East Northport man convicted of $600M in health care fraud, feds say

An East Northport man was found guilty Wednesday of defrauding insurance companies out of more than $600 million and impersonating patients, federal prosecutors said.

The federal jury convicted Mathew James, 54, of health care fraud, wire fraud and identity theft scheme, prosecutors said in a news release.

James, who operated a medical billing company, Leale Inc. in East Northport, billed patients for a series of procedures different from those his doctor-clients performed, and had them schedule elective surgeries through an emergency room so insurance companies reimbursed at a higher price, prosecutors said. 

When insurance companies denied the reimbursement, James, according to court documents and evidence at trial, posed as several patients and demanded the companies to pay the balance which was tens or hundreds of thousands of dollars.

“The defendant stands convicted of carrying out an audacious scheme in which he used insurance companies like ATM machines. He stole hundreds of millions of dollars until he was finally exposed by a paper trail a mile-long, phone recordings on which he impersonated patients, and text messages and emails with his co-conspirator doctor clients demonstrating his nefarious billing practices," said U.S. Attorney for the Eastern District Breon Peace.

He was indicted on Aug. 22, 2019, according to court documents.

“James orchestrated a fraudulent medical billing scheme to steal from insurance companies and businesses, in order to line his own pockets,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department in a statement.

James will be sentenced at a later date and can face up to 10 years in prison for health care fraud conspiracy, up to 10 years for health care fraud, and up to 20 years for each of the three wire fraud counts. He will face a two-year mandatory minimum for three aggravated identity theft counts.

“Health care fraud, including fraudulent billing schemes like this, costs U.S. taxpayers tens of billions of dollars annually. These crimes impact all of us in many ways, including increased health insurance premiums, greater out-of-pocket expenses and copayment amounts for medical treatment, and reduced or lost benefits, just to name a few,” said FBI Assistant Director Luis Quesada in a statement.

James' attorney, Paul M. Krieger, declined to comment.