3 New Jersey men plead guilty to $50M medical supply fraud, kickback scheme

Three men pleaded guilty Nov. 9 to conspiracy to commit healthcare fraud for their roles in a scheme that involved paying and receiving kickbacks and bribes in exchange for physician orders of medical equipment from companies they owned. 

Nicholas Defonte, 73, and Christopher Cirri, 63, both from Toms River, N.J., along with Pat Truglia, 53, from Parkland, Fla., all pleaded guilty to the scheme in a Newark, N.J., federal court. 

The three admitted defrauding federal healthcare benefit programs, including Medicare and Tricare, by offering, paying, soliciting and receiving kickbacks and bribes in exchange for physicians orders for medical equipment, namely orthotic braces, the U.S. Justice Department said in a news release. 

They owned several medical equipment companies, which paid kickbacks to suppliers of equipment orders in exchange for ordering more supplies. The companies then fraudulently billed the healthcare benefit programs for the supplies. 

The three concealed their ownership of the medical equipment companies by using straw owners falsely reported to Medicare as the owners, according to the Justice Department. A straw owner is a person who owns property legally or has the legal appearance of owning something but does so on behalf of someone else, usually to hide the identity of the real owner. 

The men and their conspirators also owned and operated several call centers. They obtained orders for medical equipment for beneficiaries of Medicare and other federal healthcare programs through the centers. 

The call centers paid illegal kickbacks and bribes to telemedicine companies to obtain medical equipment orders for the beneficiaries. The telemedicine companies then paid physicians to write medically unnecessary equipment orders. The orders were provided to the supply companies owned by the men in exchange for bribes. The supply companies then provided the equipment to the beneficiaries and fraudulently billed healthcare programs for the supplies. 

The schemes caused Medicare, Tricare and the Civilian Health and Medical Program of the Department of Veterans Affairs about $50 million, the Justice Department said. 

A charge of conspiracy to commit healthcare fraud is punishable by a maximum penalty of 10 years in prison and a fine of either $250,000 or twice the gross profit or loss caused by the offense, whichever is greatest, according to the Justice Department. 

The three men will be sentenced in March. 

Read the Justice Department's full news release here

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