A New York man was sentenced to 12 years in prison on Friday for masterminding a massive healthcare fraud scheme that bilked insurance companies out of more than $336 million over several years.
54-year-old Mathew James of East Northport was also ordered to pay $336 million in restitution to the defrauded health insurance providers as part of his sentence handed down in a federal court in New York.
According to court documents and evidence presented at trial, James operated several medical billing companies that provided services to plastic surgeons, orthopedists, and other specialists across the United States.
As a third-party medical biller, James was responsible for submitting insurance claims and appealing any denials to try and get more money reimbursed. Typically medical billers earn a percentage of the amount paid out by insurers.
However, prosecutors say James took things much further by brazenly defrauding insurance companies in several ways over a multi-year period.
One scheme involved James billing for far more expensive or serious procedures than what doctors actually performed. For example, billing for a complex spinal fusion surgery when only a minor back operation was done.
James also impersonated real patients and their relatives by phone thousands of times. He would call insurers insisting they reconsider denied claims or bump up payments on existing claims, netting his doctor clients millions more dollars.
Additionally, James told doctors to improperly schedule elective surgeries as emergency procedures. This made insurers foot higher reimbursement costs. When claims were still denied or underpaid, he continued his patient impersonation ploy to force more money out of insurers.
In total, prosecutors say James’ elaborate healthcare fraud schemes netted his medical provider clients tens of millions in fraudulent insurance payments, from which he took a significant cut.
The fraud went undetected for years until James was indicted in 2019 and finally brought to trial in 2022. On July 13, 2022, a jury convicted him of multiple felonies including healthcare fraud, conspiracy to commit healthcare fraud, wire fraud, and aggravated identity theft.
Besides the 12-year prison sentence, James also faces having to repay every penny of the estimated $336 million stolen through fake billing practices, patient impersonation, and elaborate insurance scams.
Prosecutors hailed the outcome as an important step in combating massive-scale healthcare fraud schemes that ultimately lead to higher insurance premiums for everyday citizens.
Acting Assistant Attorney General Nicole M. Argentieri said: “This defendant orchestrated an expansive and complex health care fraud scheme and spendthrifted hundreds of millions of dollars in illicit proceeds.
This case exemplifies the Department’s commitment to protecting health care program integrity and the financial well-being of patients across the country.”
U.S. Attorney Breon Peace also commended the thorough investigation by the FBI that brought James’ years-long fraud operation crashing down:
“This office will continue to root out egregious health care fraud schemes like this one that plunder private and government-sponsored health care plans.”
The investigation into James’ activities was led by the FBI’s New York Field Office, with the Department of Justice’s Criminal Division also playing a key role in the prosecution.
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Beyond the 12-year sentence and $336 million restitution order, James also faces forfeiture of assets purchased through the proceeds of his crimes.
Healthcare fraud continues to be a massive problem costing tens of billions annually. James’ schemes exploited vulnerabilities in insurance claim systems for years and highlight the ongoing cat-and-mouse game between fraudsters and insurers.
His conviction and lengthy sentence serve as a stark warning to others engaged in large-scale healthcare scams. Withenhanced digital systems, insurers are getting better at detecting fraudulent claims before big money goes out the door.
So brazen schemers looking to illegally profit off the healthcare system should take heed of James’ ultimate downfall.
In the end, crime didn’t pay for this New York man who will now spend more than a decade behind bars for his central role in a nearly $350 million healthcare fraud operation.