• Najib Jabbour, 47, of Glendora, California

In the District of South Carolina:

• Andrew Chmiel, 43, of Mt. Pleasant, South Carolina

Any doctors or medical professionals with knowledge of allegedly fraudulent telemedicine and DME marketing schemes – including those involving Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD – are still being asked to report such conduct to the FBI hotline at 1-800-CALL-FBI.