Feds charge five in massive fraud scheme

NEWARK, N.J. – Five individuals have been charged and two others have pleaded guilty for their roles in a $93 million kickback fraud scheme involving DME and genetic cancer screening, according to the U.S. Attorney’s Office for the District of New Jersey. Thomas Farese, Pat Truglia, Domenic Gatto, Nicholas Defonte and Christopher Cirri are each charged by complaint with conspiracy to commit health care fraud; while Brian Herbstman has pleaded guilty to conspiracy to commit health care fraud and violate the Anti-Kickback Statute, and Sean Hogan has pleaded guilty to conspiracy to engage in money laundering. Each of the defendants played a role in defrauding health care benefit programs by offering, paying, soliciting and receiving kickbacks and bribes in exchange for completed doctor orders for DME, namely orthotic braces. Farese, Truglia, Gatto, and their conspirators had financial interests in multiple DME companies, which paid kickbacks to suppliers of DME orders, including Cirri, Defonte, and Truglia. In exchange for DME orders, the DME companies fraudulently billed Medicare, TRICARE, CHAMPVA, and other health care benefit programs. The defendants concealed their ownership of the DME companies by using straw owners, who were falsely reported to Medicare as the owners of the companies. Truglia, Cirri, Defonte, and their conspirators owned and operated multiple call centers through which they obtained DME orders for beneficiaries of Medicare and other federal health care programs. The call centers paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these beneficiaries. The telemedicine companies then paid physicians to write medically unnecessary DME orders. The orders were provided to DME supply companies owned by Farese, Truglia, Gatto, and others in exchange for bribes. The DME supply companies provided the braces to beneficiaries and fraudulently billed the health care programs. Herbstman and his conspirators had financial interests in multiple DME companies. The DME companies paid kickbacks to suppliers in exchange for DME orders, which the DME companies fraudulently billed to Medicare, TRICARE, CHAMPVA, and other health care benefit programs. Hogan and his conspirators agreed to launder the proceeds of the health care fraud conspiracy. From March 2018 to October 2019, Hogan and others withdrew approximately $1.16 million in ill-gotten gains.