David Finn Gets Architect of Massive Medical Kickback Scheme Light Prison Term

Andrew Hillman was sentenced in two separate fraud cases involving health care kickbacks and will be out in about 5 years.

The now-defunct Forest Park Medical Center was involved in a large-scale fraudulent scheme that Andrew Hillman took part in. (Rose Baca/The Dallas Morning News)[/caption]

Andrew Hillman, a mastermind of health care kickback schemes in Dallas, is headed to prison for a handful of years.

But his extensive cooperation with federal investigators during the past 17 months will continue to be felt in the North Texas medical industry, which has become one of the nation’s hotspots for fraud. Already, additional criminal cases have sprouted from his debriefing sessions with agents and more are expected.

Hillman operated mostly behind the scenes of the laboratory and pharmacy empire he built using a complex web of LLCs, shell companies and umbrella corporations. He kept a low profile. But his schemes netted him and his business partners staggering sums of money.

Citing “greed on a huge scale,” U.S. District Judge Jack Zouhary sentenced him on Thursday to serve five and a half years in federal prison and to pay $3 million in restitution. He had faced considerably more, if not for his cooperation.

“The future is yours Mr. Hillman,” Zouhary said before he was led away. “Make it a good one.”

Hillman, 43, and his primary business partner, Semyon Narosov, 55, are best known for their ownership of the Next Health network of pharmacies and testing labs that gave homeless people $50 gift cards to urinate in cups at Whataburger bathrooms. The specimens were sent to the Next Health labs for a battery of unnecessary and expensive tests under the guise of a wellness study, court records say, and doctors were paid kickbacks for referring patients.

Next Health’s offices were raided last year by federal agents. And Hillman and Narosov pleaded guilty that same year to conspiracy to commit money laundering in the Next Health case, admitting that their company billed private and government health insurance plans more than $450 million between 2012 and 2018 and collected about $150 million in fraudulent proceeds.

Dallas is one of roughly a dozen health care fraud hot spots across the U.S. in which the government has established Medicare Strike Force teams. The multi-agency law enforcement teams analyze data and work to “quickly identify fraud and bring prosecutions.”

Hillman and Narosov also pleaded guilty to their role in a $200 million health care fraud — also involving doctor kickbacks — in connection with the now-defunct Forest Park Medical Center. A trial in that case earlier this year led to convictions against several people, including the hospital’s managers and doctors. Narosov has not yet been sentenced.

The sentence handed down to Hillman on Thursday was for his roles in both the Forest Park and Next Health cases. Hillman, who is now broke, was described during the hearing as a funny and likable man who could be generous with his money, even though it was ill-gotten.

“I stand before you, a broken man,” Hillman told the judge. “I realize I’m the only one to blame.”

‘Crime spree’

Flipping through the lengthy pre-sentence report, Zouhary noted Hillman’s business smarts and other abilities and asked him, “How can all this be?”

“I surrounded myself with some bad sharks,” Hillman said.

But he had to think it wasn’t going to end well, the judge said.

“Greed got in the way of my judgment,” Hillman said.

Hillman testified for the government in the lengthy Forest Park trial, during which he was asked about his past activities under cross-examination. The exchange was reported by The Texas Lawbook.

“Mr. Hillman, is it fair to say that for the past 10 years you’ve been a one-man crime spree?” asked attorney Chris Lewis, who represented a surgeon in the case.

“I had a partner, sir,” he said.

As part of Hillman and Narosov’s plea agreements, the government agreed to drop charges in a marijuana distribution case against them. In that case, both were accused of buying a Los Angeles medical marijuana business and sending large shipments of the drug to Dallas.

Spin-off cases continue to arise from the ashes of Next Health.

The government filed a lawsuit in October, seeking the forfeiture of money and property seized from Vinson Woodlee and his company, Med Left LLC, which performed marketing services for Next Health. Next Health paid Woodlee’s businesses about $60 million as part of its fraudulent scheme, Assistant U.S. Attorney Chad Meacham wrote in the lawsuit.

The Woodlee family filed a motion last week to stay the proceedings in the forfeiture suit, on the grounds that they are the subject of an ongoing criminal investigation by the government. A judge has not yet ruled on that motion.

Next Health was run out of this office building and went out of business after federal agents raided it in 2018.

David Finn, an attorney for the Woodlee family, said his clients are cooperating with the government and hope to resolve the case soon. If the government chooses to prosecute them, it will end with a not-guilty verdict, said Finn, who is working with lawyer Tom Melsheimer on the case.

“They are God-fearing, tax-paying citizens with no criminal history whatsoever,” Finn said. “Andrew Hillman is a whirlwind of disaster, and he should thank his lucky stars he’s not spending the rest of his life in prison.”

Hillman and Narosov and Next Health are currently being sued by United Healthcare, a large insurance company that says the duo defrauded it out of $100 million with their kickback and bribery schemes using almost 100 shell companies. A recent filing in the 2017 lawsuit says the duo “paraded” around their Dallas office building, shooting a “money gun” at their employees. And they played “duck-duck-goose” to decide which workers to fire, the lawsuit said.

The insurer also said in a 173-page filing in September that Next Health’s owners flew around the country for “wild parties” in a fleet of four private jets. The men operated a fraud that is a “scourge on the modern health care system,” the lawsuit says.

United Healthcare also said in its recently-updated complaint that a former Georgia insurance commissioner profited from the massive fraud, which included a newly-discovered scheme involving substance abuse centers Next Health opened just to bill the government for services never provided.

‘Gift for mischief’

Dallas lawyer Elisa Reiter told Zouhary that Hillman, her friend of 12 years, spent many days with her ailing mother before she died and that he helped her family in many other ways.

Reiter said Hillman has a “gift for mischief” and tries to make people see the humor in things. She said he has continued his Jewish studies from behind bars and is helping other inmates learn to read.

Brian Poe, his attorney, said Hillman was abandoned by his father when he was just 6 months old and that he put his trust in the wrong fatherly figures later in life as a result. It turned his moral compass “upside down,” he said. In addition, certain lawyers not only gave him bad advice but also helped him hide fraud by “papering it up,” Poe said.

Assistant U.S. Attorney Andrew Wirmani said Hillman was involved in a “wide breath of criminal conduct” but also provided more cooperation than any other defendant he’s seen in his career.

Hillman’s first brush with the law came in 2005 when he and a high school friend were indicted on mail fraud and health care fraud charges for an alleged scheme to defraud workers’ compensation insurance companies by getting them to pay for unnecessary medical equipment.

The following year, the U.S. attorney’s office in Dallas dropped the charges against Hillman after the friend took the blame for the fraud and said Hillman had nothing to do with it, according to court records.

The first sign of real trouble for Hillman came in 2014, when one of Next Health’s testing labs, Medicus, agreed to pay $5 million in 2014 to settle a federal civil complaint that it defrauded Medicare over urine testing services.