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Curses, Stereotypes Aren't Pros' Misconduct in Medicare Fraud Case

By Casey C. Sullivan, Esq. on June 10, 2015 | Last updated on March 21, 2019

The operator of a home hospice care company had his Medicare fraud, conspiracy, and money laundering convictions upheld by the Third Circuit recently. Matthew Kolodesh had claimed that his conviction was obtained through prosecutorial misconduct.

He alleged that the prosecutors improperly relied upon a recording of him planning to defraud Medicare and improperly introduced stereotypes that Russians sought to "game the system." The Third Circuit, however, disagreed, finding that the prosecutor's actions were appropriate given the context.

The Medicare Fraud Scheme

Kolodesh and his partner, Alex Pugman, started Home Care Hospice together, as equal owners, while Kolodesh's wife handled the day-to-day management. The three soon began giving gifts and cash to doctors in exchange for referrals. Some were given fake jobs, but paid real paychecks.

Almost all of the company's funding came from Medicare reimbursements. As Medicare only reimburses hospice treatment for mentally ill patients in care for a limited time, many of Home Care Hospice's claims for reimbursement were fraudulent.

Kolodesh and company were eventually found out and Kolodesh was convicted of health-care fraud, mail fraud, money laundering and conspiracy. He was sentenced to 176 months in prison and ordered to pay $16.2 million in restitution.

Prosecutorial Misconduct Claims

On appeal, Kolodesh sought to have his conviction overturned due to prosecutorial misconduct, among other grounds. Kolodesh particularly objected to the prosecution's repeated referral to what the court labeled the "F*** Medicare Statement." When under investigation, Kolodesh had been recorded saying "We have to f*** them over this time, one more time and be smart about it." Except he said it in Russian. According to Kolodesh, the prosecution should have said that the F*** Medicare Statement only appeared in later transcriptions.

The Third Circuit was not convinced. First, it noted, Kolodesh had stipulated to the truth and accuracy of the translations. Second, the statement was relevant to the charge of conspiracy, as direct evidence that Kolodesh was conspiring to defraud Medicare.

Further, the reliance on the statement was not an attempt to invoke a stereotype of Russians who "game the system," the Third found. While there were references to Russians generally, they were not elicited by the prosecution. Further, references to the "Russian team" of nurses were not prejudicial as that was how Kolodesh's employees were organized -- those who spoke Russian dealt with Russian patients, the rest dealt with English speakers.

None of Kolodesh's claims of prosecutorial misconduct could stand when examined in the proper context, the Third Circuit held. The court affirmed his conviction and sentence in full. Kolodesh can now turn his attention to accusations that he also defrauded consumers, this time through an online furniture retail business.

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