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The Biggest Healthcare Fraud Case? 10 Defendants Charged $1.4 Billion For Grand Hospital Scheme

Photo Credit: Brittany Reuss/ Tribune

On June 29th, 2020, one of the largest healthcare fraud cases was unsealed and reported to the public. Ten defendants, of whom included hospital managers, laboratory owners, billers, and recruiters were charged a whopping $1.4 Billion for an “elaborate pass-through billing scheme using rural hospitals in several states as billing shells to submit fraudulent claims for laboratory testing” revealed the Department of Justice. According to the indictment, filed in U.S. District Court in Jacksonville, Florida, from around November of 2015 to February of 2018, “the conspirators billed private insurance companies approximately $1.4 billion for laboratory testing claims as part of this fraudulent scheme and were paid approximately $400 million”.

Hospitals involved:

  • Cambellton-Graceville Hospital (CGH), Regional General Hospital of Williston, Chestatee Regional Hospital, and Putnam County Memorial Hospital.

Those listed on the inditement:

  • Jorge Perez (60), Seth Guterman (54), Ricardo Perez (57), Aaron Durall (48), Neisha Zaffuto (44), Christian Fletcher (34), James Porter Jr. (49), Aaron Alonzo (44), Nestor Rojas (45), and Sean Porter (52).


  • One count of conspiracy to commit health care fraud and wire fraud: Jorge Perez, Seth Guterman, Ricardo Perez, Aaron Durall, Neisha Zaffuto, Christian Fletcher, James Porter Jr., and Aaron Alonzo, Nestor Rojas.

  • Five counts of substantive health care fraud: Jorge Perez, Guterman, Ricardo Perez, and Aaron Durall

  • Two counts of conspiracy to commit money laundering: Aaron Durall and Neisha Zaffuto

  • One count of conspiracy to commit money laundering: James Porter and Sean Porter

  • Substantive money laundering: Aaron Durall (three counts); Neisha Zaffuto (one count); Jorge Perez (seven counts); Seth Guterman (one count); Ricardo Perez (five counts); Christian Fletcher (two counts); James Porter (12 counts) and Sean Porter (two counts).

The defendants were able to find hospitals with first-time patients, for whom they were able to take blood and urine tests and process them for a higher amount. “Insurers were billed using the higher rates allowed for the rural hospitals”, stated Lauren Weber, writer for the Kaiser Family Foundation. This reflected statements on the indictment: rural hospitals were taken over by the defendants through management companies they had already owned. Later, the conspirators would bill private insurance companies through rural hospitals for blood and urine tests they acknowledged as done in laboratories at the hospital when in fact most of the testing was conducted elsewhere. This was because the hospitals, in agreement with the insurance company, would receive a higher reimbursement if the tests were conducted inside the hospital.

Moreover, not only were the tests that were conducted analyzed in an outside laboratory, but many of the tests conducted were not even medically necessary. The Department of Justice report stated that “the conspirators allegedly would obtain urine specimens and other samples for testing through kickbacks paid to recruiters and health care providers, often sober homes and substance abuse treatment centers”. Furthermore “the indictment also alleges that the conspirators engaged in sophisticated money laundering to promote the scheme and to distribute the fraudulent proceeds”.

Jorge Perez’s company, EmpowerHMS, based in Miami, helped oversee a rural empire encompassing 18 hospitals across eight states while owning or co-owning 11 of these hospitals. However, the franchise has “since failed as they ran out of money when insurers refused to pay for the suspect billing. Half of the nation’s rural hospital bankruptcies in 2019 were affiliated with his empire,” reported KHN. When asked for his comment on the situation, Perez stated “I wanted to see if I could save these rural hospitals in America, I’m that kind of person.”

Others took the opposite point of view. KHN reported that “Pam Green, a former night charge nurse at the now-shuttered Horton Community Hospital in Horton, Kansas said she hopes Perez and his colleagues receive long prison sentences.” She went on to say “he just devastated so many people, not just in Kansas, but in Oklahoma and all the other places where he had hospitals, I went months and months without pay, without health insurance. He robbed the community.” The 12 hospitals now have entered bankruptcy and 8 have already closed down. This has “left hundreds of employees without jobs and small towns across the Midwest and South without lifesaving medical care.”

Not only does “the indictment marks the third major case federal prosecutors have filed alleging billing fraud at Perez-affiliated hospitals,” but it sheds light on a larger issue at hand, being the multitude of healthcare fraud cases. This illustrates a lack of care for the justice system when it comes to making a dime off of another individual’s health and wellbeing. As stated by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, “the charges announced today make clear that the department is committed to dismantling fraud schemes that target our health care system, however complex or elaborate.”

Furthermore, reported by the Department of Justice, “the FBI views health care fraud as a severe crime problem that impacts every American,” said Special Agent in Charge Rachel L. Rojas of the FBI’s Jacksonville Field Office. “Fraud and abuse take critical resources out of our health care system and contribute to the rising cost of health care for everyone. The FBI and our law enforcement partners will continue to investigate these crimes and prosecute all those who are intent in defrauding the American public.”


  • Conspiracy to commit - An agreement between two or more people to commit an illegal act, along with an intent to achieve the agreement's goal

  • Health care fraud - providing false information when applying for programs or services, forging or selling prescription drugs, using transportation benefits for non-medical related purposes, and loaning or using another's insurance card.

  • Inditement - a formal charge acknowledging an individual has committed a crime

  • Money laundering - the illegal process of making large amounts of money generated by a criminal activity

  • Substantive - describes when a person can be found guilty for the acts of another

  • Wire fraud - a type of fraud that involves the use of some form of telecommunications or the internet.

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