California minister sent to jail in massive Obamacare fraud after using phony addresses in Connecticut and other states

A California minster who devised a plan to treat desperate drug addicts by cheating health care providers in the early days of the Affordable Care Act was sentenced to prison in Hartford Tuesday for a fraud that grew so large it skewed the rates charged by insurance exchanges across the country and cost the health insurance industry nearly $28 million in losses.

Jeffrey White, youth minister at a rural church in the mountains north of San Bernadino, was sentenced to three years in prison - less than half of what he faced - after an emotional, hours-long hearing in federal court. White, who is 63, tearfully acknowledged allowing a recovery program he created for addicts to spiral into conspiracy that ended up raising costs of insurance for those arguably most in need of it.

White’s scheme broke rules designed under the affordable care act to set low local health care premiums by basing them on the anticipated health care needs of local exchange areas. He created false addresses and other identifying information that allowed addicts desperate for treatment to buy insurance outside the annual enrollment window and undergo residential, in-patient treatment in places far from their homes where the local exchanges offered more generous coverage.

Lisa-Noelle LeGare, a special investigator for a west coast health insurer, said in court Tuesday that the 163 fraudulent enrollees White directed to a California and Arizona health insurer so skewed the actuarial tables in some exchanges that the insurer raised Arizona premiums.

White is accused of fraudulently enrolling 300 people in residential treatment programs in 12 states, including Connecticut - where the fraud was detected.

Assistant U.S. Attorney David J. Sheldon said in a court filing that White’s conspiracy occurred early enough in the effective operation of the Affordable Care Act that it threatened to “skew the analysis of the success of the ACA or of individual plans across the country, or could affect the calculation of premiums to be paid by lawful ACA enrollees in any plan’s area.”

“By engaging in their conspiracy, the defendant and his co-conspirators caused losses to ACA plans in Arizona and elsewhere during this critical time of the ACA’s development, but more importantly, created financial harm that could ripple outward in a uniquely vulnerable environment,” Sheldon said.

Colleagues and friends of White said he left a successful business career and essentially impoverished himself, his wife and his 11 children through devotion to youth ministry. He became involved in trying to arrange treatment for drug dependency after the county sheriff asked his church for help when a wave of addiction swept into the San Bernadino area. Among those who became dependent was one of White’s sons.

U.S. District Judge Alvin was sympathetic - to a degree. White’s devotion was not in doubt. But Thompson said White set up a corrupt business and profited - if only in a relatively small way - from a conspiracy that, over three years, undermined the effective roll-out of the Affordable Care Act, a program was created to provide health insurance to people who had been unable to obtain or afford it.

“The plans that were victimized were the very ones that offered the best coverage,” Thompson said.

White had pleaded guilty to conspiracy to commit health care fraud and, under the sentencing scheme used in federal court, faced from about seven to about nine years in prison. Thompson said some imprisonment was necessary because White’s insurance scheme, however well-intentioned it might have begun, devolved into a corrupt business operation.

White took advantage of an exception in Affordable Care Act rules to circumvent the limited enrollment period and requirement to obtain local treatment. The exception allows year-round enrollment to those who can prove a qualifying life change, one of which is being required to relocate elsewhere in the country. White, working with a son who is also charged, created phony addresses, phone numbers and counterfeit leases that showed falsely that those seeking dependency treatment had moved to areas where more generous coverage was offered.

White also arranged to obtain kickbacks from the treatment facilities and hospitals where he directed addicts. As the conspiracy developed - and some of the health care providers became concerned about detection - Assistant U.S. Attorney David J. Sheldon said the kickbacks were disguised as consulting fees. But Sheldon said White spent half of what he collected in kickbacks on the patients for whom he was arranging fraudulent coverage.

Federal authorities charged on health care provider in the conspiracy, but it was unclear Tuesday how or if others will be charged.

While the insurance industry loss was about $27.6 million, Sheldon said White collected about $2 million from the providers over three years. He spent about $1 million flying his so-called customers to and from treatment and on other expenses such as clothing. Sheldon said White distributed the remaining $1 million among his family members and on other business interests.

White said that, early on, he didn’t realize he was breaking the law. He thought he was helping to save the lives of dependent people who, in his view, might have died without immediate intervention - long before the Affordable Care Act enrollment window opened.

He said his initial plan was to move addicts into rental cabins in California and enroll them in local treatment. The plan failed when an insurer balked at the idea of so many drug dependent insureds living at a common address. White said the failure turned him against the health insurance industry.

“I believed with all my heart I was the helper of the lost and hopeless,” he wrote in a letter to the court. “I despised insurance companies whom I saw as soulless corporate monsters willing to take funding from our government but unwilling to spend it to save the lives of those lost in addiction.”

White said has been convinced he was wrong and asked to expedite his sentencing.

“Now, I was not all about selfless sacrifice for the downtrodden,” he said. “This enterprise was originally designed as a business to make money and I did profit from my work.”

Sheldon said the fraud affected the Connecticut health exchange and plans to a lesser degree than some elsewhere.

White used phony address in Unionville and Norwalk to enroll individuals who never lived in the homes and were unaware they were parties to crimes. He also used a multi-family apartment building on Shultas Place in Hartford and a commercial address on Main Street in Danbury as fraudulent addresses. In all the Connecticut cases, White created fraudulent leases with false landlord names in order to establish the phony residence.