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Peter J. Costas, 26, of Red Bank, told a federal judge via teleconference that he paid some addicts several thousand dollars to use specific rehab centers in New Jersey and other states.
He and owners of a marketing company that he conspired with arranged for cross-country travel to the drug treatment centers in California and other states, U.S. Attorney Craig Carpenito said.
In exchange, Carpenito said, the conspirators “could generate referral fees from those facilities.”
The fraud cost health insurers millions, the U.S. attorney said Wednesday.
Costas carried out the scheme with several marketing companies, although one, in particular, was pivotal, Carpenito said.
The company, located in California, had contracts with drug treatment facilities around the county and paid Costas to recruit patients, he explained.
To convince addicts who otherwise wouldn’t have enrolled or traveled to the facilities, Costas offered bribes – “often as much as several thousand dollars,” Carpenito said.
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.
U.S. District Court Judge Peter G. Sheridan scheduled sentencing for Costas’s guilty plea to conspiracy to commit health care fraud for Sept. 29.
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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