First National-Scale ACA Fraud Case Makes Waves in Connecticut

HARTFORD (CN) — Federal prosecutors on Friday touted the indictment of a California man as the “first of its kind” involving large-scale fraudulent enrollments of people in plans under the federal health care law.

Though announced this afternoon, the indictment against R. Jeffrey Yates, of Santa Ana, California, is dated Oct. 31 and was unsealed Wednesday. Yates was arrested on Nov. 6 in California and is released on bond pending his Connecticut arraignment on 13 counts of conspiracy and fraud.

Enacted in the Obama administration, the Patient Protection and Affordable Care Act is a federal law that allowed everyone to purchase health insurance on the federal or state-based exchanges, regardless of their medical condition or gender. Each exchange offers a range of health insurance plans with different benefit levels. 

Yates owned and operated Morningside Recovery, a substance-abuse treatment facility in California. Prosecutors say he conspired with father-son duo Jeffrey and Nicholas White to fraudulently enroll individuals with substance abuse problems “in ACA plans that offered the highest possible reimbursement for residential substance abuse treatment services, even though the patients were not in fact residents of the offering state, as required by law.” 

After Whites and Yates then arranged to have the individuals admitted to Morningside Recovery facilities for treatment, according to the indictment, Morningside Recovery then billed ACA plans in Connecticut and elsewhere for thousands of dollars for treatment services. 

Prosecutors say Yates and Morningside Recovery then paid the Whites for each patient that had been placed in a Morningside facility. 

“In order to fraudulently enroll the patients in the designated ACA Plans, the defendant and his co-conspirators made materially false representations to the ACA plans about  where the patients lived or intended to live, and concealed the patients’ actual residences from the ACA Plans,” the indictment states. 

In addition to one count of conspiracy to commit health care fraud and mail fraud, Yates faces seven counts of health care fraud and five counts of mail fraud. 

More than a year ago, the Whites each pleaded guilty to one count of conspiracy to commit health care fraud and admitted that their scheme resulted in more than $27 million in losses to ACA plans across the country, including ACA plans in Connecticut, Arizona, California, Delaware, Indiana, Kentucky, New Jersey, Ohio, Oregon, Pennsylvania, Tennessee and Texas. They await sentencing. 

The case is being prosecuted by Assistant U.S. Attorney David J. Sheldon.

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