Federal Charges Against Physical Therapists
Welcome to Spodek Law Group. Our goal is to give you the reality of federal prosecution against physical therapists - not the sanitized version you find on compliance websites, not the vague warnings from your professional association, but the actual truth about what happens when the federal government decides your billing practices constitute healthcare fraud.
Most physical therapists facing federal investigation share the same terrifying realization: they had no idea they were being watched. The investigation started months or years before anyone knocked on their door. And by the time they learned about it, the government had already built most of its case using records the physical therapist created themselves.
Heres the thing that changes everything about how you should understand federal healthcare fraud prosecution: the government doesnt need to prove you intended to steal. They prove "knowledge" and "intent" through statistical analysis of your billing patterns. Your documentation, your scheduling software, your claims history - these become the evidence that convicts you. Not testimony about what was in your mind. Data about what was in your files.
What Actually Triggers Federal Investigation Against Physical Therapists
The surveillance begins before any human investigator reviews your case. Medicare data analytics systems constantly analyze billing patterns across every physical therapy provider in the country. These algorithms dont have opinions or biases. They have statistics. And when your numbers look different from everyone else's, you get flagged.
In 2025, the Department of Justice announced its largest healthcare fraud enforcement action in history - 324 defendants charged in connection with over $14.6 billion in alleged fraud. Physical therapists were explicitly targeted. This wasnt random selection. These were providers whose billing patterns triggered algorithmic flags, then survived human review of the data.
What triggers the algorithm? Billing significantly more than similar providers in your geographic area. Patient retention rates that seem unusually high. Specific procedure codes billed at disproportionate rates compared to peers. Time-based billing that suggests statistical impossibilities. The system notices patterns before investigators do.
OK so heres were it gets uncomfortable. Your practice might be doing everything right. You might provide excellent care. You might have genuinely longer treatment times because you believe in thoroughness. But if your data looks different from peers, the algorithm doesnt ask WHY. It just flags you for human review. And human reviewers approach flagged files with suspicion, not curiosity.
The Three Prosecution Patterns That Destroy PT Careers
Federal prosecutors dont bring random healthcare fraud cases. They follow patterns that have proven successful. Understanding these patterns reveals what your actualy being evaluated for - and its probably not what you think.
Pattern One: Unlicensed Staff Providing Billable Services
Stephen Timothy Wells owned Oahu Spine and Rehab in Hawaii. From July 2013 through early 2020, he submitted false claims by using massage therapists, athletic trainers, and personal trainers to provide services billed as physical therapy. Not licensed physical therapists. Support staff without PT credentials.
Wells probably thought he was helping patients get seen faster. The government thought he was submitting false claims. He recieved 9 months in federal prison plus 3 years supervised release and was ordered to pay $392,157.20 in restitution to TRICARE and Medicare.
Heres the part nobody talks about. Many clinic owners dont fully understand which staff credentials are required for which billing codes. They rely on billing software or billing staff to "figure it out." But owner liability means every claim with your practice name on it is your responsability. You cannot delegate criminal liability to your billing department.
Pattern Two: Services Not Provided As Documented
This is what prosecutors call "ghost billing" - but its more nuanced then most people understand. Ghost billing doesnt require fake patients or completely fabricated services. It means services werent provided AS DOCUMENTED.
In a Brooklyn scheme involving $30 million in fraud, patients were real. They came to the clinic. They spent time their. But heres what actualy happened: patients were told to remain in the clinic for nearly an hour - which they often did by simply watching television in a waiting room - while the physical therapist had "brief pro forma conversations" with them. Then the practice billed Medicare for roughly an hour of physical therapy services.
Real patients. Real clinic. Real time in the building. But the service billed - comprehensive physical therapy - wasnt what was provided. Hatem Behiry recieved 24 months in federal prison after a six-week jury trial.
Pattern Three: Kickback Arrangements
The Anti-Kickback Statute makes it illegal to pay or recieve anything of value in exchange for patient referrals. In a Los Angeles scheme involving $15 million in Medicare fraud, clinic owners paid kickbacks equal to about 55% of the reimbursement they recieved from Medicare.
Think about that. For every dollar Medicare paid, 55 cents went to the person who referred the patient. The patient referral became a commercial transaction. Everyone in the scheme knew exactley why patients were being sent to specific clinics - because money changed hands.
But kickbacks dont always look like envelopes of cash. They can be free rent, below-market leases, paid vacations disguised as "conferences," or services provided at suspiciously low rates. The government looks for anything of value exchanged in connection with referrals.
How Prosecutors Prove "Intent" Without Reading Your Mind
This is the core of why physical therapists get convicted even when they beleive they did nothing wrong.
Federal healthcare fraud under 18 U.S.C. § 1347 requires proof that you "knowingly and willfully" executed a scheme to defraud. Defense attorneys argue this means you must have consciously decided to commit fraud. Prosecutors argue it means you knew the claims were false - and they prove "knowledge" through your own records.
Chang Goo Yoon owned physical therapy clinics in Massachusetts. He billed $50,000 in PT claims on dates when cell phone data and credit card records placed him at casinos. He billed $150,000 when traveling in South Korea, Los Angeles, and Toronto.
The government didnt need his confession. They didnt need witnesses to testify about his mental state. They needed his cell phone records, his credit card statements, his travel documents. Mathematical impossability became proof of knowledge. He recieved 27 months in federal prison.
Heres the thing. Even without casino gambling, prosecutors build "knowledge" cases through pattern analysis. If your documentation shows four simultanous hour-long one-on-one appointments, the clock proves fraud. You cant be in four places at once. The scheduling software testifies against you.
The standard prosecutors use is called "willful blindness" or "deliberate ignorance." They dont need to prove you actually knew. They prove you SHOULD have known - that you deliberately avoided learning about problems that were obvious to anyone paying attention. Billing patterns that no reasonable physical therapist could overlook become proof that you must have overlooked them intentionally.
Think about what this means practically. You hired a billing company to handle claims. You trusted there expertise. You signed off on batches of claims without reviewing each one. Prosecutors argue this shows you deliberately avoided knowing about fraudulent billing. The delegation of responsibility becomes evidence of willful blindness rather then innocent reliance on professionals.
Let that sink in. The records you create to prove you provided quality care become the evidence that you knew billing was false. The more thorough your documentation, the more ammunition prosecutors have to find inconsistancies between treatment notes and billing codes.
As Todd Spodek explains to clients facing this situation: the paradox is real. Documentation that should protect you becomes the weapon used against you. But the solution isnt less documentation - its accurate documentation reviewed by someone who understands how prosecutors will analyze it.
What Happens When Patients Are Interviewed
Federal investigators dont just analyze billing data. They interview patients. And patient memory is devistating to physical therapists who billed for more then what patients remember recieving.
The questions are simple: How long were your therapy sessions? What exercizes did you do? How often did you see the actual physical therapist versus support staff? Did you spend time in a waiting room during what was suposed to be treatment time?
Patients dont lie under federal investigation. They answer honestly. And honest answers from patients who recieved 20 minutes of attention - when the practice billed for 45 minutes - create a gap. That gap is evidence.
In the Brooklyn scheme, patients testified that they sat in waiting rooms watching television. They thought they were waiting for treatment. They were actualy being used to justify billing claims. There recollections matched each other. The pattern became impossible to explain away.
Notice the problem. Your patients like you. They want to help you. But they cant lie to federal agents without risking there own criminal liability. And when asked direct questions about session length and activities, they tell the truth as they remember it.
The Timeline Nobody Prepares You For
Federal healthcare fraud investigations operate on government time, not your time. Understanding the timeline reveals why early intervention matters so much.
Month 1-6: Medicare data analytics flags your billing patterns. You have no idea this has happened. You continue practicing normally, creating more documentation that will eventually be used against you.
Month 6-18: HHS Office of Inspector General opens an investigation. Subpoenas go to banks, insurers, and possibly your billing company. Still, you know nothing. Your staff may be contacted and interviewed. If a qui tam lawsuit was filed, DOJ is investigating under seal.
Month 18-30: Patients are contacted and interviewed. Federal agents ask about session lengths, treatments recieved, and there experiences at your clinic. Patients think there helping with "quality review." They dont realize there statements are building a criminal case against you.
Month 30-36: If the case is strong enough, a federal grand jury reviews evidence. Grand juries hear only the government side. There is no cross-examination. The conviction rate at grand jury is effectively 100% - if prosecutors present the case, indictment follows.
Month 36+: You learn about the investigation through arrest, subpoena, or target letter. By this point, the government has gathered years of evidence. The case is largely built. Your opportunity to shape the narrative happened months or years ago - and you didnt know to act.
This timeline explains why physical therapists feel blindsided. From there perspective, federal agents appeared suddenly. From the governments perspective, they spent years preparing before making contact.
The Sentence Reality: 9 Months to 8+ Years
Federal healthcare fraud convictions result in real prison time. Not probation. Not house arrest. Federal prison.
According to U.S. Sentencing Commission data, healthcare fraud defendants recieve an average sentence of 27 months - and thats with plea deals that reduce exposure. Defendants who go to trial and lose face higher sentences.
Heres the range from actual physical therapist cases:
- Stephen Timothy Wells (Oahu): 9 months + $392,157 restitution for using unlicensed staff
- Chang Goo Yoon (Massachusetts): 27 months + $300,000+ restitution for billing while traveling
- Hatem Behiry (Brooklyn): 24 months after jury trial for participation in ghost billing scheme
- Gyulnara Bayryshova (Brighton, MA): 36 months + $7,383,756 restitution for clinic fraud scheme
- Arisleidys Fernandez Delmas (Florida): 104 months - over 8 years - for role in $36 million PT scheme
The determining factors in sentence length: dollar amount of fraud, duration of scheme, role in organization, and whether you cooperated or fought. "Cooperation" doesnt mean explaining your billing practices to investigators. It means pleading guilty early and providing information about others involved.
Spodek Law Group has seen clients who thought there cooperation would earn leniency discover that cooperation without legal guidance simply provided more evidence. The government thanks you for the help and recommends the same sentence anyway.
The Consequences Beyond Prison
Prison is temporery. The professional consequences are permanant.
Healthcare fraud conviction triggers mandatory exclusion from Medicare and Medicaid. This isnt discretionary. Its automattic. Upon conviction, you cannot bill federal healthcare programs. Period. Your career treating the patients who most need affordable care ends the day your convicted.
But its worse. State licensing boards recieve notification of federal conviction. License revocation proceedings begin. Even if you somehow kept your license, no hospital will grant you privileges. No insurance company will credential you. Your professional reputation - built over decades - evaporates.
And the civil consequences pile on. The False Claims Act allows penalties up to $27,894 per false claim. A physical therapist billing 20 patients per day creates 20 potential false claims daily. Over a year, thats over 5,000 claims. Theoredical exposure exceeds $139 million from False Claims Act liability alone.
Then theres the qui tam dimension. The False Claims Act allows employees who witness fraud to file lawsuits on behalf of the government. These "whistleblower" cases are filed under seal - meaning the investigation happens without your knowledge for years. If the government intervenes and recovers money, the whistleblower recieves 15-30% of the recovery.
Your billing staff who disagreed with practices. The front desk employee who thought something was wrong. The therapist who quit under suspicious circumstances. Any of them could have filed a qui tam lawsuit that triggered everything.
Defense Strategies That Usually Fail
Physical therapists facing federal healthcare fraud charges often arrive at there attorneys office with explanations they beleive will clear everything up. Most of these explanations have been heard before - and rejected before.
"I relied on my billing company." The government argues you remained responsible for claims submitted in your name. Delegation doesnt eliminate liability. If anything, it shows willful blindness.
"The billing codes are confusing." Medicare fraud convictions happen to experienced providers who knew the billing rules. Claiming confusion when youve billed millions of dollars over years undermines your credibility.
"I actually provided the services." If patients remember 20 minutes and you billed for 45 minutes, "I provided the services" isnt a defense. The issue isnt whether treatment occurred but whether billing matched reality.
"Everyone in the industry does this." Even if true (which is questionable), widespread fraud doesnt legalize your fraud. This argument tends to annoy judges rather then persuade them.
"I'll just pay it back." Once federal criminal charges are filed, restitution is part of the sentence, not an alternative to prosecution. You cannot write a check to make federal felony charges disappear.
What actualy works: demonstrating that billing patterns resulted from genuine compliance efforts, documented training, immediate correction when errors were discovered, and absence of personal enrichment patterns. These factors can keep cases in civil settlement territory rather then criminal prosecution - but only if addressed before charges are filed.
What To Do If Your Under Investigation
The moment you learn of federal interest in your practice - a subpoena, a patient mentioning an interview, a letter from Medicare - the clock starts running on decisions that will determine the rest of your life.
Do not explain. Physical therapists instinctivley want to demonstrate there innocence by explaining there billing practices. This is the worst possible response. Explanations become evidence. Cooperation without counsel becomes self-incrimination. The government records everything you say and uses it to prove you "knew" what the billing codes meant.
Do not destroy. Obstruction of justice charges carry there own prison sentences. Document destruction after investigation begins is a seperate federal crime. Whatever your records show, destroying them makes everything worse.
Do contact a federal healthcare fraud defense attorney immediately. Not your malpractice carrier. Not your business lawyer. Someone who specifically handles federal healthcare fraud prosecutions and understands how these cases are built and defended.
At Spodek Law Group, we tell clients the hard truth: by the time you know about the investigation, the government has already gathered extensive evidence. The question isnt whether theyll find problems - theyre looking because algorithms already flagged problems. The question is how to characterize what they find.
Billing errors arent crimes. Regulatory complexity isnt intent to defraud. Good physical therapists can face bad accusations. But proving that requires understanding how prosecutors build healthcare fraud cases - and presenting an alternative narrative before charges are filed.
The window between learning about investigation and potential indictment is critical. Its when defense strategy matters most. Its when cooperation versus silence decisions have maximum impact. Its when the trajectory of your case gets established.
If your facing federal investigation or have reason to beleive your billing practices may attract scrutiny, the next 48 hours matter more then the next 20 years of your career. The prosecutors have been building there case. Now its time to build yours.
Call Spodek Law Group at 212-300-5196. The consultation costs nothing. Not calling costs everything.
They built there case over years. You have days to respond. The asymmetry is deliberate. But its not hopeless. The difference between prison and resolution often comes down to who tells your story first - and how convincingly they tell it.
