In an alleged scheme of massive proportions, two Florida brothers were convicted Thursday on federal charges of billing fraud at addiction treatment centers they operated.
The ruling came from a South Florida jury after a seven-week trial, in which brothers Jonathan and Daniel Markovich were accused of fraudulently billing $112 million in services at two separate facilities: Second Chance Detox LLC in Pembroke Pines and WAR Network LLC in Hallandale Beach. Jonathan Markovich owned both facilities.
The convictions of the two Miami-area brothers were for health care fraud and wire fraud.
Second Chance Detox — which was also known as Compass Detox — provided in-patient detox and residential services, while WAR Network operated an outpatient treatment program. Prosecutors contended that the Markovich brothers paid kickbacks to patient recruiters, received kickbacks from testing laboratories and billed for services that were never provided or were otherwise deemed medically unnecessary.
The two allegedly used recruiters to steer patients their way, enticing them with gifts such as airline tickets, illegal drugs and cash payments, according to prosecutors. Such tactics — which are commonly referred to as “body brokering” or “patient brokering” — were federally prohibited in 2018 under the Trump-era SUPPORT Act.
After receiving patients, prosecutors said the Markovich brothers billed on fraudulent claims by shuttling patients back and forth between Compass Detox and WAR Network. Patients were then said to have been provided illegal drugs by recruiters upon admittance to Compass Detox in order to ensure detox treatment, which was the most expensive service available at the brothers’ facilities.
The government further asserted that therapy sessions at Compass Detox were billed when they were not regularly provided or attended by patients, and that urinalysis drug tests — which were deemed excessive and not medically necessary — were ordered. Compass Detox patients were also supposedly given a so-called “Comfort Drink” to sedate them, and were provided large and potentially dangerous amounts of controlled substances to render them docile and compliant enough to remain at the facility.
“These substance abuse treatment facility operators orchestrated a massive, multi-year fraudulent billing scheme by taking advantage of patients seeking treatment,” Kenneth Polite Jr., an assistant attorney general with the U.S. Department of Justice’s (DOJ) Criminal Division, said in a news release.
The Markovich brothers’ actions were uniquely egregious, the government alleged.
Patients that were said to have been shuffled between Compass Detox and WAR Detox consisted of a core group that supposedly enabled the brothers to maximize revenue through routine readmissions.
Additionally, Jonathan Markovich was charged with money laundering, along with bank fraud connected to the Paycheck Protection Program (PPP). Previously, Markovich filed for PPP assistance and was alleged to have committed fraud by stating on applications that both Compass Detox and WAR Network were not engaging in illegal conduct.
The U.S. Small Business Association (SBA) oversees the PPP program, which was enacted as part of the CARES Act that was signed into law in March 2020. False statements made to the SBA can carry a prison term of up to 30 years, a fine of up to $1 million or both.
Jonathan Markovich was convicted on eight counts of health care fraud, and Daniel Markovich was convicted on two. Both were convicted of conspiracy to pay and receive kickbacks, as well as being convicted on two counts of paying and receiving kickbacks.
“Their tactics were brazen and the dollar losses immense,” George Piro, the special agent in charge of the FBIs Miami Field Office, said in the DOJ news release. “These health care fraudsters, driven by greed, sought to cheat their way to riches by billing tens of millions of dollars from various health care programs.”
Jonathan Markovich was separately convicted of conspiring to commit money laundering, two counts of concealment money laundering and six counts of laundering at least $10,000 in proceeds of unlawful activities. He was also convicted on two counts of fraudulently obtaining PPP loans for Compass Detox and WAR Network.
Both Jonathan and Daniel Markovich face up to 20 years each for health care and wire conspiracy fraud. Jonathan Markovich faces up to an additional 80 years on separate criminal counts.
Both brothers are scheduled to be sentenced in January.
“What happened today is a miscarriage of justice, and we intend to fight to reverse such wrongdoing,” Vanessa Singh Johannes, who is Jonathan Markovich’s attorney, said in a statement obtained by TV station WTVJ.
Daniel Markovich’s lawyer said she will also appeal her client’s verdict.
“The verdict is completely inconsistent with the evidence presented at trial,” attorney Marissel Descalzo said in a statement, which was also obtained by WTJV-TV. “I will appeal the verdict. I will continue to fight tirelessly to clear Daniel Markovich’s name.”
Four additional defendants have been charged along with the Markovich brothers in the case. The trial of the other four defendants is scheduled to begin in January.