Five Individuals Charged for Roles in $65 Million Nationwide Conspiracy to Defraud Federal Health Care Programs
The owners of four orthotic brace suppliers and several marketing companies were charged in a complaint unsealed yesterday for allegedly orchestrating a nationwide kickback and bribery scheme to order medically unnecessary orthotic braces for Medicare beneficiaries.
Thomas Farese, 78, of Delray Beach, Florida and Pat Truglia, 53, of Parkland, Florida, the owners of orthotic brace suppliers, were each charged with one count of conspiracy to commit health care fraud and three counts of health care fraud, all in connection with paying and receiving health care kickbacks and bribes for orders of orthotic braces.
Christopher Cirri, 63, and Nicholas DeFonte, 72, both of Toms River, New Jersey, the owners and operators of a fraudulent marketing company were charged with one count of conspiracy to commit health care fraud in connection with paying and receiving health care kickbacks and bribes for orthotic brace orders. Cirri and DeFonte were arrested and appeared this afternoon before U.S. Magistrate Judge Jessica S. Allen of the District of New Jersey
Domenic Gatto, 46, of Palm Beach Gardens, Florida, an owner and operator of an orthotic brace supplier, was charged with one count of conspiracy to commit health care, in connection with soliciting and receiving health care kickbacks. Gatto surrendered and appeared this afternoon before U.S. Magistrate Judge Jessica S. Allen of the District of New Jersey
The complaint alleges that between October 2017 and April 2019, Farese, Truglia, Cirri, DeFonte, and Gatto participated in a nationwide conspiracy to defraud Medicare, TRICARE, Civilian Health and Medical Program of the Department of
Veterans Affairs (CHAMPVA), and other federal and private health care benefit programs through the payment and receipt of illegal health care fraud kickbacks in exchange for orthotic brace orders that lacked medical necessity with a total loss of approximately $65 million.
The complaint further alleges that Truglia, Cirri, and DeFonte operated or controlled marketing call centers to solicit beneficiaries of federal and private health care benefit programs and to entice them to accept orthotic braces regardless of need. Truglia, Cirri, and DeFonte paid telemedicine companies illegal kickbacks and bribes in exchange for doctors and other medical professions signing brace orders and falsely swearing to their medical necessity. Truglia, Cirri, and DeFonte concealed the kickbacks and bribes by entering into sham contracts with the fraudulent telemedicine companies and issuing invoices describing the payments as “marketing” or “business process outsourcing” expenses.
Farese and Truglia purchased these brace orders through orthotic brace suppliers in Georgia and Florida through which they billed the federal and private health care benefit programs for the orders. To conceal their ownership interests in the brace suppliers, Farese and Truglia used nominee owners and provided those names to Medicare in lieu of their own.
The complaint further alleges that Gatto connected Cirri and DeFonte to other co-conspirators and arranged for Cirri and DeFonte to sell orthotic brace orders to orthotic brace suppliers in New Jersey and Florida in exchange for illegal health care kickbacks and bribes. Gatto and others paid Cirri and DeFonte kickbacks and bribes for each federal health care beneficiary for whom orthotic brace orders were sold to orthotic brace suppliers to be billed to Medicare, TRICARE, CHAMPVA, and other federal and private health care benefit programs. To conceal the kickbacks and bribes, Cirri and DeFonte created sham invoices labeling the payments as “marketing” and “business processing outsourcing” expenses. To conceal his ownership interest in the brace supplier, Gatto used a nominee owner on forms submitted to Medicare and used shell corporations to transfer the funds he paid in connection with the purchase of the supplier.
The charges here—health care fraud and conspiracy to commit health care fraud—are punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross profit or loss caused by the offense, whichever is greater. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Rachael A. Honig of the District of New Jersey; Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Special Agent in Charge Christopher F. Algieri of Department of Veterans Affairs Office of Inspector General (VA-OIG); Special Agent in Charge Patrick J. Hegarty of the Defense Criminal Investigative Service (DCIS); and Special Agent in Charge George M. Crouch Jr. of the FBI’s Newark Field Office made the announcement.
This case was investigated by HHS-OIG, DCIS, the FBI, and VA-OIG.
Trial Attorney Darren C. Halverson of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Sean Sherman and Ryan O’Neill of the District of New Jersey are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Any doctors or medical professionals who have been involved with alleged fraudulent telemedicine and durable medical equipment (DME) marketing schemes should call to report this conduct to the FBI hotline at 1-800-CALL-FBI.
A complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.