A 41-year-old Honolulu man pleaded guilty in federal court Friday after he used unlicensed people to provide physical therapy and chiropractic services, then faked claims that resulted in collecting more than $3 million in payments over a period of 4-1/2 years.
Stephen Timothy Wells owned and operated Ehukai Kapolei LLC and Healthcare Partners Inc., which did business on Oahu as Oahu Spine and Rehab.
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 Friday, 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 more than $390,000 in 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.
Wells remains free on an unsecured $50,000 bond.
“As part of the plea agreement, Wells stipulated that his scheme caused a loss of between $250,000 and $550,000 and agreed to pay total restitution in the amount of $392,157.20, with half to be paid before sentencing. The United States and Wells agreed that Wells should be sentenced to a term of between probation and two years in prison,” according to a statement from the U.S. attorney’s office.
His attorney, Richard Sing, declined comment. Assistant U.S. Attorney Mohammad Khatib is prosecuting 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 allegedly submitted claims for payment for physical therapy and chiropractic services to TRICARE, Medicare, Veterans Health Administration and 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 allegedly provided “gifts and complimentary child care” to patients as a means of encouraging them to frequent his business, thereby maximizing the count of fraudulent claims he could submit, according to the federal court documents.
His fake claims allegedly 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 fund his lifestyle and other business ventures, according to the indictment.
Wells, who was born in La Jolla, Calif., surrendered his U.S. and Canadian passport in 2022 and remains free on an unsecured $50,000 bond until he is sentenced Jan. 29 before U.S. District Judge Jill A. Otake.
