2 Toms River Men Among 5 Charged In $93M Health Care Fraud Scheme

NEWARK, NJ — Two Toms River men are among five people who have been charged in connection with a pair of health care fraud schemes that caused $93 million in losses to Medicare and two health insurance programs for the military, federal authorities said Thursday.

In addition, two New Jersey men pleaded guilty Thursday in the scheme, Acting U.S. Attorney Rachael A. Honig said.

Nicholas Defonte, 72, and Christopher Cirri, 63, both of Toms River; Thomas Farese, 78, of Delray Beach, Florida; Pat Truglia, 53, of Parkland, Florida; and Domenic J. Gatto Jr., 46, of Palm Beach Gardens, Florida, all are charged with conspiracy to commit health care fraud, Honig's office said.

Brian Herbstman, 46, of Jackson, pleaded guilty to conspiracy to commit health care fraud and to violate the Anti-Kickback Statute, while Sean Hogan, 48, of Old Bridge, pleaded guilty to conspiracy to engage in money laundering, authorities said. Sentencing for both is scheduled for Aug. 31.

The fraud scheme, which involved durable medical equipment and genetic cancer screening, caused $93 million in losses to Medicare; TRICARE, the health insurance for military members and their families, and CHAMPVA, the Civilian Health and Medical Program of the Department of Veterans Affairs, authorities said.

The men are accused of having a role in defrauding the health care benefit programs by offering, paying, soliciting, and receiving kickbacks and bribes in exchange for completed doctors’ orders for durable medical equipment, namely orthotic braces, authorities said.

Authorities allege:

• Farese, Truglia, Gatto, and their conspirators had financial interests in multiple durable medical equipment companies, which paid kickbacks to those who supplied orders, including Cirri, Defonte, and Truglia. In exchange for the equipment orders, the companies fraudulently billed Medicare, TRICARE, CHAMPVA, and other health care benefit programs. The defendants concealed their ownership of the durable medical equipment 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 durable medical equipment orders for beneficiaries of Medicare and other federal health care programs. The call centers paid illegal kickbacks and bribes to telemedicine companies to obtain equipment orders for these beneficiaries. The telemedicine companies then paid physicians to write medically unnecessary equipment orders. The orders were provided to durable medical equipment supply companies owned by Farese, Truglia, Gatto, and others in exchange for bribes. The durable medical equipment supply companies provided the braces to beneficiaries and fraudulently billed the health care programs.

• Herbstman and his conspirators had financial interests in multiple durable medical equipment companies. The durable medical equipment companies paid kickbacks to suppliers in exchange for durable medical equipment orders, which the durable medical equipment 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.

• Herbstman and his conspirators had business relationships with call centers through which they obtained patient referrals for genetic cancer screening tests. Herbstman provided these patient referrals to others in exchange for kickbacks and bribes from companies that performed the tests and fraudulently billed them to health care programs.

The charge of conspiracy to commit health care fraud is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gross profit or loss caused by the offense, whichever is greater.

The charges of conspiracy to violate the federal Anti-Kickback Statute and conspiracy to commit health care fraud, to which Herbstman pleaded guilty, are punishable by a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross profit or loss caused by the offense, whichever is greater.

The charge of conspiracy to transact in criminal proceeds, to which Hogan pleaded guilty, is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000 or twice the gross profit or loss caused by the offense, whichever is greater.

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