CEO of Health Care Software Company Sentenced for $1B Fraud Conspiracy
107 points
9 hours ago
| 14 comments
| justice.gov
| HN
exabrial
7 hours ago
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> An Arizona man was sentenced Friday to 15 years in prison and ordered to pay more than $452 million in restitution for conspiring to defraud Medicare and other federal health care benefit programs of more than $1 billion by operating a platform that generated false doctors’ orders used to support fraudulent claims for various medical items.

I wish all headlines read like this instead of "here's why you should be scared"

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lixtra
7 hours ago
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As you would expect from a state press release, not a tabloid publication.
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burkesquires
7 hours ago
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I think fraudsters should have to work off the money they stole at prison wages…punishments are supposed to be deterent and prevent people from commingting crime…don’t seal a billion dollars becasue IF you get caught you will have to pay back half is not a deterent…BUT if they have to pay off a billion dollars at 13-52 cents/hour…that is a deterent!
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UqWBcuFx6NV4r
6 hours ago
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That sounds like something you’d read in a Facebook comment. This is government-sanctioned slavery, and I strongly doubt that it would serve as a deterrent. People routinely put much more on the line for much less.
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mr_toad
4 hours ago
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There’s a lot of research of people for whom punishment obviously didn’t act as a deterrent, and unsurprisingly this research concludes that the prospect of punishment doesn’t act as a deterrent.

There is no research I’m aware of on people for whom the prospect of punishment did act as a deterrent (i.e. people who decided not to commit the crime).

So I argue that there is a very big selection bias in literature surrounding the effectiveness of punishment as a deterrent .

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f1shy
4 hours ago
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AFAIK, this is a (dangerous and misleading) simplification.

Punishment absolutely works as deterrent. Boy I know people that would absolutely forge the tax declaration, if it wasn't a terrible fine if they do!

The key point is the probability of the punishment being enforced. There is a trade off calculation going on, like "I could get 5 years prison and 10 grand fine... IF they catch me!". Studies suggest, that if you have 100% probability of being caught, then the punishment is extremely good deterrent.

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beAbU
4 hours ago
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The US constitution explicitly allows for this (prisoner slavery) so there's that
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stavros
2 hours ago
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Imagine "someone two hundred years ago said it was OK" being valid ethical justification.
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janalsncm
6 hours ago
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At that rate you can pay back maybe $1000 per year, so if you’re only going to live 30 more years there’s no difference in punishment between 30k in fraud and a billion dollars in fraud. Punishment is the same, so might as well scam more.
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matwood
4 hours ago
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The movie Heat addresses this scenario in the opening scene. A guard is shot 'accidentally' during a robbery even though they didn't intend to kill anyone. At that point they killed all the guards because 1 guard or 3 guards, it had become a capital murder crime so might as well not leave any witnesses.
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f1shy
4 hours ago
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That is the problem with draconian law. Because it saturates to death penalty pretty fast, any crime escalates pretty quick.
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f1shy
4 hours ago
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They should absolutely pay the money back. But why prison wages? Let they produce what they can, and pay back, with interest and all you want. I think it is more important that they are able to "undo" the damage, as to make they suffer.
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inamberclad
7 hours ago
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I'd like to see a prison sentence for corporations.
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x3n0ph3n3
6 hours ago
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I'd like to see the death penalty (dissolution) for them.
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llmslave2
6 hours ago
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How would that work. Would the employees be banned from working together again or something?
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saghm
6 hours ago
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The corporation would be terminated, all of its copyrights and trademarks would be nullified, and the assets seized. If investors want to try to spend their money on building the exact same thing again under a different name after those losses, that's their perogatice. I suspect that after a few of these occurrences they might start to get cagey about whether they want to give money to someone who's had this happen before though.
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KellyCriterion
4 hours ago
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...regarding their trademarks & IP, I suggest that all of these are moved over to either Public Domain or the government should try to make much money as possible from selling the IP to someone else?
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SpicyLemonZest
5 hours ago
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The process you're describing is hardly unheard of. The problem is that a large corporation's assets include things like employees, office buildings, supplier contracts, etc, which generally aren't valuable except in the context of the business unit they operate within. So if you want to maximize recovery, you have to keep critical business units intact, which often means that large parts of the business survive in all but name.

Purdue Pharma is a recent instructive case. The marketing folks did some terrible stuff, but it would be pretty rough on victims, employees, and patients who need pain meds to respond by tearing down Purdue's factories and auctioning off the contents. So the bankruptcy plan calls for keeping the factories running, transferring them to a new company called Knoa, which will be owned by a trust that's dedicated to managing the opioid crisis. Isn't Knoa just Purdue wearing a new hat? Kinda, sure, but there's no better alternative.

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kelseyfrog
5 hours ago
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What if you don't want to maximize recovery?
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bryan_w
5 hours ago
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Do you genuinely just not like businesses?
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nrb
3 hours ago
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Surely there’s some wiggle room in between “I just do not like businesses” and “businesses that are convicted of causing some amount of damage to society should not exist”

At some point, recovery needs to take a back seat to deterrence.

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ssl-3
4 hours ago
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Well that would be terrible! People all over would be furious!

(As, perhaps, they should be.)

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SpicyLemonZest
5 hours ago
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Again, it's pretty rough on the victims to tell them we won't bother trying to get the money they're owed. Sometimes you have no choice; I would be shocked if the healthcare company mentioned in the source link were still operating, since it doesn't sound like it was actually doing much beyond the Medicare fraud. But when you do have a choice, what does anyone have to gain from blowing it up?
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kelseyfrog
4 hours ago
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Punitive punishment serves as a deterrent to other businesses.

I really dislike the black or white thinking of, "if we're not maximizing recovery then victims will get nothing."

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llmslave2
3 hours ago
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> Punitive punishment serves as a deterrent to other businesses.

You mean the owners and management and employees? Because a "business" in the way it's being suggested isn't a human with emotions or feelings, you can't "deter" a legal construct...

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mschuster91
3 hours ago
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> So if you want to maximize recovery, you have to keep critical business units intact, which often means that large parts of the business survive in all but name.

Easy solution: fire (and imprison) the executives, sell off the entire company, leave the owners/investors with nothing.

That sets a proper incentive for shareholders to not send yes-men or people with a dozen or more other well-paid low-effort board memberships into corporate boards but people actually willing and capable of controlling the executive.

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bsder
4 hours ago
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All investors are wiped. Anyone on board of directors is gone. Anyone in main executive management (CEO, CFO, CTO, etc.) is fired and replaced. All assets placed into immediate Chapter 11 (restructuring) bankruptcy.
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llmslave2
4 hours ago
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Keep in mind all investors would include the average joe's who are investing their retirement savings as well. You think they should just have those wiped out, despite there being no fault of their own?
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nubg
4 hours ago
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Yes as for the average Joe it's 0.001% of his ETF getting nuked.
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cyberpunk
4 hours ago
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Make those who are convicted personally liable to repay investors?
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bsder
3 hours ago
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Absolutely.

It used to be that "company reputation" was part of the value of a stock certificate. That disappeared and the primary value of CEO became being a sufficiently raging asshole to pump the value of the lottery ticket at all costs.

Bringing back a bit of risk to investors would help put some pushback into the system.

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tobr
5 hours ago
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Ok, so they have to. Or else what? Back of the envelope, it would take somewhere between 200k and 1 million years of 24/7 work to pay it back at that rate.
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free_bip
7 hours ago
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I wouldn't want to see that. That's called slavery!

And no, the severity of the crime does not (IMHO) justify it.

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hasperdi
5 hours ago
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Slavery as punishment is actually allowed by the constitution...

AMENDMENT XIII

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

https://www.archives.gov/milestone-documents/13th-amendment

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stavros
2 hours ago
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That doesn't mean it's right, it means the constitution is wrong!

The constitution isn't a holy book, it's some opinions someone wrote down on paper. Some of them might be wrong.

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user_7832
5 hours ago
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Just because it's legal doesn't mean it's ethical or moral, and there are enough examples of things in such categories.
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cyberpunk
3 hours ago
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Not just permitted, but actually widespread. If you’re imprisoned in Texas, Georgia, Arkansas, Alabama, and Mississippi, you are going to be doing unpaid forced labor which is slavery, and many of the prisons are privately owned.

Federal prisons pay roughly $0.12 to $0.40 per hour for regular jobs, which isn’t much better.

The hypocrisy of the US is breathtaking sometimes, and the current administration has the gall to criticise europe.

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empiko
6 hours ago
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Just to play devil's advocate, you're okay with forcing a criminal to sit in a room for the rest of their life, but you're not okay if they also have to work for society during that timeframe. What is the main argument why the first case is okay and the second is not.
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devsda
6 hours ago
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Because it creates perverse incentive for government to put more people in prison.

Right now the punishment is confinement. When you add effectively unpaid labour in prison as part of acceptable punishment, you're also paving the way for a future where unpaid labor as a standalone punishment is also acceptable. That's just slavery by law.

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blobbers
5 hours ago
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Outside in society, I have to work to pay my rent, to pay for my food.

Inside a prison, should they not have a similar responsibility? They commit a crime and as such are held in stasis? Should they not at least carry the burden of themselves

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devsda
4 hours ago
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Its a fair point but its probably not practical.

I don't think there's enough jobs in prisons that need physical labour where they can cover the costs. You would then have to train them in useful skills but incompetence is not a crime so you cannot penalize those who "cannot learn/do" skilled work.

Other alternative is to make them work the same job they did outside but that is a slippery slope with lot of potential for abuse.

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navigate8310
4 hours ago
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Apologies for my ignorance, exactly what kind of jobs do prisoners work inside that benefit the society outside?
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hvb2
5 hours ago
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> Because it creates perverse incentive for government to put more people in prison.

Except for some rare cases, I think you'll find that the cost of keeping an inmate in prison for a day makes it that you never break even

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thelock85
5 hours ago
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Or the taxpayers foot the bill for keeping the inmate in prison while private interests (including but not limited to private prisons and select contractors) take additional profit off the unpaid labor instead of passing savings to the consumer
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reed1234
4 hours ago
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Breaking even is more attractive than debt for a cash-strapped city
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empiko
5 hours ago
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So if we could set it up in a way where there is no slippery slope, you would be okay with it?
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tyre
5 hours ago
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Not really a perverse incentive. The government isn’t making any money here. They’re paying someone from their own pocket only to take it away again?

At that point it really is just slavery, which they can already do as protected in the US Constitution.

(I’m not arguing for this. I agree with restitution and believe that sentences longer than a certain point are also pointless and a net negative to society.)

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devsda
4 hours ago
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> The government isn’t making any money here.

Hypothetically let's say govt is allowed to use unpaid labour outside menial tasks and the prison system is setup in a way to efficiently utilize the skills of their labour pool and is allowed to outsource their skills to private entities at attractive rate for covering prison costs (i.e. more money left for govt spending)

E.g. tradesmen employed on their related jobs. A programmer employed in software jobs or a technician "loaned" to a nearby lab etc.

Don't you think the local/state governments will then have incentive to fill their pool with "missing" talent according to the job requirements.

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vincnetas
6 hours ago
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thats why for some prison systems main goal is not punishment but rehabilitation. i think this is scandinavian approach.

"The stated goal of the Swedish prison system is to create a safer society by reducing recidivism and rehabilitating offenders rather than focusing solely on punishment. This is achieved through humane treatment, education, and reintegration programs designed to prepare prisoners for life after release."

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llmslave2
6 hours ago
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Probably for the same reason that it's generally seen as less intrusive to prevent someone from doing something, compared to forcing them to do something.
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saghm
6 hours ago
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If you aren't already seeing it, it's because you're eyes are closed or you're intentionally looking away: https://www.epi.org/publication/rooted-racism-prison-labor/
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thayne
5 hours ago
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That might, maybe, make it more effective as a deterrent, and possibly as retribution, but it would be less effective for restitution (since it would take much longer for those defrauded to get paid back).
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donmcronald
5 hours ago
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Seize the generational wealth they accumulated. Make their parents, siblings, kids, grandkids, cousins, etc. demonstrate how they earned their money and take every penny they can’t link to honest means.

The discussion around billionaires needs to move away from taxing their income and beyond taxing their wealth. We need to start talking about how much of their wealth we should be taking away. Light it on fire or delete it. The whole world will be better off.

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burnt-resistor
9 minutes ago
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So token enforcement despite widespread corruption, collusion, racketeering, and rapacious bankrupting of ill, dying, and dead patients and their families in-lieu of a functional healthcare system that isn't obsessed with maximizing shareholder value over lives. It's literally the most expensive deathcare the market will bear.
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frinxor
6 hours ago
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Seeing a lot of these pop up more recently, but this has been happening for a decade now apparently. Isn't this the fault of Medicare itself, of not having routine checks and better processes for preventing these fraudulent claims at the source?

If only the big scams are being caught (and we don't know what % are being caught), there's likely a lot more going undetected.

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throw-12-16
5 hours ago
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He should run for the Senate.
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keernan
7 hours ago
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Why does he only have to repay 45%?
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wredcoll
7 hours ago
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Article says medicaid only paid 300ish million on the claims.
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shoo
5 hours ago
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see also: Odd Lots interviewed Jetson Leder-Luis about medicare and medicaid fraud (nov 2024): https://podcasts.apple.com/us/podcast/how-fraudsters-are-bil...
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dickersnoodle
2 hours ago
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Good. Now do (Florida Senator) Rick Scott.
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xnx
6 hours ago
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Is Trump going to pardon this guy like he did Salomon Melgen, who was convicted in 2017 of defrauding Medicare out of $73 million?
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stock_toaster
4 hours ago
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Exactly what I was wondering. I guess it depends on how much he does or doesn’t “donate”.
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rdtsc
7 hours ago
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> The fraudulent doctors’ orders generated by DMERx falsely represented that a doctor had examined and treated the Medicare beneficiaries when, in fact, purported telemedicine companies paid doctors to sign the orders without regard to medical necessity

They'll get doctors as well? Hopefully they are part of the co-conspirators group they mentioned they convicted at the start. Criminals are going to be criminal, but it's especially disheartening when doctors engage in this. All those years going to school should be canceled and thrown into the trash immediately if they get convicted of these kinds of crimes. The path of ever being a doctor should be closed for them.

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OutOfHere
6 hours ago
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The problem here is not the doctors. It is billing it to government insurance. Doctors should remain free to gratify patients who are willing to pay cash rather than bill to government insurance. In fact, most such gratifications never have a problem for precisely this reason.
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kotaKat
2 hours ago
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It's still partially a problem with crooked doctors.

This is just a step adjacent to the online pill mills for ED medication, GLP-1s, and ketamine, only the advertising and service delivery has been adapted to the elderly that don't use the Internet.

Instead of ads online it's ads on daytime television bragging for free orthopedic supports and braces at no charge to you if you "call today" while they link you up to someone that signs a prefilled script for fifty bucks a pop to bill out to Medicare.

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AndrewKemendo
8 hours ago
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I mean that’s pretty unabashed good news. I’m probably the most cynical person that comments regularly and I’ll take it!

It’s something at least.

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Cipater
7 hours ago
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You're nowhere near the most cynical peron here if your first thought wasn't "how long till he gets pardoned"?
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atmavatar
7 hours ago
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My first thought was that the guy was required to pay back less than half of what was stolen.

From there, of course, it's a short hop to "he has more than enough money left over to purchase himself a pardon."

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wombatpm
6 hours ago
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Recent reports say the going price is a million
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perihelions
5 hours ago
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https://www.wsj.com/politics/policy/trump-presidential-pardo... ("Inside the New Fast Track to a Presidential Pardon" / "Lobbyists close to Trump say their going rate to advocate for a pardon is $1 million")
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wombatpm
5 hours ago
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Thanks I knew I saw it somewhere reputable
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Nevermark
6 hours ago
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Well if he wasn't already contributing some percentage to the "right" people ahead of time, and saying the "right" things ("autism, something, something, vaccines, something something, persecution, ..."), he wasn't very good at what he did.

Despite the great post-sentencing opportunities for monetary re-justicing, insurance still works better when paid for up front.

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webdevver
3 hours ago
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79 years of age!? umm... i dont understand - is this supposed to be a warning to others, or an invitation?

where was the FBI for the last 40 years? or did he really just go postal post-covid?

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jmyeet
7 hours ago
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Meanwhile, we have the former governor of Florida and now Seantor from Florida Rick Scott, who was CEO of the company successfully prosecuted for the largest Medicare fraud in history ($1.7 billion) [1].

Here's what to watch: how long it takes for a donation to show up to the Trump library and how soon after that the sentence is commutted. This has erased roughly $1 billion in penalties so far since January 20. Hell, it might only take $1 million.

[1]: https://www.justice.gov/archive/opa/pr/2003/June/03_civ_386....

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hermannj314
7 hours ago
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Does polymarket let you bet on when Trump pardons this guy?
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rdtsc
7 hours ago
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It's your great chance to win big money! You should bet on it!
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kQq9oHeAz6wLLS
7 hours ago
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Couldn't you go find out yourself? Or was your purpose to score some internet points with a snarky political jab?
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garyfirestorm
7 hours ago
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Is it a ‘snarky political jab’ if it is highly likely to happen irl?
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mr_toad
4 hours ago
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Two things can be true.
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gregjw
7 hours ago
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It's funny when people are more upset about being called out than seeing the person they voted in do absurd things again and again.
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hermannj314
7 hours ago
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It is a snarky political jab.

President Trump loves to pardon white collar criminals in exchange for donations. It is his whole thing and well documented.

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wombatpm
6 hours ago
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The donations to his Presidential library are a scam. I’ve made this prediction elsewhere. I am 99% confident that the Trump Presidential Library will not be build during his lifetime. Further,I am 50 year old nonsmoker and I am 85% confident the Trump Presidential Library will not be built in my lifetime.

I also expect the new East Wing Ballroom will not be built this term and the donations will mysteriously disappear with the next administration.

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nutjob2
7 hours ago
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I guess you've never heard of a rhetorical question.

But speaking of snark why are you so upset? Trump has form pardoning people for purely political reasons and for personal gain of various kinds.

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