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Press Release

Hospice Owner Convicted In Multi-Million Dollar Health Care Fraud

For Immediate Release
U.S. Attorney's Office, Eastern District of Pennsylvania

PHILADELPHIA - Matthew Kolodesh, a/k/a "Matvei Kolodech", 51, of Churchville, PA, was found guilty of conspiracy to defraud Medicare of more than $14 million through his home hospice business, announced United States Attorne ZaneDavid Memeger. A federal jury delivered its verdict today. Kolodesh's business, Home Care Hospice, Inc. ("HCH"), located at 2801Grant Avenue in Philadelphia, submitted claims totaling approximately $14.3 million for patients that were not eligible for or did not receive the hospice services billed to Medicare.  Kolodesh also allegedly diverted $9.36 million dollars from HCH's operating account for his own personal use, such as extensive renovations to his house, travel expenses, college tuition for his son, and a luxury automobile. He siphoned substantial sums of cash from the HCH operating account through kickbacks from HCH vendors using a system of phony and inflated invoicing, and a cash kickback scam through sham charitable donations made in the name of the hospice

The jury found Kolodesh guilty of conspiracy to commit health care fraud, 21 counts of health care fraud, 11 counts of money laundering, and two counts of mail fraud. Kolodesh faces a statutory maximum sentence of 370 years in prison. The government will also seek restitution to Medicare in the amount of $14.3 million and proceeds from the money laundering.

“Cases like this involve the type of fraud and abuse that this office and the Department of Justice fights every day,” said Memeger. “The guilty verdict here bolsters our resolve to investigate and prosecute fraudsters who believe they can steal the public’s hard-earned tax dollars and government funds with impunity.”

“Criminals like Matvei Kolodech, who hide behind others in hopes of avoiding prosecution, should take notice of today’s jury verdict,” said Special Agent-in-Charge Nick DiGiulio, of the US Department of Health and Human Services, Office of Inspector General. “We will continue to aggressively investigate ring leaders like Kolodech, whose fraudulent organizations rob Medicare of precious resources.”

Kolodesh and his co-conspirator, identified only as "A.P.," would pay health care professionals, including doctors, for referring patients to HCH even when those patients were not eligible or appropriate for hospice services. In an effort to mask the alleged kickback scheme, HCH fraudulently represented that some of those health care professionals were paid for servicesas medical directors, advisors, or hospice physicians. 

Among the ineligible patients were patients who were not terminally ill and patients who were on the service list for more than six months. At the direction of Kolodesh and A.P., HCH staff would routinely "doctor" or alter patient charts to make it appear on paper as though the patient's medical condition was worse than it actually was. The staff was also allegedly directed to bill certain claims at a higher, more costlier rate of service than was actually provided to the patient.

In February 2007, HCH was notified that it was subject to a claims review audit.  Kolodesh, through A.P., directed members of HCH staff to falsify documentation to be submitted for the audit. In September 2007, HCH was notified that it had exceeded its cap for Medicare reimbursement and would have to repay $2,625,047 to the government program. At that point, Kolodesh ordered a mass discharge of patients. In October 2007, A.P. had 79 hospice patients discharged and a total of 128 discharged by January 2008, some of whom had been ineligible for hospice or inappropriately maintained on hospice service in excess of six months. Of those discharged patients, 16 were admitted to Kolodesh's other hospice business, Community Home Health in Bucks County. Once the Medicare cap was resolved, 11 of those patients were returned to HCH.  

In August and September 2005, Kolodesh and A.P. applied for a low interest loan worth $2.5 million with the Philadelphia Industrial Development Corporation. The purpose of PIDC loan is to stimulate business investment and create jobs in the city of Philadelphia. Kolodesh indicated that the funds were to be used to acquire and renovate a property for his business and the creation of 50 jobs in Philadelphia at the 2801 Grant Avenue site of HCH. In reality, Kolodesh knew that between August 2005 and July 2009, the job quota was not being met, and in the summer of 2008 he set up a sham office for CHH (his Bucks County health care business) at that location and falsely identified 73 CHH employees as working at the office location on Grant Avenue who, in fact, had never worked there.

The case was investigated by the Federal Bureau of Investigation and the Department of Health and Human Services Office of Inspector General.  It is being prosecuted by Assistant United States Attorney Suzanne B. Ercole and Trial Attorney Margaret Vierbuchen with the Department of Justice’s Criminal Section.

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PATTY HARTMAN, Media Contact, 215-861-8525

Updated December 15, 2014