Middletown Man Sentenced in Health Insurance Fraud Scheme

A Middletown man has been sentenced for his role in a health insurance fraud scheme.

Michael Cassandro, 48, worked for HMA Direct, a Massachusetts health insurance company implicated in a fraud scheme that involved “carving out” high-risk employees in its client pools and arranging for them to be shuffled into traditional health insurance plans offered by providers like Blue Cross and Blue Shield, Harvard Pilgrim, Tufts Health Plan, and United Healthcare.

Cassandro was sentenced to eight months in prison and three years of supervised release along with five other employees or investors of the company for their role in the scheme.

For his part, Cassandro, along with William O’Brien, of West Barnstable, Mass.; and Shelly Lenkutis, of Framingham, Mass., participated in the carve-out scheme and lied to health insurance providers with the help from investor conspirators who pretended to be happy customers and gave fake references to prospective clients.

United States Attorney Carmen M. Ortiz said in a statement that HMA direct offered self-funded plans to small businesses in New England. But the heart of their business was offloading high-risk employees to those outside plans to maximize their income.

The investors, Francis Gaetani, of Sutton, Mass; and Ronald Anger, also of Sutton, were ordered to pay restitution and forfeiture along with O’Brien, Lenkutis and Cassandro, Ortiz said.

When company executives realized there was an investigation into their illegal and unethical business practices, they shredded some documents and altered others in an attempt to conceal the evidence of their scheme, Ortiz said.

Between August and September 2014, O’Brien, Brown, Cassandro and Lenkutis pleaded guilty to conspiracy to commit mail fraud, wire fraud, health care fraud, and false statements relating to health care matters. In addition, Lenkutis pleaded guilty to obstruction of justice; O’Brien, Brown and Cassandro pleaded guilty to health care fraud; and O’Brien pleaded guilty to wire fraud and obtaining customer information from a financial institution by false representations. Gaetani and Anger each pleaded guilty to wire fraud. The defendants were indicted in August 2011.

O’Brien was sentenced to 18 months in prison and three years of supervised release, Brown was sentenced to one year and one day in prison and three years of supervised release, Cassandro was sentenced to eight months in prison and three years of supervised release, Lenkutis,was sentenced to three years of probation, the first six months of which is to be served in home confinement; Gaetani was sentenced to one year of probation, the first six months of which is to be served in home confinement; Ange was sentenced to one year of probation, the first four months of which must be served in home confinement.

According to reports, the executives used their profits to buy high priced goods and live otherwise lavish lifestyles. The former CEO, Jedediah Brettschneider of Phoenix allegedly embezzled at least $500,000 and bought luxury cars and access to an exclusive country club.