Information — United States of America v. Alexander Schleider
Summary
An Information in United States v. Alexander Schleider in the U.S. District Court for the District of New Jersey, filed after he waived prosecution by indictment and charging conspiracy under 18 U.S.C. § 1349 and wire fraud under 18 U.S.C. § 1343. Count One, conspiracy to commit health care fraud, alleges kickback agreements paying suppliers approximately $100 to $300 per durable medical equipment order, and states that Medicare and other programs paid the Subject DME Companies at least approximately $21,721,676.31 for such orders. Count Two, wire fraud, concerns the HRSA Provider Relief Fund, alleging that DME Company-1 received approximately $322,237 on or about April 17, 2020, and that Schleider submitted a fraudulent attestation to HRSA on or about May 4, 2020 under his spouse's name.
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Full text
SMS/2021R00506
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA : Hon.
:
v. : Criminal No. 23-
:
ALEXANDER SCHLEIDER : 18 U.S.C. § 1349
: 18 U.S.C. § 1343
INFORMATION
The defendant having waived in open court prosecution by Indictment,
the United States Attorney for the District of New Jersey charges:
COUNT ONE
(Conspiracy to Commit Health Care Fraud)
1. Unless otherwise indicated, at all times relevant to this Information:
Background on the Medicare Program
a. Medicare was a federally-funded program established to
provide medical insurance benefits for individuals age 65 and older and certain
disabled individuals who qualified under the Social Security Act. Individuals who
receive benefits under Medicare were referred to as “Medicare beneficiaries.”
b. Medicare was administered by the Center for Medicare and
Medicaid Services (“CMS”), a federal agency under the United States Department
of Health and Human Services.
C. Medicare was divided into four parts, which helped cover
specific services: Part A (hospital insurance), Part B (medical insurance), Part C
(Medicare Advantage), and Part D (prescription drug coverage).
d. Medicare Part B covered non-institutional care that included
physician services and supplies, such as durable medical equipment (“DME”)
that were needed to diagnose or treat medical conditions and that met accepted
standards of medical practice.
e. Medicare was a “health care benefit program,” as defined by
18 U.S.C. § 24(b), and a “Federal health care program,” as defined by 42 U.S.C.
§ 1320a-7b(f), that affected commerce.
f. In order for a supplier of DME services to bill Medicare Part B,
that supplier had to enroll with Medicare as a Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (“DMEPOS”) supplier by completing a Form
CMS-855S.
g. As provided in the Form CMS-855S, to enroll as a DMEPOS
supplier, every DMEPOS supplier had to meet certain standards to obtain and
retain billing privileges to Medicare, such as, but not limited to, the following:
(1) provide complete and accurate information on the Form CMS-855S, with any
changes to the information on the form reported within 30 days; (2) disclose
persons and organizations with ownership interests or managing control;
(3) abide by applicable Medicare laws, regulations and program instructions,
such as, but not limited to, the Federal Anti-Kickback Statute (“AKS”) (42 U.S.C.
§ 1320a-7b(b)); (4) acknowledge that the payment of a claim by Medicare was
conditioned upon the claim and the underlying transaction complying with such
laws, regulations and program instructions; and (5) refrain from knowingly
presenting or causing to be presented a false or fraudulent claim for payment by
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Medicare and submitting claims with deliberate ignorance or reckless disregard
of their truth or falsity. The Medicare Form CMS-855S also requires that those
with an ownership interest in the DMEPOS supplier disclose, among other
things, any federal convictions within the preceding ten years.
h. Medicare-authorized suppliers of healthcare services and
supplies, such as DME, can only submit claims to Medicare for reasonable and
medically necessary services. Medicare will not reimburse claims for services
that it knows are procured through kickbacks or bribes. Such claims are deemed
false and fraudulent because they violate Medicare laws, regulations, and
program instructions, as well as federal criminal law. For example, where a
prescription for DME is procured through the payment of a kickback in violation
of the AKS, a claim to Medicare for reimbursement for that DME is fraudulent.
By implementing these restrictions, Medicare aims to preserve its resources,
which are largely funded by United States taxpayers, for those elderly and other
qualifying beneficiaries who have a genuine need for medical services.
Telemedicine
1. Telemedicine allows health care providers, such as
physicians, to evaluate, diagnose, and treat patients remotely—without the need
for an in-person visit—by using telecommunications technology, such as the
internet or telephone to interact with a patient.
J. Medicare deemed telemedicine an appropriate means to
provide certain health care related services (“telehealth services”) to beneficiaries,
including, among other services, consultations and office visits, only when
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certain requirements were met. These requirements included, among others,
that: (a) that the beneficiary was located in a rural area (outside a metropolitan
area or in a rural health professional shortage area); (b) that the services were
delivered via an interactive audio and video telecommunications system; and (c)
that the beneficiary was at a licensed provider’s office or a specified medical
facility—not at a beneficiary’s home—¬during the telehealth service furnished by
a remote provider.
k. Telehealth services could be covered by and reimbursable
under Medicare, but only if telemedicine was generally appropriate, as outlined
above, and only if the services were both ordered by a licensed provider and were
reasonable and medically necessary to diagnose and treat a covered illness or
condition
Relevant Individuals and Entities
1. Defendant ALEXANDER SCHLEIDER (“defendant
SCHLEIDER”) was a resident of New Jersey. Defendant SCHLEIDER owned,
operated, and had a financial or controlling interest in multiple DME supply
companies, including DME Company-1 and DME Company-2 (collectively, the
“Subject DME Companies”). The Subject DME Companies primarily supplied
DME such as knee, ankle, back, wrist, and shoulder braces to Medicare
beneficiaries. Defendant SCHLEIDER concealed his affiliation with the Subject
DME Companies by failing to disclose himself as owner to Medicare.
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The Conspiracy
2. From at least as early as April 2019 through in or around April 2021,
in the District of New Jersey, and elsewhere, defendant
ALEXANDER SCHLEIDER
did knowingly and intentionally conspire and agree with others to knowingly and
willfully execute, and attempt to execute, a scheme and artifice to defraud a
health care benefit program and to obtain, by means of false and fraudulent
pretenses, representations, and promises, any of the money owned by, and
under the custody and control of, a health care benefit program, as defined by
18 U.S.C. § 24(b), in connection with the delivery of or payment for health care
benefits, items and services, contrary to Title 18, United States Code, Section
1347.
Goal of the Conspiracy
3. The goal of the conspiracy was for defendant SCHLEIDER and others
to profit by submitting or causing the submission of false and fraudulent claims
for DME to federal and private health care benefit programs.
Manner and Means of the Conspiracy
4. The manner and means by which defendant SCHLEIDER and others
sought to accomplish the goal of the conspiracy included, among other things,
the following:
a. Defendant SCHLEIDER conspired with others in a scheme to
defraud health care benefit programs by offering and paying kickbacks and
bribes to individuals and entities (collectively, the “Suppliers”) in exchange for
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completed doctors’ orders for DME (“DME Orders”), which were subsequently
fraudulently billed to Medicare and other health care benefit programs. As the
term was used during the course of the scheme, a DME Order was comprised of
the name of a patient covered by one or more health care benefit or private
insurance programs, as well as that patient’s contact information, insurance
details, and a doctor’s order or prescription for DME for that particular patient.
A DME Order amounted to a guarantee that the patient’s prescription would be
reimbursed by Medicare or other federal or private health care programs.
b. Generally, DME Order Suppliers generated DME Orders by
identifying qualified beneficiaries located in New Jersey and elsewhere through
the use of marketing call centers under their direction. Once beneficiaries were
identified by the marketers, the Suppliers utilized the services of telemedicine
companies to secure RX Orders, regardless of whether the prescriptions were
medically justified for the beneficiaries.
c. After obtaining the DME Orders, the Suppliers transmitted
and caused to be transmitted the DME Orders to the Subject DME Companies.
After receiving the DME Orders from the Suppliers, defendant SCHLEIDER
(through the Subject DME Companies) arranged for the prescribed DME, such
as orthotic braces, to be shipped to the individual Medicare beneficiaries
pursuant to the DME Orders. Finally, defendant SCHLEIDER (through the
Subject DME Companies) electronically submitted or caused the electronic
submission of claims to Medicare and other federal and private health care
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benefit programs from New Jersey and elsewhere for payment for each of the
DME Orders.
d. Defendant SCHLEIDER and his co-conspirators paid
kickbacks to the DME Order Suppliers for each DME Order that resulted in
reimbursement from a paying health care benefit program. Specifically,
defendant SCHLEIDER entered into kickback agreements with Suppliers to pay
the Suppliers kickbacks ranging from approximately $100 to $300 in exchange
for each DME Order depending upon the type of brace prescribed.
e. Defendant SCHLEIDER and his co-conspirators knew that the
claims to Medicare and other federal and private health care benefit programs
for each of the DME Orders were fraudulent because they were (i) procured
through the payment of kickbacks and bribes and therefore not eligible for
federal reimbursement; (ii) medically unnecessary; and/or (ii) approved by
providers who did not treat the beneficiary.
f. To conceal the nature of the kickback arrangement, defendant
SCHLEIDER entered into sham contracts with Suppliers (collectively, the “Sham
Agreements”). The Sham Agreements falsely stated that the Suppliers were
engaged in marketing services for the Subject DME Companies and provided,
among other things, that the Suppliers would provide the Subject DME
Companies with raw leads, not DME Orders. With respect to compensation, the
Sham Agreements provided that the Suppliers would be paid a “fixed annual fee”
and also would be paid based on “Marketing hours.” Nowhere did the Sham
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Agreements indicate that, in reality, the Suppliers were being paid kickbacks per
DME Order.
g. To further conceal the nature of the kickback payments, the
Suppliers submitted sham invoices to the Subject DME Companies that
intentionally mischaracterized the nature of the payments sought. Specifically,
the invoices sent by the Suppliers billed the Subject DME Companies for
“marketing” on an hourly basis, when, in reality, the payments were being made
on a per-DME Order basis.
h. In or around May 2014, before the health care scheme began,
defendant SCHLEIDER pleaded guilty in the District of New Jersey to committing
wire fraud related to a fraudulent real estate scheme. In or around December
2014, he was sentenced to one year of imprisonment and three years of
supervised release for his role in the scheme. Accordingly, as an individual with
an ownership interest in the Subject DME Companies, defendant SCHLEIDER
was required to disclose his prior fraud conviction on the Form CMS-855S.
i. To conceal his involvement in this healthcare fraud scheme
and to conceal his recent prior conviction from Medicare, SCHLEIDER’s spouse
was listed as the nominee owner of DME Company-1 and DME Company-2 and
her name was provided to Medicare on the Form CMS-855Ss in lieu of his own.
j. As a result of defendant SCHLEIDER’s participation in the
health care fraud scheme, from at least as early as in or around April 2019
through in or around April 2021, Medicare and other health care benefit
8
programs paid the Subject DME Companies at least approximately
$21,721,676.31 for DME Orders that were the product of the illicit scheme.
All in violation of Title 18, United States Code, Section 1349.
9
COUNT TWO
(Wire Fraud)
5. The allegations in paragraphs 1, 3, and 4 of Count One of this
Information are re-alleged here.
Background: The CARES Act Provider Relief Fund
6. In March 2020, Congress passed the Coronavirus Aid, Relief, and
Economic Security (“CARES”) Act, which was designed to provide emergency
financial assistance to the millions of Americans suffering due to the COVID-19
pandemic.
7. The CARES Act appropriated money to help Medicare providers that
were financially impacted by COVID-19, as well as to provide care to individuals
who were suffering from COVID-19 and compensate Medicare providers for the
cost of that care (the “Provider Relief Fund”). The Department of Health and
Human Services (“HHS”), through its agency, the Health Resources and Services
Administration (“HRSA”), oversaw and administered the Provider Relief Fund.
8. In order to rapidly provide funding to Medicare providers during the
pandemic, HRSA distributed payments under the Provider Relief Fund (“Provider
Relief Payment”) to Medicare providers who (a) billed Medicare Part A or Part B
in Calendar Year 2019; (b) provided after January 31, 2020 diagnoses, testing,
or care for individuals with possible or actual cases of COVID-19; (c) were not
currently terminated from participation in Medicare or precluded from receiving
payment through Medicare Advantage or Part D; (d) were not currently excluded
from participation in Medicare, Medicaid, and other Federal health care
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programs; and (e) did not currently have Medicare billing privileges revoked.
Medicare providers meeting these criteria automatically received the Provider
Relief Payment and did not have to apply for the funding but were required to
comply with the terms and conditions of the Provider Relief Fund if they retained
such funding.
9. If a Medicare provider elected to retain the payment, it was required
to abide by the terms and conditions of the program, including that (a) the
payment shall reimburse the recipient only for health care related expenses or
lost revenues that are attributable to COVID-19 and (b) that the payment would
only be used for the diagnoses, testing, or care for individuals with possible or
actual cases of COVID-19. Medicare providers would attest to the terms and
conditions by logging into a portal on the HHS website or would be deemed to
have agreed to the terms and conditions by keeping the funds for longer than 90
days. The requirement that the providers fully comply with the terms and
conditions was material to HHS’s decision to disburse Provider Relief Funds to
the providers. Non-compliance with any term or condition could cause HHS to
recoup some or all of the payment.
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The Scheme
10. From in or around April 2020 through in or around April 2021, in
the District of New Jersey, and elsewhere, defendant
ALEXANDER SCHLEIDER
did knowingly and intentionally devise and intend to devise a scheme and artifice
to defraud and to obtain money and property by means of materially false and
fraudulent pretenses, representations and promises.
Goal of the Scheme
11. The goal of the scheme was for defendant SCHLEIDER to unlawfully
enrich himself by submitting or causing the submission of a false and fraudulent
attestation to HRSA in order to unlawfully keep and divert Provider Relief Funds
for his personal use and benefit.
Manner and Means of the Scheme
12. The manner and means by which defendant SCHLEIDER and others
sought to accomplish the goal of the scheme included, among other things, the
following:
a. On or about April 17, 2020, DME Company-1 received
approximately $322,237 from the HRSA Provider Relief Fund.
b. On or about May 4, 2020, defendant SCHLEIDER submitted
a fraudulent attestation electronically interstate to HRSA under the name of his
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spouse (the nominal owner of DME Company-1) in relation to the Provider Relief
Funds deposited with DME Company-1.
c. The attestation prepared by defendant SCHLEIDER falsely
claimed that DME Company-1 provided diagnoses, testing, and care for
individuals with possible or actual cases of COVID-19 after January 31, 2020.
In reality, DME Company-1 had ceased billing for any services in or around April
2019.
d. The attestation prepared by defendant SCHLEIDER also
falsely claimed that the payment would only be used to prevent, prepare for, and
respond to coronavirus, and that the payment shall reimburse the recipient only
for health care related expenses or lost revenues that are attributable to
coronavirus. In reality, defendant SCHLEIDER did not use the funds for those
purposes. Rather, after receiving those defendant SCHLEIDER transferred them
into other accounts and subsequently used them to purchase real estate and
vehicles, among other things.
13. On or about May 4, 2020, in furtherance of the scheme and artifice
to defraud described above, and for the purpose of executing and attempting to
execute the scheme and artifice to defraud, in the District of New Jersey, and
elsewhere, defendant
ALEXANDER SCHLEIDER
knowingly and intentionally transmitted and caused to be transmitted by means
of wire communication in interstate and foreign commerce certain writings,
signs, signals, pictures, and sounds; namely, an electronic attestation to the
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HRSA under the name of his spouse (the nominal owner of DME Company-1) in
relation to the Provider Relief Funds deposited with DME Company-1.
In violation of Title 18, United States Code, Section 1343.
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FORFEITURE ALLEGATIONS
1. Upon conviction of the Federal health care offense alleged in Count
One of this Information, defendant SCHLEIDER shall forfeit to the United States,
pursuant to 18 U.S.C. §982(a)(7), all property, real or personal, defendant
SCHLEIDER obtained that constitutes or is derived, directly and indirectly, from
gross proceeds traceable to the commission of such offense, which was at least
approximately $21,721,676.31, and all property traceable to such property.
2. Upon conviction of the wire fraud offense alleged in Count Two of
this Information, defendant SCHLEIDER shall forfeit to the United States,
pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c), all property, real
and personal, defendant SCHLEIDER obtained that constitutes or is derived
from proceeds traceable to the commission of such offense, which was at least
approximately $322,237, and all property traceable to such property.
SUBSTITUTE ASSETS PROVISION
(Applicable to Both Forfeiture Allegations)
3. If any of the above-described forfeitable property, as a result of any
act or omission of the defendant:
(a) cannot be located upon the exercise of due diligence;
(b) has been transferred or sold to, or deposited with, a third
person;
(c) has been placed beyond the jurisdiction of the Court;
(d) has been substantially diminished in value; or
(e) has been commingled with other property which cannot be
subdivided without difficulty;
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the United States shall be entitled to forfeiture of substitute property, pursuant
to 21 U.S.C. § 853(p), as incorporated by 18 U.S.C. § 982(b) and 28 U.S.C.
§ 2461(c).
__________________________
PHILIP R. SELLINGER
United States Attorney
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CASE NUMBER: 23-
═════════════════════════════════
United States District Court
District of New Jersey
═════════════════════════════════
UNITED STATES OF AMERICA
v.
ALEXANDER SCHLEIDER
═════════════════════════════════
INFORMATION FOR
18 U.S.C. § 1349
18 U.S.C. § 1343
═════════════════════════════════
PHILIP R. SELLINGER
UNITED STATES ATTORNEY
NEWARK, NEW JERSEY
═════════════════════════════════
Sean M. Sherman
ASSISTANT U.S. ATTORNEY
973-645-2733
═════════════════════════════════
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