$40M health care claims fraud scheme: Co-owner pleads guilty

A Connecticut insurance firm owner faces up to 30 years in prison and will pay nearly $15 million in restitution and forfeit $2 million in connection with a scheme to steal a client’s health care funds, defraud lenders and use misappropriated funds to pay for personal expenses, according to a statement from the DOJ. Anthony Riccardi pleaded guilty to conspiracy to commit wire fraud and bank fraud as part of the $40 million scheme. Sentencing has been scheduled for July 20, 2023.

According to court documents, Riccardi owned 50% of Employee Benefit Solutions LLC and served as its executive vice president. The firm offered health care insurance-related services and provided third-party health care claims administration services to clients that self-insured their employee health care plans. As a TPA, EBS was supposed to earn an administrative fee to administer, process and pay health care claims for its clients.

EBS served as a TPA for a New York auto dealership’s self-funded employee health care program and administered a bank account on the dealership’s behalf for the purpose of paying employee health care claims. EBS generated bi-monthly ‘check register’ invoices for the dealership that listed all employee health care expenses from health care providers during each two-week period. The dealership then would pay the invoiced amount with the expectation that EBS would pay the claims to the health care providers.

Between 2015 and 2019, the dealership transferred about $26 million to EBS for payment of health care claims. In reality, a significant number of purported checks listed on the EBS “check register” invoices were never actually deposited by the health care providers. Instead, approximately $17.87 million in payments were misappropriated with the overwhelming majority transferred by EBS into its own operating account, where they were used for non-health care expenses by the managers and owners of EBS. A review of bank records discovered that funds were used by Riccardi and his co-conspirators to pay home mortgage expenses as well as personal credit card accounts with expenses relating to boating, luxury cars and golf.

Related: Health care fraud: DOJ recovered $1.7B in false claims cases in 2022

EBS, through Riccardi and his co-conspirators, made decisions on what health care claims they did pay based on which health care providers were likely to complain if they did not receive payment or if the claims were connected to the client’s executives. In addition, EBS routinely inflated health care claims by creating fraudulent entries in the firm’s claims processing software. Riccardi and his co-conspirators tried to conceal their fraud by creating and sending manipulated and fabricated bank statements and checks to create the appearance that health care claims were being paid.

When the scheme began to unravel in 2017, EBS attempted to conceal and perpetuate the fraud by applying for millions of dollars in fraudulent bank loans purportedly to finance the purchase of upgraded billing software for EBS. Riccardi and his co-conspirators submitted fabricated invoices from a fake company that supposedly sold the billing software.

Riccardi’s co-defendant, Patricia Riccardi, previously pleaded guilty to one count of conspiring to commit wire and bank fraud. Sentencing is scheduled for June 20, 2023. Co-conspirator Erin Verespy, was previously sentenced to 66 months in prison following her guilty plea to one count of conspiring to commit wire fraud and bank fraud.

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel.