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Middletown residents James Spina, 59, and Jeffery Spina, 56, participated “in a widespread health care fraud scheme through their fraudulent operation of Dolson Avenue Medical, a multi-disciplinary medical clinic located in (Orange County).”
From 2011 through September last year, Dolson Avenue Medical was a registered medical service that “purported to provide a variety of pain management and rehabilitation services including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.”
In addition to Dolson Avenue Medical, as many of eight other corporations, including four other medical companies, billed Medicare and other insurance providers from the Dolson Avenue location, according to Geoffrey Berman, the United States District Attorney for the Southern District of New York.
Berman said that on paper, Dolson Avenue Medical and the other businesses appeared to be separate entities. However, in reality, the two Spinas, who are chiropractors, not medical doctors, were the true owner and operators of all the different medical service corporations.
According to the indictment, the brothers, along with business manager Andrea Grossman - who is also facing fraud charges - made all the corporate decisions for the businesses, though they “went to great lengths to conceal their control and ownership” of the operation.
The indictment states that the Spinas recruited medical doctors to serve as nominee owners of the organizations and concealed their ownership by transferring revenues of the companies into other companies they owned. To create more subterfuge, they drafted fake lease and marketing companies they owned and referred to payments as “rent” or “marketing fees.” They also used false addresses to make it appear that they were operating out of separate locations.
“As alleged, in operating the multiple fraudulent businesses, James Spina and Jeffrey Spina showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated Dolson Avenue Medical and billed insurance providers to provide them with their own profits,” according to the indictment.
In total, the scheme and double-billing led to more than $80 million in fraudulent claims, resulting in the loss of tens of millions of dollars.
Jeffrey Spina, James Spina, Grossman, and Kimberly Spina - who worked as a practice administrator - were each individual counts of conspiring to commit health care fraud and health care fraud, each of which carries a maximum sentence of 10 years in prison. The Spinas were also charged with one count of obstructing and impeding a federal audit, which could add an additional five years to their sentence.
“As alleged, these four defendants purported to run a legitimate medical clinic that provides care and rehabilitation to patients,” Berman said in a statement. “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.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. added that “patients go to a doctor hoping they will help them get better. The subjects in this investigation allegedly performed treatments patients didn’t need, double billed for procedures and up-coded. The FBI New York agents and our law enforcement partners uncovered tens of millions of dollars in losses. This type of fraud eventually ends up costing all patients more money when they seek medical attention.
“The Spinas and their associates allegedly swindled tens of millions of dollars by fraudulently billing health insurers including the NYS Health Insurance Program and the State Insurance Fund,” New York State Comptroller Thomas DiNapli stated. “An alleged theft of this magnitude is appalling when so many hard-working people experience rising health care costs. Now, their alleged scams have been exposed.”
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