Six Defendants Plead Guilty to Charges Related to Health Care Fraud Conspiracy that Billed $48 Million to Medicare

by Andrew Murray | November 13th, 2019

The Justice Department announced entry of the pleas on October 7, 2019. The Press Release states:

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Six people pleaded guilty to crimes related to a health care fraud conspiracy in which Medicaid was billed $48 million for drug and alcohol recovery services, many of which were not provided, not medically necessary, lacked proper documentation

Six people from Ohio pleaded guilty in federal court to crimes related to a health care fraud conspiracy in which Medicaid was billed $48 million for drug and alcohol recovery services, many of which were not provided, not medically necessary, lacked proper documentation, or had other issues that made them ineligible for reimbursement.

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All six pleaded guilty to crimes related to their work at Braking Point Recovery Center, which operated drug and alcohol rehabilitation facilities in Austintown and Whitehall, Ohio.

According to the court documents:

Ryan Sheridan was the sole owner of Braking Point Recovery Center, which operated drug and alcohol rehabilitation centers in Austintown and Whitehall, Ohio, that provided detox, intensive outpatient treatment, day treatment and residential living rehabilitation.

Sheridan also owned and operated numerous other businesses, including Breaking Point Health and Fitness LLC and Braking Point Recovery Housing LLC, which owned recovery houses (or “sober houses”) for individuals attempting to maintain abstinence from drugs and alcohol.

As part of being a certified provider, Sheridan agreed to follow the rules and regulations of the Ohio Medicaid Program and the Ohio Department of Mental Health and Addiction Services.

Between January 2015 and October 18, 2017, various defendants submitted or caused to be submitted billings to Medicaid for drug and alcohol services that were: coded to reflect a service more costly than was actually provided; without proper documentation; without proper assessment documents containing valid diagnosis; billings for patients whose records did not contain diagnosis by a physician; related to treatment at unlicensed inpatient beds; billings related to Bailey dispensing of Suboxone even though Bailey did not have the authority to do so; for case management services when, in fact, the clients were working out at Sheridan’s gym; billings based on quotas provided to the nurses by the defendants to bill four to five hours of treatment daily, even if the services were not medically necessary; billing for in-patient detox and drug treatment services that were, in fact, provided in an out-patient setting, among other violations.

Braking Point submitted approximately 134,744 claims to Medicaid for more than $48.5 million in services it claimed to provide between May 2015 and October 2017. The claims caused Medicaid to pay Braking Point more than $31 million. Medicaid suspended payments to Braking Point on October 18, 2017.

The Sheridans, Gherardi, Pertee, Bailey and Smith developed a standard protocol of distributing the same amount of Suboxone to every patient seeking drug treatment immediately upon entering Braking Point’s detox program without being evaluated by a properly licensed physician to determine the medical necessity for the use of Suboxone.

The Sheridans, Gherardi and Bailey used Smith’s DEA data waiver license to dispense more than 3,000 doses of Suboxone in 2017 alone without Smith having seen the patients. Smith held himself out to be Braking Point’s medical director but only went to Braking Point approximately twice a month.

Ryan Sheridan made numerous financial transactions involving money derived from unlawful activities, including health care fraud and conspiracy to commit health care fraud.

Prosecutors are also seeking for forfeit property and proceeds obtained as a result of these crimes, including nearly $3 million, property in Columbiana, Mahoning and Trumbull counties, and eight automobiles, including replicas of vehicles used in the movies “Back to the Future,” “Ghostbusters,” and “Batman.”

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