TRENTON – A Monmouth County man admitted on May 20 to participating in a conspiracy to defraud health insurance companies through a multi-state patient brokering scheme.
Peter J. Costas, 26, of Red Bank admitted to having bribed drug-addicted individuals to enroll in drug rehabilitation in exchange for referral fees from the rehabilitation centers, U.S. Attorney Craig Carpenito announced.
Costas pleaded guilty by teleconference before U.S. District Judge Peter G. Sheridan to an information charging him with one count of conspiracy to commit health care fraud. According to documents filed in the case and statements made in court:
The Red Bank man carried out a scheme in New Jersey, California, and other states that involved bribing individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so Costas and his conspirators could generate referral fees from those facilities.
Costas worked with several marketing companies to carry out the scheme, but one marketing company in California run by Costas’s conspirators was pivotal.
The marketing company maintained contractual relationships with drug treatment facilities around the country. Costas was engaged by the marketing company to recruit potential patients, who were addicted to heroin or other drugs and who had robust private health insurance, from New Jersey and other states.
To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas offered to bribe them – often as much as several thousand dollars.
Once they agreed to enroll in drug rehabilitation in exchange for the offered bribe, Costas and the owners of the marketing company would arrange and pay for cross-country travel to the drug treatment centers in California and other states.
Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities long enough to generate referral payments. He and the marketing company often directed patients to different rehabilitation facilities month after month to generate multiple referral payments without regard to whether the substance abuse treatment was medically necessary or effective.
In a conversation over Facebook, one patient told Costas that if Costas made good on his promise to pay the patient a bribe, the patient would enroll in additional facilities to trigger additional referral payments and bribes: “Just get us [sic] grab the dough and put us in another place. . . . Get paid some more feel me. . . . I’ll keep this up all year with you. As long as you do us right.”
When the patient later expressed doubt that Costas would pay the bribe, Costas responded, “Don’t worry. . . . I do this with so many people.”
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.
The facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral, and Costas and other brokers received approximately half that amount for each patient they brokered.
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.
He faces a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Sept. 29, 2020.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea. The government is represented by Assistant U.S. Attorney Jason S. Gould of the Health Care Fraud Unit in Newark.
