By Larry Keller
Coastal Delray Beach osteopathic doctor Michael Ligotti was a man in whom investigators had long been interested as they probed fraudulent practices in one of Palm Beach County’s largest industries — substance abuse treatment centers.
Numerous people have been charged and sentenced in recent years in connection with abuses at halfway houses — or sober homes — including medical insurance scams. Now some of them have turned on Ligotti.
The doctor was arrested at home in late July. The U.S. Justice Department charged him with conspiracy to commit health care fraud and wire fraud — fraudulently billing private insurance companies and Medicare of around $681 million, for which they paid $121 million over a span of nine years. His attorney said Ligotti “looks forward to establishing his innocence.”
A federal judge Sept. 1 in West Palm Beach conducted a preliminary hearing and concluded that the government’s evidence established probable cause for the case to move forward.
Ligotti, 46, is free on a $1.5 million bond that requires him to be electronically monitored, observe a 10 p.m. to 7 a.m. curfew and surrender any passports.
He has shuttered his medical practice, Whole Health, at 402 SE 6th Ave. One of his homes and the medical building are for sale. A second home was recently taken off the market. Investigators also executed a search warrant for computer hard drives, financial records, patient files and numerous other documents from Ligotti’s office, as well as for his cellphone.
While he has not been charged in connection with any patients’ deaths, Ligotti also recklessly prescribed 265,000 pills of buprenorphine to more than 2,800 patients, investigators say. A dozen of those patients died while still receiving the drug, and he repeatedly prescribed drugs to more patients than his license permitted, investigators contend.
Buprenorphine is an opioid approved for suppressing withdrawal symptoms and blocking the effects of other opioids. Like other opioids, it is addictive and can be misused.
“What we’re investigating is culpability and responsibility,” FBI special agent William Stewart testified at the daylong preliminary hearing.
Ligotti’s attorney, Ben Curtis, said in a written statement before the hearing: “As is always the case with any criminal matter, the burden of proof rests entirely with the government. And in this instance, we do not believe the U.S. Department of Justice’s claims — and that is exactly what they are at this point, just one-sided claims — will reconcile with actual evidence at a future trial.
“Dr. Ligotti thus looks forward to establishing his innocence.”
FBI cites years of abuse
Ligotti’s arrest is the latest development in federal and state efforts to thwart the insurance frauds and shams at sober homes that earned Palm Beach County in general, and Delray Beach in particular, a national reputation as the epicenter of these schemes.
While the alleged fraud in Ligotti’s case wasn’t limited to Palm Beach County, “we believe this to be the largest drug treatment/physician provider fraud in terms of dollar amount” locally, Alan Johnson, Palm Beach County chief assistant state attorney, said in an email.
Substance abuse treatment in Palm Beach County was once estimated to be a $1 billion-a-year industry. Rampant misconduct led to the formation of a federal task force as well as a Sober Homes Task Force by the county state attorney’s office. Ordinances enacted in Delray Beach were passed in an effort to stymie the opening of sober houses that were little more than flophouses.
Federal and state agencies combined efforts in the Ligotti case. The probe began in April 2014, FBI agent Stewart testified. Ligotti knew he was under investigation since at least October 2016, when he was served with a grand jury subpoena for Whole Health records. Yet the alleged conspiracy continued until “at least July of 2020,” Stewart testified.
“Numerous former patients, employees and associates working with Ligotti have provided information to law enforcement regarding fraudulent activity being conducted” by him, his staff and others, according to the FBI’s 62-page affidavit in support of establishing probable cause for Ligotti’s arrest and a search warrant.
Ligotti was the only physician at Whole Health, which included nurse practitioners and other medical professionals.
Details of investigation
Investigators allege the scheme worked like this:
Ligotti would, for a nominal or no fee, become the medical director of sober homes and treatment facilities. He provided them with “standing orders” enabling them to require urine tests from their residents that investigators assert were medically unnecessary. Brokers often connected sober homes with laboratories that would do the urinalyses.
Sober home operators would bill patients’ insurance companies for the urine tests authorized by Ligotti’s standing order. The labs in turn billed insurers for the tests, and some paid kickbacks to the brokers and sober houses. Ligotti profited by requiring businesses that received his signature on standing orders to send their insured patients to Whole Health for treatment, investigators allege. He charged for office visits and routinely ordered unnecessary urine and blood samples from patients at his own in-house lab, and billed hundreds of millions of dollars in fraudulent and unnecessary treatments, including nonexistent therapy sessions.
He billed one patient’s insurer $25,900 in tests during a single office visit, plus hundreds of dollars in additional fees. Investigators say Ligotti billed another patient’s insurer more than $840,000 in a little over six years. Another insurer was billed $707,000 in less than four years for a single patient.
Ligotti, who earned an undergraduate degree from Florida Atlantic University and his medical degree from Nova Southeastern University, was the purported medical director for more than 50 addiction treatment facilities, and signed 137 standing orders authorizing fraudulent tests, investigators say.
Business partner identified
One target of the probe, identified as a “business partner and close friend” of Ligotti, told the FBI last year that he was a “matchmaker” who introduced Ligotti to drug testing lab operators, according to the FBI affidavit. He was identified in court as Donte Stewart.
Stewart received about $1.6 million from four labs over a span of 14 months, the complaint alleges. He invested the money in Arrow Passage Recovery, a drug and alcohol treatment center in Massillon, Ohio, in which he and Ligotti were co-owners, investigators say. The company’s website says Stewart is the CEO. He lives in Fort Lauderdale, according to his Facebook page.
Patients were often brought to Ligotti’s office in passenger vans — “druggy buggies” — a nurse practitioner told investigators, carrying 10 to 15 addiction treatment patients.
One patient said that he and others living in a Fort Lauderdale sober home in 2013 were required by the owner to be driven in a van to Delray Beach to see Ligotti.
The patient said that in October 2018, while he lived in a sober home in Boynton Beach, patients were transported once a week in a van to visit Ligotti’s office.
“I would occasionally see vans,” Mark Armstrong, who lives in a townhome facing the Whole Health parking lot, told The Coastal Star.
“It actually was quieter than I expected. I’ve never seen more than three or four cars at one time.”
A nurse practitioner who worked at Whole Health in 2016, however, told investigators that the practice saw more than 100 patients a day.
Urine tests were especially lucrative. One lab billed insurance companies about $5,500 per test three times per week for urinalyses, the complaint states.
Investigators interviewed Whole Health patients who said that even though their urine was frequently taken at their sober houses and sent to labs, they nevertheless had to repeat the process on visits to Ligotti. The doctor got angry at nurse practitioners who didn’t collect urine samples from patients, regardless of the reason for their visits, two of them told agents. One of them said that Ligotti insisted, “Even if you have to scoop urine out of the toilet, you have to do it.”
Blue Cross Blue Shield and United Healthcare eventually placed Whole Health under “prepayment review”because of the clinic’s billing practices.
“The evidence provided both by Whole Health patients ... and employees shows that Ligotti’s primary concern was obtaining blood and urine from insured patients,” the FBI affidavit states. Not for use in patient care, but rather “to make money from insurance companies.”
The document cites five defendants, previously charged or about to be, in sober house insurance schemes who have cooperated in the case against Ligotti in the hope of receiving reduced sentences, favorable plea deals or lesser charges.
One of them is Eric Snyder, who owned a halfway house and treatment center and pleaded guilty to conspiracy to commit health care fraud and was sentenced last December to 10 years in prison. In pleading guilty, he agreed to testify against others suspected of involvement in patient brokering and insurance fraud. Snyder’s outpatient program was located a short walk down the street from Whole Health. Ligotti was listed as its former medical director, Snyder told investigators.
Defense attacks FBI case
Ligotti wrote a letter to regulators in 2013 stating that he was “astonished and outraged” to learn that his name and license were being used by drug addiction treatment entities without his permission.
Ligotti may have written the letter as a “manufactured defense” that he could point to later to show that he was unaware that treatment facilities were using his name and license to order expensive urine tests, according to investigators. Defense attorney Curtis scoffed at this during the September preliminary hearing. He noted that the government’s investigation of his client didn’t begin until the following year, so it made no sense that Ligotti would draw attention to himself by drafting such a letter if he were breaking the law. Throughout the hearing, Curtis got Stewart, the FBI agent, to concede there weren’t written contractual arrangements between Ligotti and his alleged co-conspirators, nor was there evidence in the form of checks or cash paid to his client as kickbacks. He also questioned the veracity of former Whole Health patients who were interviewed by investigators, getting Stewart to concede that, “yes, as a general construct,” drug addicts can be dishonest. Four or five of Ligotti’s staff helped in his scheme, including his office manager, according to Stewart. Former nurse practitioners at Whole Health said the office manager was the “pivot point” at the clinic and helped Ligotti interview job applicants and asked one of the nurse practitioners to write prescriptions for drugs that patients didn’t need, the FBI affidavit states. In addition to leveling the fraud charges, investigators suspect that Michael and Christine Ligotti, his wife, have tried to conceal assets. In May, the seven-bedroom home the Ligottis own and live in with their three children on Seagate Drive in Delray Beach was listed for sale at nearly $5.7 million. They paid $3.3 million for the home in 2014. Records show that it features a chef’s kitchen, media room, exercise room, library, wine cellar, air-conditioned garages, a tiled pool with hot tub, a half-basketball court and a batting cage.
The couple also owns a six-bedroom home on one acre west of Interstate 95 in Delray Beach, with a pool and slide and waterfall, a koi pond and a bocce court. It was listed for $799,000, but was recently taken off the market. Michael Ligotti’s parents and a pet pig live there.
The Ligottis also placed the Whole Health medical building up for sale in May for $4 million. If all three properties fetched close to their listed prices, they would total more than $10 million. The federal government, however, will seek to take the properties through forfeiture if Ligotti is convicted. As part of his scheme, the complaint says, Ligotti even created a shell company named Kruger Industrial Smoothing. Sound familiar? It’s the name of the fictional company George Costanza worked at in Season 9 of “Seinfeld.”