Grand jury adds new charges in case alleging billing fraud by Kentucky drug clinics
A federal grand jury has returned additional charges against three people accused of submitting fraudulent bills to federally funded health care programs.
The three now face charges of aggravated identity theft, in addition to conspiracy and healthcare fraud charges included in an earlier indictment.
Those named in the new indictment are Dr. Jose Alzadon, Michael Bregenzer and Barbie Vanhoose.
The indictment says Alzadon worked at a series of clinics between October 2017 and late 2020 that went by different names, including Kentucky Addiction Centers, which had offices in Winchester and Paintsville.
Bregenzer was a part-owner of the business and Vanhoose was the billing manager.
The business “purported” to offer treatment for opioid use disorder, including by prescribing Suboxone, according to the indictment.
Suboxone is used in addiction treatment because it curbs the effects of withdrawal from pain drugs.
Alleged fraud scheme involves billing
Alzadon, Bregenzer and Vahoose are accused of taking part in a scheme to submit bills to Medicaid and Medicare for services that a doctor at the clinics provided, when in fact that doctor didn’t provide the service.
The doctor was identified only as Doctor-1 in the indictment.
The three created, or had others, create, false records for the claims, the indictment charges.
The fraud also allegedly included billing the federally-funded insurance programs for services that weren’t medically necessary or for a higher level of service than clients received, called “upcoding.”
The three also took part in using Doctor-1’s name in writing prescriptions without authority, the indictment says.
That resulted in the allegation of identity theft. In federal court, ID theft carries a mandatory minimum two-year sentence, to be imposed on top of any other prison time for someone convicted.
The clinics provided prescriptions in the name of Doctor-1, but Alzadon actually authorized them, the indictment alleges.
Charges against the three
The three each face one charge of conspiracy to commit health care fraud; 10 charges of health care fraud; two counts of aggravated identity theft; and one charge of conspiracy to illegally distribute drugs.
The most serious charge is the drug charge, punishable by up to 20 years in prison.
A grand jury in Lexington returned the superseding indictment Thursday.
Alzadon, Bregenzer and Vanhoose pleaded not guilty to the charges returned earlier in the case.
Another owner of Kentucky Addiction Clinics, Kristy Berry, was initially charged with them but pleaded guilty last December to charges of conspiring to commit health care fraud and to illegally distribute drugs.
The plea agreement in her case said the fraud resulted in a combined loss of $814,820 to Medicaid and Medicare between October 2017 and January 2021.
Berry has not been sentenced.
