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Peter J. Costas, 27, of Red Bank, took a deal from the government rather than go to trial, pleading guilty via teleconference with a federal judge in Newark this past May to conspiring to commit health care fraud in exchange for the sentence.
He’ll have to serve just about all of his sentence because there’s no parole in the federal prison system.
Costas paid some addicts several thousand dollars to use specific rehab centers in New Jersey and other states, then arranged with the owners of a marketing company to pay their airfare, U.S. Attorney Craig Carpenito said.
In exchange, the conspirators “generate[d] referral fees from those facilities,” Carpenito said.
The fraud cost health insurers millions, the U.S. attorney said.
Of several marketing companies participating in the scheme, one was pivotal, Carpenito said.
The company, located in California, had contracts with drug treatment facilities around the country and paid Costas to recruit patients, he explained.
Costas primarily focused on addicts with good insurance coverage, remained in contact with the New Jersey patients at the facilities and specifically instructed them to “stay long enough to generate referral payments,” the U.S. attorney said.
Costas 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,” Carpenito said.
In a conversation on Facebook, a patient told Costas that if he made good on his promise to pay him, the patient would enroll in additional facilities to trigger additional referral payments and bribes.
“[J]ust get us [sic] grab the dough and put us in another place,” the patient wrote. “Get paid some more feel me. . . . I’ll keep this up all year wit[h] 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 PPL [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,” Carpenito said.
The facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral, of which Costas and his accomplices got about half, he said.
In addition to the prison term, U.S. District Judge Peter G. Sheridan sentenced Costas to three years of supervised release and ordered him to pay restitution of $502,208.
Carpenito credited special agents of the FBI with the investigation leading to the guilty plea, secured by Assistant U.S. Attorney Jason S. Gould of his Health Care Fraud Unit in Newark.
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