Fraudulent Billing Scheme Targets Medicare and Medicaid

Three individuals involved in a fraudulent billing scheme targeting Medicare and Kentucky Medicaid have been sentenced to prison. Michael Bregenzer, from Texas, received a 48-month sentence; José Alzadon, M.D., from Kentucky, received a 60-month sentence, and Barbie Vanhoose received a 24-month sentence. Collectively, they were ordered to pay restitution exceeding $812,000.

The fraud was executed through Kentucky Addiction Centers (KAC), spanning various Kentucky cities. José Alzadon, acting as the medical director, was responsible for prescribing Suboxone for opioid addiction, while Michael Bregenzer served as CEO and Barbie Vanhoose managed billing operations. They falsely billed Medicare and Medicaid by exaggerating service complexity and costs or billing for services not rendered.

Healthcare Fraud Scheme and Legal Repercussions

The individuals billed for services under Alzadon’s father’s credentials, despite his non-involvement, and misused his DEA registration to authorize prescriptions illegitimately. In March 2025, they were convicted of conspiring to commit health care fraud, with Alzadon and Vanhoose facing additional aggravated identity theft charges.

The Justice Department’s Fraud Section prosecuted the case, with support from federal and state agencies, including the DEA and FBI. The Department of Justice recently established the National Fraud Enforcement Division, focusing on combatting health care fraud as part of a wider strategy to address fraudulent activities in federal benefit programs. The Health Care Fraud Strike Force Program has charged over 6,200 individuals since 2007, highlighting significant financial risks to both federal and private insurance sectors.

For more information on health care fraud initiatives, visit the Department of Justice's health care fraud resources.