Attorney General Shapiro, US Attorney’s Office Announce Charges Against Eleven People, Nine Businesses in Connection with Treatment Center Insurance Fraud

March 25, 2019 | Topic: Criminal

Owners and Operators of Liberation Way Profited Millions by Running Illegitimate ‘Sober Living Homes’ and Defrauding Insurance Companies

PHILADELPHIA — Today at a press conference at the Office of Attorney General in Philadelphia, Attorney General Josh Shapiro and First Assistant United States Attorney for the Eastern District of Pennsylvania Jennifer Williams announced state and federal criminal charges against eleven people and nine businesses in connection with an elaborate insurance fraud scheme involving treatment centers. The state charges include corrupt organizations, dealing in proceeds of unlawful activities, criminal conspiracy, insurance fraud, and identity theft. The federal charges are conspiracy to commit health care fraud.

The charges are the result of an 18-month investigation by the 41st Statewide Investigating Grand Jury into allegations that Liberation Way and its co-founders, Jason Gerner and the late Dallas Fetterman, were running an insurance fraud scheme out of the drug and alcohol treatment center. The Grand Jury investigation revealed a sophisticated, multi-layered scam that took advantage of vulnerable people suffering from substance use disorder to generate millions in profits. Liberation Way grew to a $40 million enterprise in under three years, with billings to various insurance companies in excess of $100 million dollars.

“The owners and operators of Liberation Way showed blatant disregard for the wellbeing of the people they were supposed to help, and for the opioid epidemic that is ravaging our communities,” said Attorney General Josh Shapiro. “This public health emergency is my top priority, and our actions to combat this crisis include prosecuting those who illegally profit off substance use disorder. I am grateful for our partners in the US Attorney’s Office, the FBI, and other agencies in Pennsylvania and Florida for their diligence and dedication to this investigation.”

“With these charges, we intend to send a clear message to those seeking to build their fortunes on fraud and the despair of individuals battling addiction:  health care fraud and the opioid epidemic are major priorities for the United States Attorney’s Office, and your illegal actions will be uncovered,” said First Assistant United States Attorney Jennifer Arbittier Williams.   “We are honored to work together with the Pennsylvania Attorney General’s Office, The Florida State Attorney’s Office, as well as with the Federal Bureau of Investigation, Health and Human Services – Office of the Inspector General, and the Office of Personnel Management – Office of the Inspector General, on these critical issues that impact our society in a most profound way.”

Liberation Way, based in Yardley, Bucks County and with locations in Bala Cynwyd and Fort Washington, Montgomery County, together with its holding company, Liberation Behavioral Health, its founding members, various employees, and investors, illegally secured and paid premiums for patients’ insurance policies so that it could bill insurance companies for treatment that was sub-standard, medically unnecessary, or sometimes nearly non-existent. These patient policies were secured using fraudulent information to ensure that patients qualified for ‘high-end’ or ‘platinum’ coverage so that Liberation Way would be reimbursed at the highest rate possible.

From its outset, Liberation Way specifically targeted out-of-network insurance carriers so that it could bill any amount it chose. Because Liberation Way wasn’t permitted to pay insurance premiums on patients’ behalf, employees hid the source of funds used to pay premiums using cash, pre-paid Visa gift cards, and bank accounts of two non-profit organizations established by and/or at the direction of Liberation Way’s owners.

One insurance company it took advantage of was Independence Blue Cross, which is based in the Philadelphia area and a member of the Blue Cross/Blue Shield network. The Grand Jury heard testimony that between July 2015 and early 2018, Liberation Way billed Blue Cross/Blue Shield companies in excess of $115 million—including approximately $17 million in overbilling. Some of these bills were for policies that Liberation Way had schemed to secure just days before or even on the same day that the patient began treatment.

The investigation also revealed that Gerner and Fetterman developed an elaborate kick-back scheme involving thousands of medically-unnecessary urine tests which were sent to a Florida-based laboratory for analysis. Former patients testified they were required to give multiple urine samples, sometimes as many as three or four per day, and employees were given cash incentives to make sure each patient was submitting as many samples as their insurance would pay for. Often, lab results were not even entered into patients’ medical files.

The Florida labs then billed insurance companies at exorbitant rates, and once the labs received the payment from the insurance companies, a portion of the fee was sent back to Fetterman and Gerner. When the unnecessary lab fees were not paid-in-full by the insurance companies, Liberation Way had lab representatives harassed and threatened patients and their families, demanding they pay the outstanding balances. As a result of this kick-back scheme alone, Independence Blue Cross was billed in excess of $33 million and paid out more than $4 million for this unnecessary lab work.

In order to maximize profits, Liberation Way also implemented a cycle of addiction ‘treatment’ that illegally directed patients to live at company-owned, un-licensed ‘sober homes’ to increase the amount of treatment time for which it could bill insurers. Because Liberation Way was working hand-in-hand with housing providers and, in some cases, had direct ownership of the properties, it was in essence operating as an inpatient facility, for which it was not licensed.

Liberation Way operated daily shuttles from the sober homes to the treatment locations, and patients were forced to adhere to the drivers’ schedules. Patients were not free to come and go, as is typical for outpatient treatment, and they could not choose where they wanted to live. One location on Stump Road in North Wales, Montgomery County, was known as the “party house”. Patients found themselves in unsavory or even unsafe situations where the temptation to relapse was rampant. Some of the housing was co-ed, which is uncommon in the treatment industry, and it was discovered that employees were engaged in sexual relationships with patients actively receiving treatment.

Any patients who relapsed would re-enter treatment at a higher level of care, which resulted in Liberation Way billing for even higher rates of reimbursement. Liberation Way cycled patients through the treatment process as many times as possible, even as many as eight times.

Between July 2015 and January 2018, Liberation Way and its co-founders profited more than $44 million in payments from these schemes. In December 2017, after less than three years of operation, Liberation Way was sold to a private equity firm for $41.6 Million. The proceeds of the sale were divided among the owners and investors, including Gerner and the estate of Fetterman, who passed away in May 2017.

Those arrested today facing state charges are: Jason Gerner, 46, of Shamong, NJ; Brandon Coluccio, 31, of Doylestown, PA; Michael Armstrong, 36, of Cherry Hill, NJ; Jesse Peters, 44, of Lake Worth, FL; Dr. Domenick Braccia, 57, of Perkasie, PA; Dr. Ramesh Sarvaiya, 64, of Voorhees, NJ; Muhammad Abdul-Hadi, 33, of Philadelphia, PA; Scott Collins, 45, of Marlton, NJ; Michael Sarubbi, 53, of Cherry Hill, NJ; Dana Fetterman, 35, of Haddon Township, NJ; Elsie Concepcion, 40, of Pennsauken, NJ.

Those arrested today facing federal charges are: Ramesh Sarvaiya and Jesse Peters. The businesses facing state charges are: Liberation Way, Liberation Behavioral Health, Liberation House, LEAF Healthcare Financial, Philly 180, Alban, Legacy House, Prestige Worldwide, and Hope for Families.

$14.6 million was seized from the investment accounts of Gerner and Coluccio, with more seizures anticipated. This is an active and ongoing investigation. This case is being prosecuted by Senior Deputy Attorney General Robert LaBar and Deputy Attorney General Kristyne Crist at the state level and AUSA Nancy Beam Winter at the federal level.

# # #