Philly Hospice Owner Sentenced 14 Years for $16 Million Fraud Scheme

The owner of a Philadelphia hospice agency was sentenced this week to 176 months in prison for his role in a $16.2 million Medicare fraud scheme.

Matthew Kolodesh, 52, of Churchville, Pennsylvania, was found guilty of conspiracy to commit health care fraud, 21 counts of health care fraud, 11 counts of money laundering and two counts of mail fraud by a federal jury in October 2013 prior to his sentencing this month.

From 2003 to 2008, Kolodesh’s business, Home Care Hospice Inc. (HCH) submitted false claims to Medicare totaling approximately $16.2 million for patients that were not eligible for hospice services, and for patients that never received the level of hospice services billed by the company. 

Court evidence revealed that the scheme was successful because nurses and other staff participated in altering patient records to make them appear eligible for hospice services, when in reality they were not. 

Kolodesh and HCH co-owner Alex Pugmand, who was the director of the company, also paid health care professionals, including doctors, for referring patients to HCH, even when those patients were not eligible or appropriate for hospice services. 

“Kolodesh’s 14-year prison sentence is a clear message to all those stealing from Medicare,” stated Nick DiGiulio, special agent in charge for the Inspector General’s Office of the U.S. Department of Health and Human Services in Philadelphia. “We will keep working with our partners to protect our health care system from fraud, waste, and abuse and to send thieves to prison.”

Evidence also found that Kolodesh siphoned $7.77 million dollars from HCH’s bank account for his own personal enrichment by way of setting up his spouse as a “sham CEO” of the company who received millions of dollars in salary draws and bonuses. 

The mail fraud conviction against Kolodesh stemmed from another scam he orchestrated that involved the Philadelphia Development Corporation (PIDC). 

In 2005, he and Pugman applied for a low-interest loan worth $2.5 million with PIDC, a program designed to stimulate business investment and create jobs in the city of Philadelphia.

The loan money was to be used to acquire and renovate a property for the business and to create 50 bona fide jobs in the Philadelphia at the site of HCH, however, between August 2005 and July 2009, the job quota was not being met. 

To prevent default on the loan, Kolodesh set up a sham office at the HCH location purportedly for Community Home Health, his health care business in Bucks County, in which he falsely identified 73 CHH employees as working at that office when they, in fact, did not work there. 

“Today’s sentence makes clear that the justice system will punish severely those criminals who engage in this type of fraud and abuse,” stated U.S. Attorney Zane David Memeger. “We will continue to work diligently with our federal partners to bring to justice those who defraud the government and deprive federal programs of valuable tax dollars.”

Written by Jason Oliva