Perpetrators of National ACA Enrollment Fraud Case Sentenced

Update 3/3/2021: This article has been updated to reflect that Jeffrey Yates was indicted as having participated in the Whites' fraud scheme. A previous version said that he was "found guilty," but this was inaccurate as he died in October 2020, according to local news outlets.

In a nationwide case, two individuals have been found guilty of an Affordable Care Act enrollment fraud scheme that used individuals in need of substance abuse care and falsely enrolled them in Affordable Care Act plans, the Department of Justice (DOJ) announced.

The defendants, Jeffrey White and Nicholas White who are father and son respectively, sought to enroll individuals in Affordable Care Act plans in states other than their own, specifically states that had high reimbursement rates for substance abuse treatment.

The two men went so far as to create fake residential addresses and cell phone numbers with accurate area codes that would direct the call to the Whites’ phones.

“In order to enroll the individuals in an ACA plan, the Whites paid the insurance premiums for the individuals, and also paid to have the individuals transported to California where the individuals were placed in expensive residential substance abuse treatment programs,” the DOJ explained.

Once the individuals were in these California-based substance abuse care centers, the centers would rack up high costs for these individuals’ care, which they would charge to the Affordable Care Act plans.

The Whites received compensation for each referral to these treatment centers and sometimes an additional share of the reimbursement funds that treatment programs received from Affordable Care Act health plans.

“The Whites conspired to defraud the Affordable Care Act, a program created to provide essential health care services to our nation’s uninsured,” said Brian C. Turner, FBI Special Agent in Charge.

“The Whites exploited both the opioid epidemic and the ACA by enrolling people with serious drug addictions into insurance programs for the sole purpose of enriching themselves and so-called rehabilitation centers. The ACA was not enacted to fill the coffers of greedy health care professionals.  The FBI is fully committed to investigating health care fraud in both government and private health insurance programs alike, and to bringing to justice those who commit such fraud.”

The Whites’ income from both the referral compensation and the kickback shares amounted to approximately $1 million.

“Health care fraud is not a victimless crime,” added Kristina O’Connell, IRS Criminal Investigation Special Agent in Charge. 

“Schemes of this magnitude ultimately hurt the taxpaying citizens who suffer from higher insurance premiums and reduced patient services. IRS will continue to lend our financial expertise to identify and prosecute those offenders who corrupt our health care system.”

States impacted by this Affordable Care Act fraud scheme included Arizona, California, Connecticut, Delaware, Indiana, Kentucky, New Jersey, Ohio, Oregon, Pennsylvania, Tennessee, and Texas.

Their federal crime could earn them as many as 10 years in prison. However, the father and son—who are currently released on bond—will spend a little over four years in prison combined. Jeffrey White will spend three years in prison and three years under supervised release and Nicholas White will spend 13 months in prison and three years under supervised release.

In 2019, the Whites’ co-conspirator—R. Jeffrey Yates—was also indicted with participating in this scheme.

Yates owned a treatment facility in California called “Morningside Recovery,” one of the treatment facilities for individuals struggling with substance abuse to which the Whites sent their clients.

The Department of Justice uncovered $2.5 billion in fraud and improper claims in 2018 and in 2019 and 2020 singular fraud lawsuits could reveal billions in false and fraudulent claims, such as a telemedicine and durable medical equipment scheme that was one of the largest of its time in 2019.

As fraud schemes get bigger and more complex, some payers are using artificial intelligence to combat these evolving strategies.

Highmark used artificial intelligence in 2019 to protect its members from commercial insurance fraud and saved $260 million in prevented losses due, in part, to this technology.

“The goal of AI is to adapt quickly to changing behavior and to help predict aberrances earlier than traditional tools that often rely on established rules to catch suspicious behavior,” Kurt Spears, vice president of financial investigations and provider review for Highmark Inc, told HealthPayerIntelligence. “We know it is much easier to stop these bad actors before the money goes out the door than pay and have to chase them.”

In order to eliminate insurance fraud, Spears emphasized that payers will need to work together and continue to ask themselves, “where are new healthcare dollars being spent and how can those systems or high-risk populations be exposed or taken advantage of?”