Sentencing for the four defendants is scheduled for January 14, 2015
Four Massachusetts men have pleaded guilty as a result of their participation in a fraud scheme involving a Massachusetts health insurance company, HMA Direct. State insurance regulators first began investigating the company in 2009 which culminated in the U.S. Attorney’s 2011 indictment of the seven men and two woman including the four defendants today as well as HMA Direct’s former Chief Executive Officer Jedediah L. Brettschneider, 35, of Phoenix.
The defendants who plead guilty last week were William O’Brien of West Barnstable, Mark Celentano of Ipswich, Francis Gaetani of Sutton and Ronald Anger of Sutton. All of them appeared before U.S. Senior District Judge Mark L. Wolf on September 30, 2014.
According to the original 2011 indictment, HMA Direct, apparently offered self-funded insurance plans to small businesses throughout New England.
At the heart of the conspiracy charged in the indictment was HMA Direct’s practice of excluding from coverage, or “carving out,” clients with health risks so severe that they might interfere with HMA Direct’s bottom line. It is alleged that Brettschneider and many of the other defendants knew, such “carving out” was illegal (albeit not criminal). It is alleged that Brettschneider and the other defendants knew that in order to succeed with a business model that relied on fundamentally unlawful behavior, they needed to conceal important aspects of their business from clients, other health insurance companies and government agencies.
According to the allegations put forth against the four defendants, the core of HMA Direct’s business was to “carve out” from its clients “…self funded plans for those employees who had significant health risks” only to have those employees insurance through traditional health insurance providers by providing those providers with false statements and misinformation.
Both O’Brien and Celentano, who were both sales agents and managers of other sale agents for the insurer, participated in the carve-out scheme as well as subsequently lying to the health insurance providers in order to further perpetuate the fraud.
In addition to the above actions, Mr. O’Brien also arranged for Mr. Gaetani and Mr. Anger, who were investors in HMA Direct, to pretend that they were satisfied customers of the company and to provide fake references to prospective clients. The U.S. Attorney’s Office claims when contacted by federal investigators, Mr. Celentano then obstructed justice by lying about the role he had played in the HMA Direct carve-out scheme.
Mr. O’Brien has pled guilty to conspiracy, wire fraud, health care fraud, as well as to obtaining customer information from a financial institution by false representation. At his appearance before the Judge Wolf, Mr. Celentano pleaded guilty to conspiracy, health care fraud, and obstruction of justice. Mr. Gaetani and Mr. Anger each pleaded guilty to wire fraud.
For O’Brien, Gaetani, and Anger, the maximum sentence under the relevant statutes is 20 years in prison, three years of supervised release, and a $250,000 fine. For Celentano, the maximum sentence under the statute is 10 years in prison, three years of supervised release and a $250,000 fine.