By Carol Wyatt
Federal jury trial proceedings are set to begin Monday, May 9, for a $1.4 billion health care scheme that preyed on several rural medical facilities in at least three states, including Campbellton-Graceville Hospital (CGH) in Jackson County.
The U.S. Department of Justice called the operation an “elaborate pass-through billing scheme” that used rural hospitals as billing shells to submit fraudulent claims for laboratory testing.
The 2020 indictment alleged that from approximately November 2015 through February 2018, the conspirators billed private insurance companies approximately $1.4 billion for laboratory testing claims as part of this fraudulent scheme and were paid approximately $400 million.
Those facilities were “critical access hospitals,” a designation which entitled them to receive favorable Medicare reimbursement rates and other benefits under the Medicare program meant to help hospitals in economically depressed locations.
DOJ says the conspiracy involved defendants researching, identifying, and then taking control over financially distressed critical access hospitals like CGH, which was in danger of closing its doors in 2015. That’s when Jorge Perez, chief executive officer of People’s Choice Hospital (PCH), arrived in Graceville to pitch what he claimed to be a plan to save the hospital. Perez pledged to invest $2 million and “reducing costs by 30 percent.” The Campbellton-Graceville Hospital board entered into a management agreement with PCH in May 2015.
By June 2016, Circuit Court Judge William Wright had signed an emergency injunction filed by then hospital attorney Michelle Jordan ordering PCH to relinquish financial management of the hospital and barring any of their staff from the property.
Jordan declined on Thursday to comment on the open court case but told Washington County News in a 2016 interview she knew she had to act when hospital staff brought information to her that was “of significant concern.”
“Within a 45-day period, there were significant wire transfers from the hospital’s bank accounts into accounts associated with People’s First Hospital,” said Jordan in 2016.
Jordan, who was repeatedly met with resistance when requesting the Graceville hospital’s financial records from PCH, reported the suspicious transactions to the FBI. Those transfers totaled more than $1.25 million; however, that was just the beginning of what the judge called a “likely attempt to dispose of or hide traced funds.” The hospital would later find itself the defendant in a lawsuit filed by Reliance Laboratory for $4.4 million in testing, services which are now associated with the federal fraud case. Jordan is expected to testify as a witness for the prosecution.
Owned by co-defendant Seth Guterman, PCH was just one company investigators say defendants used to seek out the struggling hospitals and offer a contract to provide management and billing services – as well as the dream of saving both the facility and local jobs. Campbellton-Graceville Hospital closed its doors in 2017; however, the campus found new purpose in 2018 when it was acquired by Northwest Florida Community Hospital in Chipley as an urgent care clinic.
Investigators found that instead of saving the struggling hospitals, Perez and co-defendants Ricardo Perez, Aaron Duvall, James F. Porter., Jr., Sean Porter, Christian Fletcher, Neisha Zaffuto, Aaron Alonzo and Nestor Rojas gained control of the facilities’ bank accounts, billing systems and rights to submit claims to insurance companies.
DOJ alleges the conspirators would then bill private insurance companies through the rural hospitals for millions of dollars of expensive urinalysis drug tests and blood tests. These tests were conducted mostly at outside laboratories they controlled or were affiliated with and billed through companies they also controlled. While outside laboratories did most of the tests, the conspirators allegedly billed private insurance companies as though the tests were done at the rural hospitals.
In addition, the indictment alleges the lab tests were often not even medically necessary and the conspirators engaged in sophisticated money laundering to promote the scheme and distribute its proceeds.
The conspiracy also allegedly included paying kickbacks to “recruiters” for soliciting urine samples that could be processed through the scheme by paying the recruiters a portion of the insurance reimbursements the rural hospital obtained from private insurances and other third-party payors.
Billions of dollars in assets have collectively been seized from the defendants, including residential, vacation and business properties; several boats, numerous luxury cars and jewelry, and nearly $400 million in currency.
The Department of Justice is in the process of notifying patients who may have been impacted and whose health data may have been compromised by the alleged fraud of the defendants.
According to DOJ, all defendants except Sean Porter are charged with one count of conspiracy to commit health care fraud and wire fraud. In addition, Jorge Perez, Guterman, Ricardo Perez and Durall are each charged with five counts of substantive health care fraud; Durall and Zaffuto are charged with two counts of conspiracy to commit money laundering; Jorge Perez, Guterman, Ricardo Perez, Fletcher, James Porter and Sean Porter are charged with one count of conspiracy to commit money laundering and the following defendants were charged with substantive money laundering: Durall (three counts); Zaffuto (one count); Jorge Perez (seven counts); Guterman (one count); Ricardo Perez (five counts); Fletcher (two counts); James Porter (12 counts) and Sean Porter (two counts).
The case will be heard May 9 before Judge Timothy J. Corrigan at the U.S. Courthouse in Jacksonville.
Staff Report 
Hannah Collins