Doctor Sentenced To 9 Years In Prison In Widespread Scheme To Defraud Medicare And Other Health Insurance Providers Of Millions Of Dollars

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that JAMES SPINA was sentenced to 108 months in prison for his participation in a widespread health care fraud scheme through the fraudulent operation of Dolson Avenue Medical (“DAM” or the “Practice”), a multi-disciplinary medical clinic located in Middletown, New York.  SPINA previously pled guilty before U.S. District Judge Kenneth M. Karas, who imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “James Spina led a sophisticated, widespread, and callous scheme that put greed and profits ahead of patients and their well-being.  In doing so, he betrayed his professional obligations and bilked insurance companies and Medicare out of millions of dollars.  Thanks to the coordinated efforts of federal and state investigative agencies, Spina will now serve a lengthy sentence in federal prison.”

According to the Indictment, other court filings, and statements made during court proceedings:

From 2011 through September 2017, DAM was a registered medical service corporation in New York State that purported to provide a variety of pain management and rehabilitation services, including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.  DAM primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York.

In addition to DAM, at least eight other corporations, including four other medical corporations, billed Medicare and other health insurance providers (the “Insurance Providers”) from 201 Dolson Avenue (the “Associated Businesses”).  On paper, DAM and the Associated Businesses appeared to be separate entities owned by multiple different qualified individuals.  But in reality, JAMES SPINA, who is a doctor of chiropractic – not a medical doctor – along with his co-defendant, were the true owners and operators of the different medical service corporations.

JAMES SPINA and his co-conspirators made all corporate decisions for DAM and the Associated Businesses.  In particular, JAMES SPINA ran the day-to-day operations of the businesses.  JAMES SPINA and his co-conspirators controlled payroll, the hiring and firing of employees, corporate expenses such as employee compensation and rent, and billing to Insurance Providers.  Further, JAMES SPINA and one of his co-conspirators were the financial beneficiaries of DAM and its Associated Businesses. 

JAMES SPINA also went to great lengths to conceal his control and ownership of DAM and the Associated Businesses.  In particular, JAMES SPINA and one of his co-conspirators recruited medical doctors and other professionals to serve as the nominee owners of DAM and the Associated Businesses.  JAMES SPINA further concealed his ownership of DAM and the Associated Businesses by transferring revenues of these companies into other companies that he and a codefendant owned.  To further disguise these transfers, JAMES SPINA drafted fake lease and marketing agreements between DAM and the Associated Businesses and purported real estate and marketing companies he owned, and referred to the payments as “rent” or “marketing fees.”  JAMES SPINA and his co-conspirators also used phony and non-existent addresses for the corporations so that it would appear that DAM and the Associated Businesses were operating out of separate locations.

In operating the multiple fraudulent businesses, JAMES SPINA and his co-conspirators routinely showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated DAM and billed Insurance Providers to maximize DAM’s reimbursements and, ultimately, their own profits.  In particular, JAMES SPINA and his co-conspirators: (a) submitted and caused to be submitted claims to Insurance Providers for medically unnecessary services and procedures; (b) submitted and caused to be submitted claims to Insurance Providers for medical services that were not rendered; (c) double billed, i.e., submitted and caused to be submitted multiple claims for the same service to two different Insurance Providers; (d) altered and fabricated medical records; and (e) obstructed and impeded audits by Medicare and other Insurance Providers to conceal their fraud.

As part of the fraudulent scheme, one of the doctors who worked at DAM and the Associated Businesses introduced a lucrative procedure called a facet injection.  Because the facet joints to which the injections are applied are near the spinal cord, such procedures are high-risk, with a small margin for error.  The doctor had no formal training in the procedure, and taught himself by shadowing other doctors and watching YouTube videos.  JAMES SPINA was intimately involved with all billing-related aspects of the facet injections, and continued to encourage their use even after several patients suffered serious, adverse events, and one patient died of complications following a facet injection.

As a consequence of the above-described scheme, a substantial number of claims submitted by DAM and the Associated Businesses to Medicare and other Insurance Providers were false and fraudulent. 

In addition to the prison term, JAMES SPINA, 63, of Middletown, New York, was sentenced to three years of supervised release.  The Court also ordered JAMES SPINA to pay $9,760,555.20 in restitution, and to forfeit $9,105,741.61.  On May 2, 2019, JAMES SPINA pled guilty to one count of conspiracy to commit healthcare fraud, in violation of Title 18, United States Code, Section 1349.

Ms. Strauss praised the outstanding investigative work of the FBI, the U.S. Department of Health and Human Services-Office of the Inspector General, the New York State Office of the State Comptroller, and the Orange County Sheriff’s Office. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution.  The prosecution was previously led by former Assistant U.S. Attorney Kathryn Martin.