News and Press Releases

Nurse practitioner pleads guilty to accepting
kickbacks for medicare and medicaid patient referrals

April 3, 2012


NEWARK, N.J. – A Passaic County, N.J., man who formerly worked in Newark as a nurse practioner today admitted his role in a cash-for-patients scheme in which he took envelopes of cash in exchange for patient referrals, U.S. Attorney Paul J. Fishman announced.

Jose Castaneda, 37, of Clifton, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an Information charging him with one count of violating the federal healthcare program anti-kickback statute.

“Today’s guilty plea is one more step toward ensuring that the patients are not viewed as a currency to be cashed in by those to whom they turn for help,” U.S. Attorney Fishman said.

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

On Dec. 13, 2011, Castaneda was arrested and charged with accepting cash kickback payments from Orange Community MRI (“OCM”), an Orange, N.J., diagnostic facility, in exchange for referring Medicare and Medicaid patients to OCM. Thirteen New Jersey doctors were arrested that day and charged in separate Complaints with accepting similar cash kickback payments from OCM. Each of the defendants were recorded taking envelopes of cash in exchange for their patient referrals.

Starting in at least 2010, OCM began making monthly cash kickback payments to Castaneda in exchange for his referral of patients to OCM for diagnostic tests. At the end of each calendar month, individuals at OCM printed patient reports that detailed how many diagnostic tests – including MRIs, ultrasounds, echocardiograms (“Echo Scans”), CAT Scans, and dual-emission X-ray absorptiometries (“DEXA Scans”) – were referred by Castaneda. These patient reports were used to calculate the kickback payment OCM owed to Castaneda. Pursuant to Castaneda’s agreement with OCM, he was paid kickbacks for each Medicare or Medicaid beneficiary MRI, CAT Scan, ultrasound, DEXA Scan, and Echo scan.

On Oct. 6, 2011, Castaneda received $3,500 in cash for his September 2011 referrals to OCM, and on Nov. 8, 2011, Castaneda received $4,620 in cash for his October 2011 referrals to OCM. Castaneda admitted that his offense involved losses of more than $200,000 but not more than $400,000.

On the count of violating the federal healthcare program anti-kickback statute, Castaneda faces a maximum prison term of five years and a fine of $25,000. Castaneda agreed to forfeit $57,695 as property derived from his criminal conduct. Sentencing before Judge Cecchi is scheduled for July 11, 2012.

Fishman credited special agents with the Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Joseph Mack and Scott B. McBride of the U.S. Attorney’s Office Healthcare and Government Fraud Unit.


Defense counsel: Michael Pedicini Esq., Morristown, N.J.

Castaneda, Jose Information

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