Five Charged in $65 Million Medicare Orthotic Brace Fraud

The U.S. Justice Department is accusing the owners of four orthotic brace suppliers and several marketing companies with ordering medically unecessary orthotic braces for Medicare beneficiaries.  

The nationwide kickback and bribery scheme allegedy was masterminded by orthotic brace supplier owners Thomas Farese, 78, of Delray Beach, Fla., Pat Truglia, 53, of Parkland, Fla., and Domenic Gatto, 46, of Palm Beach Gardens, Fla., as well as Christopher Cirri, 63, and Nicholas DeFonte, 72, both of Toms River, N.J., who own and operate a fraudulent marketing company. 

Farese and Truglia were each charged with one count of conspiracy to commit healthcare fraud and three counts of healthcare fraud, all in connection with paying and receiving health care kickbacks and bribes for orders of orthotic braces. Gatto was charged with one count of conspiracy to commit healthcare fraud, in connection with soliciting and receiving health care kickbacks. Cirri and DeFonte were charged with one count of conspiracy to commit healthcare fraud in connection with paying and receiving healthcare kickbacks and bribes for orthotic brace orders. Cirri and DeFonte were arrested and appeared over the weekend before U.S. Magistrate Judge Jessica S. Allen of the District of New Jersey. Gatto surrendered and appeared as well over the weekend before Allen.
 
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 healthcare benefit programs through the payment and receipt of illegal healthcare 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 healthcare 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 healthcare 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 healthcare 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 healthcare 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—healthcare fraud and conspiracy to commit healthcare 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.