Two Executives Sentenced to 20 Years for ACA Fraud Scheme
Two executives in the insurance industry received two decades in prison after being implicated in a fraud scheme impacting the Affordable Care Act (ACA), according to the U.S. Department of Justice (DOJ) announcement on February 18. The president of an insurance brokerage and the CEO of a marketing company were found guilty of defrauding the ACA program of roughly $233 million. Their scheme involved improperly enrolling thousands, including those facing homelessness, into fully subsidized ACA health plans for significant insurer commissions. These fraudulent actions triggered at least $180 million in unjustified government subsidy payouts.
Court documents disclosed that the executives employed 'street marketers' to entice vulnerable individuals with incentives to enroll in plans for which they weren't eligible. Furthermore, the executives used misleading sales tactics to prompt consumers to falsely report income levels, bypassing federal income verification protocols. This misconduct led to the denial of non-standard Medicaid applications, facilitating unmerited year-long enrollments and increasing their commission earnings.
Both executives were convicted in November 2025 for conspiracy to commit wire fraud, among other charges, and were ordered to pay $180.6 million in restitution. The case details are recorded as United States v. Lloyd et al., No. 25-cr-80016 (S.D. Fla).
In a separate legal incident, Charles Hunter Hobson, a former vice president of Corsa Coal Corp., was found guilty of a bribery scheme involving Egyptian officials, violating the Foreign Corrupt Practices Act (FCPA). Hobson's scheme brought Corsa Coal approximately $143 million in contracts from 2016 to 2018. He was accused of knowing about his agent's bribe payments, resulting in personal profits exceeding $200,000. Hobson's sentencing is set for June 25, with the case documented as United States v. Hobson, No. 2:22-cr-00086 (W.D. Pa).
Meanwhile, in Indiana, Dr. Bethany A. Cataldi was sentenced to over eight years in prison for healthcare fraud involving false claims for balloon sinuplasty procedures. The government alleged Dr. Cataldi improperly obtained nearly $20 million in payments, targeting both Medicare and private insurers. Her case is heard as United States v. Cataldi, No. 2:24-cr-00105 (N.D. Ind).
Zynex, Inc., a Colorado-based medical device company, entered a non-prosecution agreement due to fraudulent activities involving excessive billing and misrepresentation to payors and investors. The company agreed to pay up to $12.5 million and implement improved compliance measures. The agreement was sanctioned by the bankruptcy court.
Additionally, in Texas, a case suspected of involving a kickback scheme concluded with dismissal due to procedural issues, including statutory limitations. The case reference is United States v. Mortazavi et al., No. 3:24-cr-00049 (N.D. Tex).
James Rausch, a former sales director, was sentenced to eight months in prison for his involvement in a kickback scheme, violating federal Anti-Kickback Statutes. Rausch and his associates manipulated service agreements to disguise payments related to referrals, leading to fraudulent Medicare billing. His case is cited as United States v. Rausch, No. 1:25-cr-10189 (D. Mass).
Lastly, Ohio-based companies Kokosing Materials, Inc., and Barrett Paving Materials, Inc. reached settlements totaling $30 million to resolve allegations of fraudulent testing data submission on federally funded road projects. Accusations included reusing old data instead of conducting necessary quality assessments, violating the False Claims Act. Although no liability was determined, the allegations covered several years of misconduct.
These cases highlight the critical importance of maintaining rigorous compliance and integrity within the insurance and broader regulated industries. They reiterate the essential role of governance and accountability in avoiding legal repercussions and sustaining trust.