A 41-year-old Waialua man was sentenced to nine months in federal prison for using unlicensed workers to provide physical therapy and chiropractic services, then faked claims that resulted in collecting more than $3 million in payments.
Stephen Timothy Wells must pay restitution to TRICARE, a health care program for U.S. military service members and their families, and Medicare totaling $392,157.20, according to the U.S. Attorney’s Office.
“Tens of billions of dollars are lost to health care fraud each year, robbing Americans of vitally needed quality health services,” acting U.S. Attorney Ken Sorenson said in a statement. “Over a nearly seven-year period, the defendant endeavored to bilk our nation’s taxpayer- funded TRICARE and Medicare programs out of as much money as possible. He diverted scarce program dollars from military service members and their families, as well as elderly and disabled Americans — some the most deserving and physically and financially vulnerable members of our society.”
Friday’s sentence should serve as a “warning to those who attempt to cheat our taxpayer-funded insurance programs: you will be caught and when you are, a prison sentence awaits.”
Wells owned and operated Ehukai Kapolei LLC and Healthcare Partners Inc., which did business in Kailua and Aiea as Oahu Spine and Rehab. Wells, who was born in La Jolla, Calif., surrendered his U.S. and Canadian passports in 2022.
Wells had no medical training or other training related to health care, according to a Dec. 8, 2022, indictment charging him with seven counts of health care fraud and four counts of aggravated identity theft.
A superseding indictment secured by federal prosecutors May 16 amended the charges to 12 counts of health care fraud and four counts of aggravated identity theft.
As part of an agreement with the U.S. Department of Justice filed in federal court on Sept. 27, Wells pleaded guilty to a single count of health care fraud.
In exchange, federal prosecutors agreed to drop the other 15 charges at sentencing.
In addition to paying restitution, Wells will be “excluded from participation in all federal health care programs and from Medicare and state health care programs” for an amount of time to be determined.
Wells used “staff members other than physical therapists to provide physical therapy services to patients.”
“Such staff members included persons who were licensed massage therapists, certified athletic trainers and personal trainers, and others who had no licenses or certifications whatsoever,” read the May 16 indictment.
Assistant U.S. Attorneys Mohammad Khatib and Rebecca Perlmutter prosecuted the case.
The case was jointly investigated by the Defense Criminal Investigative Service and the Office of Inspector General of the Department of Health and Human Services.
Between July 2013 and early 2020, Wells submitted claims for payment for physical therapy and chiropractic services to TRICARE, Medicare, the Veterans Health Administration and the Hawaii Medical Service Association.
In the May 16 indictment, federal prosecutors highlighted 12 false claims allegedly made by Wells — eight to TRICARE and four to Medicare — ranging from $80 to $315 as examples of services provided by unlicensed staff members.
In the cases of Medicare claims, which require a national provider identifier — a unique number issued by the Centers for Medicaid and Medicare Services — Wells allegedly used the name and NPI number of licensed practitioners when they did not perform any of the work.
Wells allegedly used NPI numbers of four legitimate NPI holders to submit claims to health care benefit programs that falsely stated physical therapy and chiropractic services had been provided when unlicensed employees at Oahu Spine and Rehab performed the services.
Wells allegedly used six different billing codes that detailed the kind of treatment patients received.
He also gave “gifts and complimentary child care” to patients to get them to use his business, thereby maximizing the count of fraudulent claims he could submit, according to the federal court documents.
His fake claims resulted in $3.3 million in payments to his company, according to federal prosecutors.
Wells allegedly diverted money from those payments and used it to pay for his lifestyle and other business ventures, according to the indictment.
