High-Profile Sports Insurance Fraud Rings: A Recent Conviction

No health insurance benefit program, no matter how high profile, is immune to the temptations of insurance fraud. In the past, multiple former NFL players pleaded guilty to defrauding the NFL Player Health Reimbursement Account Plan. According to the Justice Department, the defendants submitted about $2.9 million in false and fraudulent claims for expensive medical equipment—such as hyperbaric oxygen chambers, ultrasound machines and electromagnetic therapy devices—that were not actually provided. See, e.g., https://www.justice.gov/opa/pr/former-nfl-player-sentenced-prison-nationwide-health-care-fraud-scheme. Several of the former NFL players were sentenced to prison time in connection with this scheme, including “ringleader” Robert McCune.

More recently, the government indicted multiple ex-NBA players for participating in a similar, large-scale insurance fraud scheme. Many of the ex-NBA players pleaded guilty. A physician, Dr. William Washington, who was also charged in the scheme, proceeded to trial in the Southern District of New York earlier this summer. Washington was found guilty by a jury of wire fraud, health care fraud and other related crimes in connection with a scheme involving bogus claims submitted to the National Basketball Association’s Health and Welfare Benefit Plan (the NBA Health Plan). Washington’s sentencing was scheduled for Oct. 29, 2024, but he is now seeking a new trial.

Washington’s trial drew public attention due to his connection to famous and well-known former NBA players, but his actions in the scheme are akin to those taken by many other providers involved in health care fraud schemes that fill the dockets of both civil and criminal courts. The details of Washington’s indictment and trial are worth examining here.

The Criminal Indictment

On April 27, 2022, the Southern District of New York (the Government) unveiled a superseding indictment detailing a pervasive fraud scheme that the defendants orchestrated and executed from about 2017 to 2021, resulting in at least $5 million in fraudulent claims submitted to the NBA Health Plan for the reimbursement of health care services that in actuality were never rendered. The Government’s indictment painted Terrence Williams—a former NBA player—as the mastermind of the scheme. Specifically, the Government alleged that Williams recruited other former NBA players who were participants of the NBA Health Plan and supplied them with “fake” invoices that were submitted in support of their fraudulent claims, in exchange for at least $300,000 in kickback payments.

Integral to the defendants’ scheme was the recruitment of Washington and other health care providers who were willing to and agreed to create false invoices for medical services that were never performed. Specifically, in 2019, Washington met with Williams and others and agreed to supply them with fraudulent invoices for “wellness” services in exchange for a portion of the proceeds from the insurance fraud scheme. Once agreed upon, Williams obtained the sham invoices from Washington and provided those invoices to former NBA players so they could submit them to the NBA Health Plan. Even more, Washington created fake invoices for medical services purportedly rendered on certain dates despite the fact that the players were not even in Washington State at the time that the medical services were purportedly rendered. As described in the indictment, Washington and Williams communicated extensively—via text messages—about details of the fraud scheme, including the recruitment of other participants, the creation and submission of fake invoices, and the payment of kickbacks.

On Aug. 26, 2022, Williams plead guilty to conspiracy to commit health care and wire fraud and aggravated identity theft in connection with the scheme to defraud the NBA Health Plan. Thereafter, on Aug. 3, 2023, Williams was sentenced to 10 years in prison, and was ordered to pay restitution in the amount of $2.5 million and to forfeit $653,672.

Washington initially also plead guilty to conspiracy to commit health care and wire fraud but subsequently engaged in a series of legal maneuvers to avoid facing sentencing in connection with the fraud scheme. Specifically, on Sept. 26, 2023, Washington entered a guilty plea before Magistrate Judge Ona T. Wang and was scheduled to be sentenced on March 1, 2024. During his plea allocution, Washington admitted to working with Williams and others in a scheme to defraud the NBA Health Plan. Washington further admitted that he “prepared fraudulent invoices” that were submitted to administrators of the NBA Health Plan, resulting in him unlawfully obtaining hundreds of thousands of dollars. Despite this, Washington subsequently appealed directly to the court in hopes of withdrawing his guilty plea on the grounds that there were “procedural and constitutional issues impacting [his] due process rights.” In subsequent filings, Washington also claimed ineffective assistance of counsel and sought the court’s permission to proceed “pro se” in the criminal matter. Ultimately, the court granted Washington’s requests to proceed pro se and withdraw his guilty plea.

Washington’s Jury Trial

The evidence presented by the Government during the jury trial unveiled the brazen actions taken by Washington and others to defraud the NBA Health Plan. Marvin Ely—a co-defendant and former NBA player—testified at the trial on behalf of the Government and described an “arrangement” wherein Washington would help secure reimbursement of medical services that were never provided. Further, the Government presented text messages between Washington and Williams discussing the fictitious medical services and the fraudulent charges that would be submitted to the NBA Health Plan. Even more, during cross examination, Washington himself admitted that he intended to deceive the NBA Health Plan by submitting false invoices and claiming certain charges were intended to recoup balances on previously rendered medical services. The Government’s evidence revealed that Washington’s medical clinics received approximately $475,042 from the NBA Health Plan, which he funneled to a personal bank account and then converted to cash in order to split the proceeds with co-defendants.

Following the guilty verdict, Washington’s sentencing was scheduled for Oct. 29, 2024. However, Washington filed a motion on July 15, 2024 seeking a new trial on several grounds, including allegations of Brady and due process violations. In his motion, Washington also questions the reliability and authenticity of certain evidence introduced during the trial and goes as far as suggesting that the Government “relied on potentially fabricated evidence.” The Government, in its opposition, rigorously defends its case and points to the “overwhelming evidence” demonstrating Washington’s guilt. The court has yet to rule on the pending motion, and it remains to be seen whether this will delay Washington’s scheduled sentencing or whether he will receive a new trial.

Conclusion

In addition to Washington’s guilty verdict, the Government secured guilty verdicts against former NBA players William Bynum and Ronald Glen Davis, as well as several guilty pleas by other defendants. In a June 28, 2024 statement after the trial of Washington, the U.S. Attorney’s Office issued a statement announcing the guilty verdict as follows:

“Today, Doctor William Washington was found guilty by a unanimous jury of engaging in a widespread scheme to defraud the NBA Players’ Health and Welfare Benefits Plan. This scam by former players—some who earned tens of millions in successful NBA careers—and health care providers caused a loss of over $5 million to the health care benefit plan. The players and doctors who engaged in this audacious scheme clearly thought it would go unnoticed — they were wrong. Washington now stands convicted of federal crimes for facilitating fraud and betraying his oath as a health care provider.” See https://www.justice.gov/usao-sdny/pr/statement-us-attorney-damian-williams-conviction-william-washington.

Earlier this year, another high-profile former sports player was arrested in connection with a scheme to defraud automobile insurance company, Kemper Insurance. On April 15, 2024, Florida’s Chief Financial Officer Jimmy Patronis announced the arrest of former major league baseball player Yuniesky Betancourt and others for their alleged involvement in a staged automobile accident. Specifically, Patronis alleged that Betancourt was involved in a staged motor vehicle accident where he reported false information to the police, and thereafter, sought to illegally obtain insurance benefits. It is further alleged that Betancourt’s actions resulted in thousands of dollars in medical claims for health care services that he was not entitled to. Betancourt previously played for several MLB teams, such as the Seattle Mariners, Kansas City Royals and Milwaukee Brewers. He now faces multiple criminal charges, including charges of insurance fraud and organized scheme to defraud, and if convicted, faces up to 10 years in prison.

Plainly, many believe that even audacious, high-profile insurance fraud schemes will go unnoticed. That is an unfortunate tell-tale of the times we are living in today.

Reprinted with permission from the New York Law Journal^©, ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.