The FBI and the Justice Department announced the arrest of a 26 year old New Jersey man in a “patient broker” scheme. The feds say Peter Costas of Red Bank accepted cash payments from various drug rehab clinics across the United States. He would find patients and they would pay him a fee. The fees went through a marketing company to help disguise the kickbacks. Costas would in return pay cash to addicts if they agreed to stay in a facility for at least 10 days.
Immediately after his arrest, Costas pled guilty to one count of conspiracy to commit healthcare fraud.
Prosecutors say this was a complex scheme in which the rehab facilities paid kickbacks to a marketing company who then paid money to Costas who subsequently paid cash to addicts. Court records say that Costas would only get his kickback if the addicts had good insurance. He reportedly received between $2,500 and $5,000 for each patient referred. This was in addition to the money Costas used to bribe patients and pay their transportation costs.
What is perhaps most disturbing is that some of the clinics appear to be scams themselves. Says the Justice Department,
“Costas and the marketing company sent patients to facilities in California and other states that they knew provided ineffective drug treatment or actually fostered drug use on their premises…During the scheme, Costas brokered dozens of patients on behalf of marketing companies around the country, and the conspiracy caused millions of dollars of losses for health insurers.”
Everyone got rich except taxpayers who were left footing the bill for treatment programs that were often medically unnecessary or ineffective. One patient placed by Costas said many of the participants in the program he attended were getting high on meth while at the facility.
Once a patient was discharged from the program, Costas would enroll them in a different program if they still had insurance money left.
Costas faces 10 years in prison when sentenced later this year. Public records show a Red Bank man with the same name and age was arrested in November 2018 for contempt of court.
Costas was prosecuted under federal healthcare fraud laws. New Jersey has its own law that prohibits patient recruiters or brokers.
New Jersey statute 2C:21-22.1 defines a patient “runner” as a person “who, for a [financial] benefit, procures or attempts to procure a client, patient or customer at the direction of, request of or in cooperation with a provider whose purpose is to seek to obtain benefits under a contract of insurance or assert a claim against an insured or an insurance carrier for providing services to the client, patient or customer, or to obtain benefits under or assert a claim against a State or federal health care benefits program or prescription drug assistance program.”
Unlike the federal law that is limited to federally funded healthcare, the New Jersey law includes both government funded healthcare and healthcare financed by private insurance. The law has a presumption of prison if the runner is convicted. In other words, violate the law in New Jersey and you probably won’t get a slap on the wrist.
In our experience, patient recruiter schemes usually prey on nursing home residents, the homeless and addicts. Nursing home patients may not have the mental capacity to understand that they are being recruited for unnecessary treatment. Often nursing home schemes involve payoffs (kickbacks) to someone on the nursing home staff.
The homeless and addicts are easy targets because they frequently are desperate for cash. Some recruiters ply them with booze, cigarettes and even drugs.
Patient Recruiter Schemes Qualify for Whistleblower Awards
Patient recruiter schemes are eligible for Medicaid whistleblower rewards if federal or state healthcare dollars are involved. The federal government and 29 states pay cash rewards to whistleblowers with inside information about kickbacks and patient recruiter schemes.
Congress and the states believe that medical decisions should be based on the best interests of the patient, not on bribes and kickbacks. In Costas’ case, the rehab clinics, marketing company that employed Costas and the patients themselves may also be guilty of healthcare fraud. In this case it seems like everyone was in on the action: the clinics paid kickbacks to a marketing company who in turn paid money to Costas in order to induce him to find patients. Costas in turn would pay patients to jump from facility to facility.
To be eligible for a whistleblower reward, your information must be original and must relate to federal or state funded healthcare programs. There is also a “first to file” requirement meaning if you have information, don’t wait.
Awards average between 15% and 30% percent of whatever is collected from the wrongdoer.
To earn the award, you must file a complaint under seal in federal court. Many states have similar requirements.
If you are not interested in a reward, you can report directly to your state’s Medicaid Fraud Control Unit. But remember, calling the Medicare hotline or your state Medicaid Fraud Control Unit does not qualify you for a cash reward or give you all the whistleblower protections and anti-retaliation provisions of the False Claims Act. You must have an attorney and file a sealed lawsuit in court to qualify for a reward.
We accept these cases on a contingent fee basis meaning you do not pay for our services unless we recover money on your behalf.
Medicare fraud has reached epidemic levels. The government is only able to audit one-half of one percent of providers. The FBI says that Medicare fraud cost taxpayers tens of billions of dollars per year.
Who can stop Medicare fraud? You. Doing so often saves lives too. (If the charges are true – and Costas has already pled guilty – addicts were attending treatment centers where they really didn’t get the services they needed. What a waste of tax dollars and a danger for those with addiction issues.)
For more information, contact attorney Brian Mahany at or by telephone at (202) 800-9791. You can also download our 11 step guide for whistleblowers – we don’t ask for your name, email or telephone and it is free. All inquiries are protected by the attorney – client privilege and kept confidential. Cases accepted anywhere in the United States.