4 Indicted In $80M Medicare, Insurance Fraud Scheme

MIDDLETOWN, NY — Four people have been charged in a widespread scheme to defraud Medicare and other medical insurance providers resulting in $80 million in losses. Geoffrey S. Berman, the U.S. Attorney for the Southern District of New York, said Thursday that an indictment was unsealed charging James Spina, 59, of Middletown, Jeffrey Spina, 56, of Middletown, Andrea Grossman, 59, of Loch Sheldrake, and Kimberly Spina, 54, of Woodbourne, with participating in a health-care fraud scheme through their fraudulent operation of Dolson Avenue Medical, a multi-disciplinary medical clinic in Middletown.

Berman also said that Charles Bagley, 69, of Great Neck, pleaded guilty Tuesday to one count of conspiracy to commit health care fraud.

"As alleged, these four defendants purported to run a legitimate medical clinic that provides care and rehabilitation to patients," Berman said. "Instead, the defendants allegedly put aside their medical and fiduciary obligations for greed, attempting to bilk insurance companies and federally funded Medicare out of more than $80 million."

According to the indictment, James Spina and Jeffrey Spina, who are brothers, along with Grossman, made all corporate decisions for the clinic and associated businesses. In particular, the brothers ran the day-to-day operations of the businesses, controlling the payroll, hiring and firing, corporate expenses and billing to insurance providers.

The brothers were also financial beneficiaries of the clinic and associated businesses.

Authorities said they concealed their ownership and control of the clinic by recruiting other medical doctors to serve as the nominee owners.

The brothers also transferred revenues from the clinic into other companies, by drafting fake leasing agreements and using phony addresses for their corporations.

They also allegedly operated the clinic by billing insurance providers to maximize the clinic's reimbursements, without any regard for whether services or treatments were medically necessary.

The Spina brothers, with assistance from Grossman, the bookkeeper, and Kimberly Spina, an administrator, submitted claims for services that were not necessary or were not rendered, doubled billed for services to two different insurance companies, altered and fabricated medical records and obstructed and impeded audits by Medicare and other insurance providers.

James Spina, Jeffrey Spina, Kimberly Spina and Grossman were each charged with one count of conspiring to commit health care fraud and one count of health care fraud, each of which carries a maximum sentence of 10 years in prison.

The Spina brothers are charged with one count of obstructing and impeding a federal audit, which carries a maximum sentence of five years in prison.

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