Zalma’s Insurance Fraud Letter – June 1, 2019

 Zalma’s Insurance Fraud Letter   

Sentence Stands, Restitution Needs to be Modified

Insurance fraud is rampant. Hal Kreitman was convicted of mail fraud, conspiracy to commit mail fraud, money laundering, and conspiracy to commit money laundering for participating in a scheme that defrauded insurance companies. The scheme was as elaborate as it was criminal. The conspirators recruited people to stage car accidents and seek “treatment” at one of several clinics operated by the conspirators. At the clinic, a conspirator chiropractor, like Kreitman, would prescribe dozens of fake therapy sessions for the “injured” person, bill insurance companies for the cost, and pocket the money.

In United States of America v. Hal Mark Kreitman, No. 18-12838, United States Court of Appeals for the Eleventh Circuit (May 20, 2019) Hal Kreitman appealed the district court’s sentence of 84 months of imprisonment and two years of supervised release. He also appealed the court’s order to pay $795,945.51 in restitution.

FACTS

For his role in this scheme, Kreitman was sentenced to 96-months imprisonment and 2 years of supervised release, and ordered to pay more than $1.5 million in restitution and an assessment of $2,500. On appeal, the Eleventh Circuit vacated his sentence and restitution order because the district court improperly held him accountable “for all of the loss that was generated during the course of the conspiracy” as opposed to “all reasonably foreseeable” losses. In addition, the district court failed to “make individualized findings on the scope of criminal activity undertaken by Mr. Kreitman.”
Following the instructions of the Eleventh Circuit the district court reevaluated the evidence and found that the actual loss was $795,945.51 and that ten or more victims were involved. The district court calculated Kreitman’s new guideline range as 78 to 97 months, which the court characterized as “an appropriate range . . . to work with” and “sufficient but not greater than necessary to comply with the requirements of Section 3553.”

The court then imposed an 84-month sentence followed by two years of supervised release. The court also ordered Kreitman to pay $795,945.51 in restitution.

ANALYSIS

A district court abuses its discretion if it follows improper procedures in setting a sentence. Kreitman argued the district court erred in calculating the guideline range by relying on unreliable government calculations of claims, failing to identify and exclude insurance claims involving legitimate patient treatment, and speculating that more than ten victim-entities were involved.

The Sentencing Guidelines impose a 14-level enhancement if the actual loss attributable to the defendant is more than $550,000 and less than or equal to $1.5 million. Counsel for Kreitman conceded at the sentencing hearing that even if the billings were off, the errors were “not going to be anywhere near getting [Kreitman] down to 550″ — or $550,000. The district court was entitled to find, given counsel’s concession, that the loss was above $550,000 and commensurate with a 14-level enhancement.

Since the district court did not clearly err in finding that Kreitman’s offenses involved ten or more victims he presented no argument on appeal that persuaded the Eleventh Circuit that district court’s finding was clearly erroneous.

Even assuming that only insurance claims filed by Kreitman’s patients after August 28, 2010 may be counted, the record reflects there were thirteen insurance companies that made payments on or after that date. Beyond Kreitman’s admission, there was testimony that single payments would have been consistent with the fraud scheme because the government introduced only bills attributable to Kreitman — not those bills attributable to his co-conspirators or anyone else.

As for the restitution order, it appears the district court recognized that some of the billing numbers “might be inaccurate” but credited the government’s proffered number anyway because the mistakes wouldn’t lower the guideline range. This was improper.

If Kreitman is correct about these mistakes, it is doubtful he could be made to pay the restitution amount based on them, even if his guideline range remained the same because a criminal defendant cannot be compelled to pay restitution for conduct committed outside of the scheme, conspiracy, or pattern of criminal behavior underlying the offense of conviction.

Because the district court did not meaningfully engage with Kreitman’s arguments about the loss amount once it determined the guideline range would remain unchanged the Eleventh Circuit again vacated the restitution order and instructed the district court to reconsider all the evidence. If Kreitman wants to pursue his argument that some amount of money should be deducted from the restitution order because he actually treated injured patients, he must present some evidence about what that amount should be.

The district court, after hearing what a good prisoner Kreitman was and how ill his mother was, chose, nonetheless, to adhere to the guideline range, determining that a sentence of 84 months was appropriate and sufficient. The Eleventh Circuit concluded that this was no abuse of discretion. It was, in fact, a reasoned consideration of the evidence that an appellate court is not at liberty to disturb on appeal.

ZALMA OPINION

Insurance criminals, when caught and convicted, have the unmitigated gall to dispute their sentence and bring appeals proving, as they do, how profitable the crime of insurance fraud is since they have sufficient funds to pay lawyers to bring multiple appeals and with some success. His restitution order was lowered once and will probably be lowered again. Since he will continue to be in jail for many years – unless the U.S. Marshall finds his assets and collects restitution for the insurer victims – will never pay anyway.

Guilty Of Participating In $30 Million Scheme To Defraud Medicare And Medicaid

PAUL J. MATHIEU and physical therapy doctor HATEM BEHIRY were each found guilty of participating in a $30 million scheme to defraud Medicare and the New York State Medicaid Program. The defendants were convicted following a six-week jury trial before U.S. District Judge Lorna G. Schofield.

According to the evidence presented during the trial and statements made in related court filings and proceedings:

• Between 2007 and 2013, MATHIEU fraudulently posed as the owner of three of six medical clinics in Brooklyn (the “Clinics”), which were all in fact owned by co-conspirator Alexksandr Burman. During that time period, the Clinics fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were medically unnecessary and/or not provided. Throughout this time period, MATHIEU fraudulently posed as the owner of three of those clinics, in order to satisfy a New York State law requirement that medical clinics must be owned and operated by a medical professional.

• For the last three-and-a-half years of the scheme, MATHIEU also directly participated in the fraudulent billing practices of the Clinics, by visiting several of the Clinics on a weekly basis, where he would sign stacks of false and fraudulent medical charts, and issue referrals for expensive additional testing, occupational therapy, and physical therapy, including for physical therapy purportedly provided by defendant BEHIRY. During this time period, MATHIEU saw no patients at all, simply falsifying enormous stacks of phony medical records falsely stating that he had seen and treated such patients.

• BEHIRY similarly participated in the fraudulent billing practices of the Clinics, by pretending to provide physical therapy to many of those same patients, most of whom were receiving cash kickbacks for coming to the Clinics. In fact, BEHIRY was engaged in an empty charade designed to create the appearance of physical therapy, while almost no therapy was actually being provided to many patients. To further the fraud, BEHIRY also prepared and oversaw the preparation of a huge quantity of phony medical and billing records. Among other things, BEHIRY completed thousands of fabricated reports, in which patients were described almost identically, and with little or no regard for actual medical conditions or needs. As with MATHIEU, many of the charts were for patients whom BEHIRY and his team had not evaluated or provided therapy to at all.

• In addition to his role in the Clinics, MATHIEU also wrote unneeded prescriptions for adult diapers and other incontinence products, which were filled at Universal Supply Depot, a medical supply company also owned by Burman’s wife. MATHIEU was so prolific in this regard that, throughout the period of the fraud, he was regularly a top prescriber of adult diapers in the State of New York. MATHIEU continued to write such prescriptions, even after the Clinics were closed down because Medicare stopped paying any of the clinics’ claims.

MATHIEU and BEHIRY bring to 15 the number of defendants convicted in this and related cases. The other defendants include: Aleksandr Burman, 57, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 120 months in prison; Marina Burman, 56, the former wife of Aleksandr Burman and the owner of Universal Supply Depot, was sentenced on May 17, 2018, to 36 months in prison; Mustak Y. Vaid, 45, a physician, was sentenced on August 1, 2018, to 18 months in prison; Ewald J. Antoine, 68, a physician, was sentenced on August 21, 2018, to 18 months in prison; Asher Oleg Kataev, 50, a Burman business partner, was sentenced on May 31, 2018, to 36 months in prison; Alla Tsirlin, 49, a Clinic office manager, was sentenced on June 5, 2018, to a year and a day in prison; and Edward Miselevich, 46, and Ivan Voychak, 39, Burman partners who jointly ran a related ambulette company, were sentenced on June 12, 2018, and July 19, 2018, respectively, to 36 months in prison each. In addition, Lina Zhitnik, 52, and Dina Cabana Rubenstein, 39, occupational therapists, Valery Volsky, 60, a bookkeeper, Olga Kharuk, 47, and Natalya Grabovskaya, 48, office managers, have each also pled guilty for their participation in this scheme and are awaiting sentencing.

Pain Doctor Sentenced for Fraudulently Obtaining Controlled Substances

Dr. Paul Biddle, 54, of Amherst, NY, who was convicted of identity theft and possession of unlawful hydromorphone HCL, was sentenced to two years probation by U.S. District Judge Elizabeth A. Wolford.

Assistant U.S. Attorney Michael J. Adler, who handled the case, stated that Biddle was an anesthesiologist and pain management doctor who also operated a medical marijuana practice. Between February 9, 2015 and October 16, 2017, the defendant was prescribing controlled substances for two deceased patients. Biddle knew the patients were deceased and used their names and dates of birth knowingly and without lawful authority to obtain controlled substances for himself.

After the death of one of the patients, Biddle wrote 10 prescriptions using the deceased patient’s name and date of birth between November 21, 2016 and October 16, 2017. All of these prescriptions were filled by a pharmacy in Tampa, FL, and shipped directly to the defendant’s home or office. After the death of the second patient, the defendant wrote 23 prescriptions using that deceased patient’s name and date of birth between February 9, 2015 and August 7, 2017. All of these prescriptions were also filled by a pharmacy in Tampa, FL, and shipped directly to the defendant’s home or office. Biddle was obtaining these prescriptions and using them himself.

Owner of Opioid Addiction Treatment Practice Pleads Guilty to Health Care Fraud

Jennifer Hess, 50, pleaded guilty to three counts before United States District Judge Arthur J. Schwab.

Hess, a resident of Washington, PA, pleaded guilty in federal court to charges of aiding and abetting the unlawful distribution of controlled substances and health care fraud.
In connection with the guilty plea, the court was advised that Hess founded and owned Redirections Treatment Advocates LLC (RTA), an opioid treatment practice with offices in Washington and Bridgeville, PA and Morgantown, Weirton and Moundsville, WVA. Hess aided and abetted the illegal distribution of buprenorphine, also known as Subutex and Suboxone, by completing blank pre-signed prescriptions and/or forging doctors’ names on blank prescriptions. Hess also committed health care fraud for causing fraudulent claims to be submitted to Medicaid and Medicare for payments to cover the costs of the unlawfully prescribed buprenorphine.

Judge Schwab scheduled sentencing for October 30, 2019 at 10 a.m.. The law provides for a total sentence of 30 years in prison, a fine of $1,250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Virginia Man Sentenced To 19 Months In Prison for Role In Medicare Fraud

Kenneth Johnson, 39, of Lorton, Virginia, previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging him with one count of conspiracy to commit health care fraud and one count of conspiring to wrongfully access individually identifiable information.

Ocean County Co-Defendant Recently Sentenced to 13 Months in Prison

Johnson, a Virginia man was sentenced May 20, 2019 to 19 months in prison for his role in a scheme that used the purported non-profit The Good Samaritans of America to defraud the Medicare Program of more than $525,000 by convincing hundreds of senior citizens to submit to genetic testing.

His co-defendants also previously pleaded guilty before Judge Thompson; Sheila Kahl, 47, of Ocean County, was sentenced May 14, 2019, to 13 months in prison, and Seth Rehfuss, 44, of Somerset, New Jersey, was sentenced May 10, 2019, to 50 months in prison.
Rehfuss used The Good Samaritans of America to gain access to groups of senior citizens in various low-income senior citizen housing complexes and persuaded them to submit to genetic tests without any involvement of a health care professional. Contrary to what he told the senior citizens and staff at the housing complexes, Rehfuss was a sales representative for laboratories, a fact he concealed from his targets. In order to convince senior citizens to submit to genetic testing, he used fear-based tactics during the presentations, including suggesting the senior citizens would be vulnerable to heart attacks, stroke, cancer and suicide if they did not have the genetic testing.

To get the tests authorized, Rehfuss used advertisements on Craigslist to recruit health care providers for the scheme. The health care providers were paid thousands of dollars per month by Rehfuss and others to sign their names to requisition forms authorizing testing for patients they never examined or had any interaction with. Rehfuss and his conspirators, including Kahl and Johnson, established email accounts, phone numbers, and made-up “office manager” names for the requisition forms that made it seem as though the health care providers were actually treating the patients being swabbed and would be evaluating the test results.

Rehfuss, Kahl, Johnson, and others caused the Medicare program to pay two clinical laboratories for the fraudulent test claims that the scheme generated. They obtained and divided more than $100,000 in commission payments from the laboratories.
In addition to the prison term, Judge Thompson sentenced Johnson to three years of supervised release, ordered him to pay restitution of $525,000 and forfeiture of $525,000.
Podiatrist Sentenced to Prison for Medicare Fraud Scheme

Loren Wessel, 55, a resident of Tucson, was sentenced by United States District Judge James A. Soto for his role in a Medicare fraud scheme. Wessel had previously pleaded guilty to Health Care Fraud.

From 2008 through June 2016, Wessel, a licensed podiatrist, engaged in a scheme to defraud Medicare out of hundreds of thousands of dollars. In his plea agreement, Wessel admitted he submitted false claims to Medicare. As part of his practice, Wessel regularly provided routine podiatry care for patients at assisted living facilities in and around Tucson, but fraudulently billed Medicare for more complex and significantly more expensive services that he had not performed. To further his scheme and conceal the fraud, Wessel also falsely documented patients’ medical records with alleged ailments they did not have and with care Wessel did not provide.

In addition to serving a 24-month term of imprisonment, the Court ordered Wessel to pay $965,985 in restitution to the Centers for Medicare and Medicaid Services.

Other Insurance Fraud Convictions

Washington Man Pleads Guilty

Paul Albarella, of Kennewick, pleaded guilty in Franklin County Superior Court to first-degree attempted theft. He will serve 20 days on a work crew and pay $500 in court fees. He was charged in November 2018.

According to the investigation, Albarella bought a GEICO insurance policy for his 1996 Ford F-250 in April 2016. He filed a claim in May, stating the truck was damaged in a collision at a Pasco storage facility. GEICO valued the damage at $8,038. The company found documentation from the storage facility that the collision occurred the day before he bought the policy. GEICO denied the claim and referred the case to Kreidler’s investigators.

Kreidler’s CIU investigates insurance fraud and works with the Washington State Patrol and state and local prosecutors on criminal cases.

Ohio woman keeps BWC benefits alive after father dies

Deborah Rosenlieb of Cuyahoga Falls, Ohio, pleaded guilty to the fourth-degree felony in the Summit County Common Pleas Court, where a judge ordered her to pay BWC $29,418 in restitution. The judge also ordered Rosenlieb to serve two years of community service.
Rosenlieb, a northeastern Ohio woman pleaded guilty May 9 to workers’ compensation fraud after investigators with the Ohio Bureau of Workers’ Compensation (BWC) found her collecting her father’s benefits for more than two years after he died.

“Ms. Rosenlieb’s father was receiving death benefits on behalf of his late wife, but when her father died in January 2016 she didn’t let us know,” said BWC Administrator/CEO Stephanie McCloud. “She knew she wasn’t entitled to these benefits, but she used them for personal expenses until we learned of her scheme in April 2018.”

Guilty and 15 Years on Fraud Charges in $1.7 Million Insurance Scheme

Patrick Wayne Bronnon pleaded guilty to conspiracy to commit mail fraud and use of a fire in commission of a felony at a hearing before Judge Marcia A. Crone, of the U.S. District Court for the Eastern District of Texas.

Bronnon, a Texas man pleaded guilty to criminal charges stemming from a $1.7 million scheme in which he acquired cheap properties, burned or flooded the homes and then collected large insurance claims on the homeowners policies, prosecutors said.

As part of his guilty plea, Bronnon has agreed to a prison term of 15 years, said Joseph Brown, U.S. Attorney for the Eastern District of Texas. However, a final determination on the sentence is left to the discretion of Crone, he said.

Bronnon, who owned a remodeling business, and his cousin, Geraldine Weldon Joseph — along with 10 others — were indicted last year by a grand jury on multiple counts of insurance and mail fraud.

Joseph has a trial date set for July in Beaumont, Texas.

The defendants allegedly launched the scheme in 2011 on properties in the East Texas communities of Port Arthur, Port Neches, Beaumont and Sugarland. They victimized eight insurers, Allstate Insurance Co.; American Hallmark Insurance Co.; Geo Vera Specialty Insurance Co.; Homesite Insurance Co.; Progressive; Pronto Insurance; Texas Farmers Insurance Co.; and Wellington Insurance Group, according to the indictment.

According to the indictment, Bronnon and the co-conspirators purchased low-cost homes, obtained property coverage and then damaged the homes before making a claim, prosecutors said. On several occasions, the defendants allegedly would provide the straw purchaser with the funds for the down payment and initial insurance premium. In total, nine fraudulent fire claims, three fraudulent water damage claims and two fraudulent theft claims were filed with various insurance companies on nine different addresses.

Read full ZIFL, articleS and multiple convictions here.


© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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