Category Archives: U.S. Attorney’s Office

Department of Justice and Health and Human Services Return $2.6 Billion in Taxpayer Savings From Efforts to Fight Healthcare Fraud

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April 6, 2018 Departments Work to Stamp out Pill Mills and Opioid Overprescribing

Health and Human Services Secretary Alex Azar and Attorney General Jeff Sessions today released a fiscal year (FY) 2017 Health Care Fraud and Abuse Control Program report showing that for every dollar the federal government spent on healthcare related fraud and abuse investigations in the last three years, the government recovered $4. Additionally, the report shows that the departments’ FY 2017 Takedown event was the single largest healthcare fraud enforcement operation in history.

In FY 2017, the government’s healthcare fraud prevention and enforcement efforts recovered $2.6 billion in taxpayer dollars from individuals and entities attempting to defraud the federal government and Medicare and Medicaid beneficiaries. Some of these fraudulent practices include:

  • Providers operating “pill mills” out of their medical offices.
  • Providers submitting false claims to Medicare for ambulance transportation services.
  • Clinics submitting false claims to Medicare and Medicaid for physical and occupational therapy.
  • Drug companies paying kickbacks to providers to prescribe their drugs, and pharmacies soliciting and receiving kickbacks from pharmaceutical companies for promoting their drugs.
  • Companies misrepresenting capabilities of their electronic health record software to customers.

“Taxpayers work hard every day to help fund government programs for our fellow Americans,” Attorney General Sessions said. “But too many trusted medical professionals like doctors, nurses and pharmacists have chosen to violate their oaths and exploit this generosity to line their pockets, sometimes for millions of dollars.  At the Department of Justice, we have taken historic new actions to incarcerate these criminals and recover stolen funds, including executing the largest healthcare fraud enforcement action in American history.  These achievements are important, but the department’s work is not finished. We will keep up this pace and continue to prosecute fraudsters so that we can give financial relief to taxpayers.”

“Today’s report highlights the success of HHS and DOJ’s joint fraud-fighting efforts,” said HHS Secretary Azar. “By holding individuals and entities accountable for defrauding our federal health programs, we are protecting the programs’ beneficiaries, safeguarding billions in taxpayer dollars, and, in the case of pill mills, helping stem the tide of our nation’s opioid epidemic.”

The Departments of Justice (DOJ) and Health and Human Services (HHS), through the Health Care Fraud Prevention and Enforcement Action Team (HEAT) effort, use data analytics and surveillance to crack down on, prevent and prosecute healthcare fraud. While the program continues to be very successful, the return on investment fluctuates from year to year, in part because cases resulting in large settlements take multiple years to complete. Additionally, there has been a reduction in large monetary settlements as many of the large pharmaceutical manufacturers have entered into Corporate Integrity Agreements with the HHS Office of the Inspector General to establish protections against fraudulent activities.

With teams comprised of law enforcement agents, prosecutors, attorneys, auditors, evaluators and other staff, last year DOJ opened 967 new criminal healthcare fraud investigations of which federal prosecutors filed criminal charges in 439 cases involving 720 defendants.  A total of 639 defendants were convicted of healthcare fraud related crimes. In FY 2017, the DOJ and HHS joint Medicare Fraud Strike Force filed 253 indictments and charges against 478 defendants who allegedly billed federal healthcare programs more than $2.3 billion. The Strike Force obtained more than 290 guilty pleas, litigated 33 jury trials and won guilty verdicts against 40 defendants. The Fraud Strike Force secured prison sentences for more than 300 defendants, with an average sentence of 50 months. Since its inception in 2007, Strike Force prosecutors filed more than 1,660 cases charging more than 3,490 defendants who collectively billed the Medicare program more than $13 billion.

Beyond criminal prosecution, the HHS Office of Inspector General (OIG) remains vigilant in excluding providers and suppliers who committed fraud or engaged in the abuse or neglect of patients in federal health programs. A total of 3,244 individuals and entities were excluded in FY 2017. Others were excluded as a result of licensure revocations. These exclusions help to safeguard beneficiaries from future harm that could otherwise be inflicted by such convicted individuals or entities. HHS can also suspend Medicare payments to providers during investigations of credible allegations of fraud.  During FY 2017, there were 551 related payment suspensions.  More than 4 million claims are reviewed by Medicare each day; resulting in more than one billion claims processed annually for timely payments to healthcare providers and suppliers. Given the volume of claims processed by Medicare each day and the significant cost associated with conducting medical review of an individual claim, the Centers for Medicare and Medicaid Services uses automated edits to help prevent improper payments without the need for manual intervention.  The National Correct Coding Initiative consists of edits designed to reduce improper payments in Medicare Part B, and this program saved Medicare $186.9 million during the first nine months of FY 2017.

As the opioid epidemic continues to devastate communities and families across the nation, both DOJ and HHS are responding with new approaches. One out of every three beneficiaries received prescription opioids through Medicare Part D in 2016. Additionally, 401 prescribers were found to have questionable prescribing patterns for beneficiaries at serious risk of opioid misuse or overdose, based on an OIG analysis. Last July, DOJ and HHS announced the largest ever healthcare fraud enforcement action, involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in healthcare schemes involving approximately $1.3 billion in false billings. Of those charged, more than 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics.

In August, Attorney General Sessions announced the formation of the Opioid Fraud and Abuse Detection Unit, a new DOJ pilot program that will use data to help combat and prosecute individuals and entities involved in illegal activities that fuel the crisis. As part of that task force, the department funded 12 experienced assistant United States attorneys for a three-year term to focus solely on investigating and prosecuting healthcare fraud related to prescription opioids, including pill mill schemes and pharmacies that unlawfully divert or dispense prescription opioids for illegitimate purposes. Those prosecutors have already charged several with unlawful distribution of opioids, and their continued success is crucial in combatting this deadly epidemic.

For more details on the Health Care Fraud and Abuse Control Program and today’s report, visit: https://oig.hhs.gov/publications/docs/hcfac/FY2017-hcfac.pdf

Pitt County Behavioral Health President Pleads Guilty to Medicaid Fraud Conspiracy and Perjury Charges

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Friday, August 4, 2017

RALEIGH – The United States Attorney for the Eastern District of North Carolina John Stuart Bruce Office announced that yesterday in federal court, SHEPHARD LEE SPRUILL, II, 46, of Winterville, North Carolina, pleaded guilty to Conspiracy to Commit Health Care Fraud, and Perjury. Under the terms of a plea agreement, SPRUILL faces up to 15 years in prison, $500,000 in fines, and 3 years of supervised release. Under additional terms discussed in court, SPRUILLalso agreed to make restitution in the amount of $1,846,377 to the North Carolina Medicaid program, as well as additional restitution for any other fraud committed by or through Medicaid providers Pride in North Carolina, Carolina Support Services, Elite Care, Southern Support Services, One to One Youth, Vision of New Hope, Bridge Builders Youth Services, and Jameson Consultants.

According to the Criminal Information and evidence discussed in open court, SPRUILL entered into conspiracy with Terry Lamont Speller and Donnie Lee Phillips, II (both of whom are already imprisoned) to defraud Medicaid in connection with a clinic in Pitt County, known as “The Medical Office.” SPRUILL, who at that time was the president of a behavioral health practice named Carolina Support Services, had access to lists of patient names and Medicaid Identification Numbers. SPRUILL provided these to Speller and Phillips, who used them to fraudulently bill Medicaid for more than $2 Million in fictitious services. After Medicaid sent payment for the fake services to Speller, SPRUILL received his cut of the proceeds under the guise of loan repayments.

With respect to the charge of Perjury, the evidence showed that SPRUILL testified before a federal grand jury that he had no business relationship with Speller, and that he had no knowledge of why Medicaid payments were being split between Speller and SPRUILL. Under the plea agreement, SPRUILL admitted that he lied about these facts to the grand jury.

The investigation of this case was conducted by agents of the North Carolina State Bureau of Investigation assigned to the Medicaid Investigations Division of the North Carolina Attorney General’s Office; The Internal Revenue Service – Criminal Investigation; and the United States Department of Health and Human Services Office of the Inspector General. The investigation and prosecution of this matter is being handled in a partnership between the United States Attorney’s Office for the Eastern District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office. Assistant United States Attorney William M. Gilmore of the Economic Crimes Division and Special Assistant United States Attorney Daniel Spillman of the Medicaid Investigations Division of the North Carolina Attorney General’s Office, represented the United States.

If you suspect Medicaid or Medicare fraud please visit the HHS OIG website at https://oig.hhs.gov/ and click on the Report Fraud button. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.

New Jersey Man Sentenced To 39 Months In Prison For Defrauding Investors

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Tuesday, July 25, 2017

NEWARK, N.J. – A North Caldwell, New Jersey, man was sentenced today to 39 months in prison for fraudulently using more than $550,000 in investment funds that he solicited to purchase and sell consumer products in bulk, Acting U.S. Attorney William E. Fitzpatrick announced.

Michael Esposito, 45, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of wire fraud. Judge Martini imposed the sentence today in Newark federal court.

According to the documents filed in this case and statements made in court:

From August 2013 through February 2017, Esposito was the president of numerous entities that purported to purchase consumer products in bulk from manufacturers for resale to wholesalers and retailers. Esposito told potential investors that he could purchase consumer goods – such as soda and bottled water – at substantial discounts, and that he had buyers ready to purchase the products at a significant profit.

In return for providing the funds necessary to purchase the products, Esposito promised the victim investors a large percentage of the profits. However, Esposito used the funds for his personal expenses and to pay other investors in order to make it appear the money was properly used. Esposito admitted that his actions resulted in losses of more than $550,000.

In addition to the prison term, Judge Martini sentenced Esposito to three years of supervised release. Restitution will be determined at a late date.

Acting U.S. Attorney Fitzpatrick credited special agents with the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation. He also thanked investigators with the Florida Office of Financial Regulation for their assistance.

The government is represented by Assistant U.S. Attorneys Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit and Sarah Devlin of the Asset Forfeiture Unit in Newark.

Defense counsel: Brooke M. Barnett Esq., Newark

Employee Of New Jersey-Based Trucking Company Gets 33 Months In Prison For Stealing More Than $3 Million From Her Employer

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Monday, July 24, 2017

TRENTON, N.J. – A former employee of a New Jersey based-trucking company was sentenced today to 33 months in prison for stealing more than $3 million by issuing company checks for her own benefit, Acting U.S. Attorney William E. Fitzpatrick announced.

Tracey Perrigan, 55, of Sparta, Tennessee, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to Count One of an indictment charging her with wire fraud. Judge Sheridan imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

Perrigan was an employee of a company identified in the indictment as “Company A,” the corporate parent of several subsidiary trucking, rigging, and transportation companies. Company A was headquartered in Oceanside, New York, and had a Branchburg, New Jersey, facility where Perrigan worked.

Company A used the “Comchek” system, which enables clients to authorize and monitor fuel and repair expenditures by drivers in remote locations. As part of her duties, Perrigan was responsible for authorizing Comcheks drawn on Company A’s bank account. From March 2007 through August 2015, Perrigan diverted $3.25 million from her employer to an entity identified as “Company B,” a trucking and towing company based in Tennessee that she owned with another person. Company B never conducted any business with Company A.

In addition to the prison term, Judge Sheridan sentenced Perrigan to three years of supervised release. Perrigan must also pay restitution of $3,251,419.65.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Carol Gillen Esq., Assistant Federal Public Defender, Newark

Former Employee Of Commercial Supply Company Admits Fraud, False Testimony Before Grand Jury

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Monday, July 24, 2017

TRENTON, N.J. – A former salesman at Bayway Lumber, a Linden, New Jersey, company that sold commercial and industrial products to numerous public and private entities, today admitted his role in a scheme to defraud customers and lying to a federal grand jury, Acting U.S. Attorney William E. Fitzpatrick announced.

Adam Martignetti, 43, of South River, New Jersey, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to Counts 1 and 6 of an indictment charging him with conspiracy to commit wire fraud and making false declarations before a grand jury.

According to documents filed in this case and statements made in court:

Martignetti admitted that from 2011 through 2013 he conspired with others to defraud certain Bayway Lumber customers by providing free items to customers’ employees and then recouping the cost of the items (plus additional revenue for Bayway Lumber) by overbilling and fraudulently billing the customers. Martignetti also admitted to supplying lower-quality, less expensive plywood to a customer, but charging for the more expensive, higher-quality plywood the customer had ordered.

Martignetti gave a variety of personal items to employees of some of Bayway Lumber’s customers, including Amtrak, the City of Elizabeth, and the Plainfield Board of Education.  These items included a laptop, several iPads, a camera and sound system, patio furniture, and other merchandise. Under the supervision of Robert Dattilo, president and partial owner of Bayway Lumber, Martignetti then overbilled and fraudulently billed those customers. Dattilo kept a running tally of how much Martignetti and others overbilled and fraudulently billed customers, which many at Bayway Lumber referred to as the “Bank,” to ensure that Bayway Lumber recovered the full cost of the free items. Dattilo previously pleaded guilty to conspiracy to commit mail and wire fraud and was sentenced in July 2016 to 48 months in prison and ordered to pay $708,386 in restitution.

Martignetti also conspired to provide one Bayway Lumber customer, Consolidated Edison Co. of New York Inc. (Con Edison), with lower-quality wood than it ordered and paid for. When Con Edison ordered graded plywood, a type of plywood graded by mills that had met a certain set of specifications, Martignetti, at Dattilo’s instruction, routinely sent plywood that was of a lower grade or not graded at all, including “reject” plywood, but charged Con Edison for the higher-quality plywood that it ordered.

Martignetti also pleaded guilty to falsely testifying before a federal grand jury while appearing as a witness under oath in March 2013 that he had never given Bayway Lumber items to City of Elizabeth employees for free, and that Elizabeth was never charged for items that were for Elizabeth employees’ personal use.

The conspiracy to commit wire fraud charge to which Martignetti pleaded guilty carries a maximum penalty of 20 years in prison. The charge of knowingly making false statements before a grand jury guilty carries a maximum penalty of five years in prison. Each count also carries a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greatest. Sentencing is scheduled for Sept. 28, 2017.

Acting U.S. Attorney Fitzpatrick credited special agents with the Office of Inspector General, U.S. Department of Housing and Urban Development, under the direction of Special Agent in Charge Christina Scaringi; the Office of Inspector General, Amtrak, under the direction of Special Agent in Charge Michael Waters; and the FBI, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Cari Fais of the U.S. Attorney’s Office Special Prosecutions Division, and Assistant U.S. Attorney Barbara R. Llanes, Chief, General Crimes Unit, of the U.S. Attorney’s Criminal Division, in Newark.

Defense Counsel: Michael Armstrong Esq., Willingboro, New Jersey

Newark Police Officer Admits Conspiracy To Commit Fraud Against Housing Assistance Program

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Monday, July 24, 2017

NEWARK, N.J. – A Newark police officer today admitted conspiring to fraudulently obtain payments under the federal public housing assistance program known as “Section 8,” Acting U.S. Attorney William E. Fitzpatrick announced.

Luis Cancel, 50, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with one count of agreeing with another individual to obtain Section 8 public housing benefits to which they were not entitled.

According to documents filed in this case and statements made in court:

The Section 8 Program is a federal public housing assistance program administered by the U.S. Department of Housing and Urban Development (HUD). It provides rent subsidies to qualified low-income individuals. HUD provided federal grant money to the Newark Housing Authority (NHA) for the Section 8 Program. Under the NHA’s Section 8 Program, a tenant’s rental assistance was based upon the tenant’s anticipated family gross income. Tenants receiving Section 8 assistance from the NHA had to inform the NHA of all members of the household and the annual household income.

From January 2010 to May 2015, Cancel, then a Newark police officer, lived with another person (Individual 1) who was receiving Section 8 benefits. Cancel and the other individual agreed not to disclose to the NHA that they were living together or that Cancel was a Newark police officer, and, also, a security guard with the Robert Treat Hotel. Individual 1 submitted fraudulent documents to the NHA that failed to disclose these facts. Cancel also submitted letters to the NHA falsely indicating that he lived at a separate residence. Based upon their misrepresentations, Cancel and Individual 1 received approximately $74,000 in Section 8 subsidies to which they were not entitled.

The count to which Cancel pleaded guilty carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Nov. 6, 2017.

Acting U.S. Attorney Fitzpatrick credited special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel: Joseph D. Rotella Esq., Newark

Passaic County Man Admits Defrauding Clifton-Based Trucking Company of $900,000

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Monday, July 24, 2017

NEWARK, N.J. – A Passaic County, New Jersey, man today admitted his role in a scheme to defraud a trucking company out of more than $900,000, Acting U.S. Attorney William E. Fitzpatrick announced.

Angel D. Vidal, 25, of Paterson, New Jersey, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to Count 1 of an indictment charging him with wire fraud.

According to documents filed in this and other cases and statements made in court:

Lisa Popewiny, 55, of Clifton, New Jersey, was the payroll clerk at Clifford B. Finkle Jr. Inc., a Clifton-based company that provided transportation and freight services to various public and private entities located in New Jersey, New York, and elsewhere. From June 2012 to April 2015, Popewiny, Vidal, and his two brothers, Angel Gabriel Vidal, 23, and Miguel Vidal, 23, a former truck driver for the company, engaged in a scheme to defraud the company out of $920,380. On June 26, 2017, Angel Gabriel Vidal pleaded guilty before Judge Arleo to Count 2 of an indictment charging him with wire fraud. On March 30, 2017, Miguel Vidal pleaded guilty to an information charging him with wire fraud. Popewiny is scheduled to stand trial on Oct. 2, 2017.

Popewiny allegedly falsified payroll records in order to generate fraudulent paychecks payable to non-existent employees, including the Vidal brothers. All of the Vidal brothers have admitted to allowing the use of their personal identifying information to generate the fraudulent paychecks. The three men then converted the checks, many of which were deposited into their bank accounts and then funneled out of the accounts in cash. Miguel Vidal admitted to recruiting other individuals to provide their personal information so that Popewiny could allegedly falsely add them to the payroll. Over the course of the scheme, Popewiny allegedly input false hours for at least 12 different individuals. The scheme came to light when owners of the company, in an effort to investigate suspected fraud, distributed the payroll checks to employees – a task normally completed by Popewiny. After all of the payroll checks had been distributed, several paychecks remained unclaimed that turned out to be fraudulently issued.

The charge to which Angel D. Vidal and his brothers pleaded guilty carries a maximum punishment of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Sentencing is scheduled for Nov. 17, 2017.

Acting U.S. Attorney William E. Fitzpatrick credited criminal investigators in the U.S. Attorney’s Office and postal inspectors from the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, with the investigation leading to the guilty pleas.

The government is represented by Assistant U.S. Attorney Cari Fais of the U.S. Attorney’s Office Special Prosecutions Division.

The charges and allegations against Popewiny are merely accusations, and she is presumed innocent unless and until proven guilty.