Ex-doctor at Hialeah councilwoman’s clinic was convicted of similar healthcare fraud

Hialeah Councilwoman Angelica Pacheco is accused over and over again in a new healthcare fraud indictment of conspiring with a mysterious person referred to as “Individual 1” to steal millions of dollars from insurance companies for bogus services at her addiction treatment center.

The only clue in the 22-page indictment is that Individual 1 is identified as the “medical director” of Pacheco’s Hialeah company, Florida Life Recovery and Rehabilitation LLC, which is at the center of an alleged $19.1 million health-insurance billing scam between July 2017 and August 2020.

The Miami Herald has learned that Individual 1 is a former Miami-Dade doctor, Jose Santeiro, who is serving a four-and-a-half year prison sentence for his role in a criminal case similar to Pacheco’s. Santeiro, who was licensed to practice medicine between 1995 and 2022, is scheduled to be released from a Miami-area federal prison next year. He was the medical director of Pacheco’s Florida Life Recovery during the timeframe of the activity in her indictment, according to court and public records.

Santeiro, 63, of Miami Lakes, was found guilty in March 2022 of nine counts of healthcare fraud, including conspiring with others to bill $112 million to private insurers for detox services that were never provided or were medically unnecessary at two substance-abuse facilities in Broward County.

He was the CEO and medical director of Compass Detox, an inpatient detox and residential facility in Pembroke Pines, and the medical director of WAR Network LLC, a related outpatient treatment program in Hallandale Beach — both of which were implicated in a fraudulent billing scheme that prosecutors say shared Santeiro and some patients with Pacheco’s rehab company in Hialeah. At Santeiro’s trial, prosecutors brought up evidence of his critical role as Florida Life Recovery’s medical director.

The new indictment charging Pacheco led to her removal from office by Gov. Ron DeSantis, who said in an executive order Tuesday morning that she “is prohibited from performing any official act, duty, or function of public office.”

Pacheco, reached by phone that morning, confirmed to the Herald that Santeiro was her addiction treatment center’s medical director but did not want to comment on his conviction for healthcare fraud in March 2022.

Santeiro’s sentencing in July 2022 was among the last in a major “sober homes” case that had already resulted in the convictions and imprisonment of another Miami-area doctor, anesthesiologist Drew Lieberman; a Bay Harbor Islands lawyer, Richard Waserstein; two Bal Harbour brothers, Daniel and Jonathan Markovich; and other associates.

According to evidence at his federal trial in Fort Lauderdale, Santeiro and others admitted patients with drug and alcohol addictions for purported detox services after patient recruiters offered kickbacks to lure them into the programs.

Evidence also showed that Santeiro submitted false claims for excessive urinalysis drug tests that were never used in the course of patients’ treatment, according to the Department of Justice. Santeiro and others readmitted a core group of patients who were shuffled between Compass Detox and WAR so the rehab centers could fraudulently bill for as much as possible, prosecutors said.

Perhaps most striking, Santeiro prescribed Compass Detox patients a “comfort drink” to sedate them, prosecutors said. The comfort drink was purportedly a compound medication primarily used to help patients feel high and to keep them docile and compliant so they would remain at Compass Detox, prosecutors said.

“Dr. Santeiro’s conduct was essential for the scheme to occur at all, and did not just stop at Compass Detox and WAR,” Justice Department prosecutors Jamie de Boer and James Hayes wrote in a sentencing memo in 2022. “As the government proved at trial, Dr. Santeiro’s conduct extended to Florida Life Recovery and Rehabilitation LLC using the same laboratory arrangement, resulting in additional billing for fraudulent laboratory tests.”

Santeiro’s attorney, Sabrina Vora-Puglisi, who represented him at trial, declined to comment about his case or his employment as the medical director at Pacheco’s addiction treatment center . But during Santeiro’s sentencing hearing in July 2022, Vora-Puglisi argued the physician was unaware of the fraud committed by the other defendants convicted in the sober homes case and said that he only made about $267,000 working part-time at Compass Detox and WAR over a four-year period, not millions of dollars.

It remains to be seen whether Santeiro will be called as a witness if Pacheco’s healthcare fraud case goes to trial, but there’s no indication from the court record that he is cooperating with the Justice Department.

Many of the allegations in his case have surfaced anew in the indictment of Pacheco, a 37-year-old registered nurse who was charged last week with submitting $19.1 million in fraudulent bills for substance abuse therapy, urinalysis tests, and other drug and alcohol treatment services to multiple insurance companies between July 2017 and August 2020, according to the indictment filed in Miami federal court.

Pacheco, who is being represented by the federal public defender’s office, pleaded not guilty and was released on bond as she awaits trial. Her husband, Daniel, a business partner who initially registered Florida Life Recovery as a corporation, was not charged.

Pacheco said she is innocent and cannot afford a private attorney to represent her. “I am a working-class person, that’s why I qualified for a public defender,” she said. “My innocence will be proven, I am calm. ... I am not worried about the future, I know who I am, and what I have done and what I haven’t done.”

Although she is charged alone in the indictment, Pacheco is accused of conspiring with Individual 1 — Santeiro — and others to exploit Florida Life Recovery and four clinical laboratories to submit $19.1 million in bogus bills for substance abuse therapy, urine analysis tests and other services to multiple insurance companies between July 2017 and August 2020, according to the indictment.

She and her co-conspirators are accused of generating those bills by paying “kickbacks,” such as money, gift cards and airline flights, to patients in an effort to lure them to Florida Life and the labs, located in Broward and Miami-Dade counties as well as in Pennsylvania. They’re also accused of letting patients “piggyback” on other people’s insurance policies and offering additional benefits to existing patients for referring new patients with private insurance coverage.

In total, insurers including Aetna, Cigna and Blue Cross/Blue Shield paid Florida Life and the labs about $4.3 million, which Pacheco, Individual 1 and co-conspirators pocketed for themselves, the indictment says.

While the rehab center billed the private insurance companies, in many instances the patients did not attend their “purported” treatment sessions at Florida Life, according to the indictment, which was filed by Hayes, the Justice Department prosecutor in Santeiro’s prior case.

“The services were frequently not provided as billed, were so substandard that they failed to serve a treatment purpose, and/or were medically unnecessary,” according to the indictment.

To cover up, the indictment says, Pacheco, Individual 1 and their co-conspirators “created or caused to be created therapy notes for Florida Life falsely reflecting that therapy was actually provided when it was not.”

They even billed the insurance companies for purportedly treating patients “who were not in fact enrolled in treatment at Florida Life at the time,” prosecutors allege.

Investigation by the Department of Children and Families

In 2019, a different investigation was conducted by the Florida Department of Children and Families, which regulates the state’s addiction treatment centers. The state agency was following numerous complaints against Pacheco’s rehab facility when Santeiro was the medical director at Florida Life Recovery. The complaints included a lack of nursing staff on duty after morning hours and inadequate protocols for medication followup.

According to the DCF investigation, the rehab center also restricted patients to using Pharmacy Care Center, located at 2081 West 76st St. in Hialeah, rather than being allowed to choose another pharmacy in their insurance network.

In the DCF inquiry, Pacheco said she used Pharmacy Care Center because most of the pharmacies in the Hialeah area did not carry Suboxone, a prescription medication used to treat opioid use disorder.

As a result of the DCF inquiry, the agency denied Florida Life Recovery’s application to renew its Regular License for Day or Night Treatment with Community Housing, which expired on July 2, 2021, according to public records. Pacheco eventually dissolved her company in 2023, records show.

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