New on Sports Illustrated: Analyzing the Health Care Fraud Case Against 10 Retired NFL Players

Ten retired NFL players face felony charges for conspiracy, wire fraud and health care fraud. If convicted, they could spend years in federal prison.

In an announcement that will send shockwaves through the ranks of retired NFL players and their families, Assistant U.S Attorney General Brian Benczkowski revealed in a press conference on Thursday that 10 retired NFL players face felony charges for conspiracy, wire fraud and health care fraud. These players are accused of using a collectively bargained health care fund as “their own personal ATM.”

The 10 players are Clinton Portis, Carlos Rogers, Robert McCune, Correll Buckhalter, Tamarick Vanover, John Eubanks, Ceandris Brown, James Butler, Frederick Bennett and Etric Pruitt. Six of them have agreed to self-surrender to federal authorities, while the remaining four refused to surrender and have been arrested instead.

Two other players, retired wide receivers Joe Horn and Reche Caldwell, are also accused and could face charges.

If convicted, each of the charged players faces the possibility of spending decades in federal prison.

No current NFL players are implicated and none is expected to face accusations. As detailed below, the only players who qualify for the allegedly misappropriated benefits are certain types of retired players.

Understanding the pyramid scheme

The accused players allegedly defrauded the Gene Upshaw NFL Player Health Reimbursement Account Plan of $3.4 million between 2017 and 2018. This $800 million plan is a collectively bargained benefit to retired players who qualify. The plan, which was established in 2006, is administered by a seven-member board of representatives appointed by the NFL or NFLPA. Cigna serves as the plan’s benefits administrator.

Funded by the NFL and its teams, the plan permits qualified NFL players to obtain reimbursement for medical expenses and medical equipment. Qualified players are those who, among reaching other benchmarks, played at least three seasons in the NFL. Along with their spouses and dependents, qualified players can use the fund to obtain tax-free reimbursements for out-of-pocket medical care expenses that aren’t covered by insurance. The potential value of the plan to each qualified player (and their families) is up to $350,000. The precise value is complicated by number of seasons played and when they played, but the takeaway is that the plan offers players and their families hundreds of thousands of tax-free dollars for health care expenses.

Reimbursement requests are made through a conventional practice. The player electronically transmits a reimbursement request form, along with supporting documentation. The claim lands at a data center in Lexington, Kentucky. From there the claim is routed to, and reviewed by, Cigna employees who are located in Lackawanna County, Pennsylvania. At that point, Cigna determines whether or not to pay. If the claim is approved, Cigna either mails a check to the retired player or makes the payment to the player through direct deposit.

This reimbursement process is ordinary and not especially complicated. The same could be said of the alleged scheme hatched by the retired players. The players are accused of submitting false claims for such pricy medical equipment as hyperbaric oxygen chambers, cryotherapy machines, ultrasound machines and electromagnetic therapy devices (designed for use on horses). In some instances, the equipment cost more than $50,000. In all instances the equipment wasn’t actually purchased.

To try to deceive Cigna, the players allegedly submitted fabricated documents that were portrayed as corroborating the request. Phony documentation included from health care providers. Such paperwork was manufactured to seem believable. To that point, false signatures of real doctors and the use of what appeared to be official letterhead were among the deceptive measures. If the government’s accusations are true, the players engaged in blatant health care fraud.

Two of the players are accused of taking additional steps to swindle. They are also portrayed as the scheme’s “ringleaders.” McCune, a linebacker who played sparingly for the Washington Redskins and Baltimore Ravens, and Buckhalter, a former running back on the Philadelphia Eagles and the Denver Broncos, allegedly dialed the telephone number provided on the reimbursement form and impersonated conspiring players. They did so to check on the status of the fraudulent claims and encourage payment as soon as possible. This was a risky move since phone calls to health care companies are sometimes recorded.

Like other health care schemes, the design of this one resembled a mafia pyramid. At the top were two ringleaders who directly and through runners recruited other players. They convinced their recruits to provide their Cigna identification numbers, social security numbers, mailing addresses and dates of birth. Such information was crucial to making credible sounding, but completely false claims. Later, when the recruited players received their ill-gotten reimbursement checks, they kick-backed several thousand dollars to the ring leaders. This process played out numerous times between 2017 and 2018. It led to $3.9 million worth of false claims, of which $3.4 million was paid out.

The accused players are portrayed as unwittingly leaving a trail of obvious criminal activity

There was an inherent defect in the players’ scheme: it was done electronically, and thus left a digital trail for FBI agents and federal prosecutors to follow.

The Fraud Section of the Justice Department’s Criminal Division for investigation was tipped off by Cigna after company employees had detected irregularities and anomalies in certain players’ reimbursement requests. As mentioned above, those requests included reimbursement requests for medical devices that cost tens of thousands of dollars to treat horses. They also included documents that, upon inspection, were fraudulent. Cigna’s anti-fraud staff soon realized there was an abnormal pattern and conveyed that point to the Justice Department. Using data analytics and other anti-fraud measures, the FBI exposed the scheme and its masterminds.

The fact that the fraudulent activity crossed state lines—beginning with a reimbursement request filed in a player’s home state, which in turn was transmitted to Kentucky, then onto Pennsylvania and lastly, through a reimbursement check or direct deposit, back to the player’s home state—is important in terms of the Justice Department’s jurisdictional authority. Criminal activity that crosses state lines empowers the federal authorities to take action.

The players face serious charges

The charges against the players are detailed in two indictments filed in the U.S. District Court for the Eastern District of Kentucky. U.S. Attorney Robert Duncan, who presides over federal prosecutions in the Eastern District of Kentucky, will oversee the cases. Charges include conspiracy to commit wire fraud and health care fraud, wire fraud, and health care fraud.

The conspiracy charges refer to agreements between the players to accomplish specific unlawful purposes. Here, the unlawful purposes are wire fraud and health care fraud. Proof of an illegal conspiracy generally requires a showing of knowledge, intent and a shared objective by the conspirators. Prosecutors insist that the conspiracy occurred in a straightforward and easy-to-see manner: there is unambiguous documentation of players submitting false claims for medical equipment that they didn’t purchase and unambiguous documentation of those players funneling a “cut” of reimbursement checks back to the ring leaders. Benczkowski, who supervises more than 600 federal prosecutions in the Justice Department’s Criminal Division, contends the players acted “brazenly.”

In carrying out the scheme, the players defrauded collectively bargained property—namely, funds that could have instead been distributed to legitimate reimbursement requests made by honest players and their families. As the government portrays it, there was nothing accidental or hidden about the players’ activities. They transparently, and intentionally, engaged in fraud. A conviction on federal conspiracy carries a maximum sentence of 20 years in prison.

As to wire fraud, it is a federal crime to use interstate wire communications—such as phone calls, emails, texts or bank transactions that cross state lines—to defraud a victim of its assets, money or property. Here, the players alleged used phone calls, faxes and other communications that crossed state lines and that were designed to procure ill-gotten reimbursements. Wire fraud, like conspiracy, carries a maximum prison sentence of 20 years in prison.

A charge for health care fraud is similarly designed. Health care fraud refers to knowingly or willfully using false pretenses to obtain money or property from a health care benefit program. The players are accused of knowingly submitting false reimbursement requests. If true, the players would be guilty of committing the underlying act. Health care fraud carries a potential penalty of 10 years in prison.

The players face the real prospect of being convicted and sent to prison for years

The players face multiple counts, each of which carries a maximum prison sentence of 10 or 20 years in prison. McCune, who is considered one of the two ringleaders, faces a stunning 19 counts. Obviously, the players—particularly if they lack criminal records—would not be sentenced to many decades or hundreds of years in prison. The “maximum” sentence for a charge is usually reserved for repeat offenders and for those who engaged in exceptionally egregious conduct. Also, the presiding judge could, and probably would, choose to run all or most of the sentences concurrently, rather than consecutively.

Still, the players face the very real prospect of spending a double-digit number of years in federal prison if they go to trial and are convicted. Although every case is different, a few months ago a health care facility owner was sentenced to 20 years in prison and, in a separate case, a hospital administrator was sentenced to 10 years in prison. Both defendants were guilty of federal health care fraud charges. Health care fraud, particularly when coupled with other kinds of fraud, often attracts lengthy sentences. This is because the convicted defendants essentially stole funds used to pay deserving persons.

The prospect of a conviction is also quite real with federal charges. Federal prosecutors obtain convictions at a rate of 85% to 95%. Faced with these daunting odds, about 90% of federal defendants plead guilty as part of plea deals and hope for leniency in sentencing.

Possible legal defense for the players and how plea deals would work

All of the players are innocent until proven guilty, which requires either a player entering a guilty plea or being convicted by jurors who unanimously believe there is guilt beyond a reasonable doubt. At this early stage in the prosecution, we have not yet heard from the players or their attorneys. In the coming weeks and months, those attorneys could offer defenses that cast questions on the government’s portrayals.

For instance, perhaps the players’ attorneys can show that the medical equipment devices at issue were, in fact, purchased or were in the process of being purchased. The attorneys might also insist that most of the players were victims themselves. Perhaps they felt coerced into partaking in a scheme that the ringleaders presented as legitimate and lawful.

The problem with these types of defenses is that there isn’t much gray area between a credible reimbursement request and a fraudulent one. Either medical equipment was purchased through legitimate invoices, prescriptions and letters of medical necessity or that didn’t happen. Also, if there is clear evidence of kickbacks, the players would struggle to persuasively insist that they “didn’t know any better.” Players transmitting portions of health care reimbursements to other players would seem like obvious kickbacks.

Some of the players might gravitate towards negotiating plea deals with prosecutors. In a plea deal, the player would plead guilty to the charges, or to lesser charges. In exchange, prosecutors would recommend that the player receive a relatively favorable sentence. For instance, instead of spending 10 or 12 years in a prison, a defendant who negotiates a plea deal on fraud charges might be sentenced to a year or two behind bars, along with probation and other non-incarceration penalties.

A plea deal would require that the cooperating player provide value to the Justice Department. The player would be compelled to share all email and other records. He must also be willing to implicate, and testify against, other persons, possibly including former teammates who also engaged in fraud.

To that point, George Piro, the Special Agent in Charge of FBI’s Miami Field Office and the top investigator in this matter, stressed during Thursday’s press conference that the investigation is on-going and will go where it leads. It’s possible other retired players who qualify for the plan could be charged. Whether that happens might depend on what is told to prosecutors as part of plea deals.

Law-abiding retired NFL players and their families should be concerned

It’s important to not paint retired NFL players with a broad brush. There are more than 20,000 retired NFL players, many of whom qualify for the reimbursement plan and many of whom have family members who are also covered. A fraction of one percent of retired players engaging in wrongful acts should not raise questions about the other 99%. Many retired NFL players have significant health care needs—it’s been said every retired NFL player has a preexisting condition—and lawfully rely on health care benefits. They are the real victims of fraud.

Benczkowski alluded to that point when warning that the reimbursement plan’s tax-exempt status is endangered by fraudulent activity. The accused players have “threatened the ability of law-abiding former players to continue to receive tax-free reimbursements for legitimate medical expenses for themselves or their families.” To that point, the Internal Revenue Service could review whether the plan remains compliant under federal law governing health plans and tax-exempt reimbursements.

If the plan lost its tax-exempt status, thousands of retired players would lose an important benefit that the NFLPA negotiated through collective bargaining. Players would then need to pay taxes on reimbursed funds on legitimate medical expenses for themselves or their families.

Michael McCann is SI’s Legal Analyst. He is also an attorney and the Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.

December 13, 2019 at 05:29AM
Analyzing the Health Care Fraud Case Against 10 Retired NFL Players