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Texas Man Sentenced to 48 Months for Fraud Scheme Involving Theft of Electronic Health Records

A Texas man has been sentenced to 48 months in prison after pleading guilty to one count of conspiracy to obtain information from a protected computer.

Demetrius Cervantes of McKinney, TX, was one of three defendants indicted over the theft and misuse of protected health information. Prosecutors alleged the defendants unlawfully gained access to an unnamed healthcare provider’s EHR system, stole information, then repackaged that data to create false and fraudulent physician orders, which were sold to durable medical equipment providers and contractors. The defendants are alleged to have obtained $1.4 million from the sale of the data, which they subsequently used to purchase high value items such as vehicles and jet skis.

“Today’s sentence sends the message that the theft of protected health information, the fabrication of physicians’ orders, and the sale of prescriptions will not be tolerated in the Eastern District of Texas,” said Acting U.S. Attorney Nicholas J. Ganjei. “This office will continue to pursue those who place profits over patients and manipulate the healthcare system for their personal gain.”

The other two defendants named in the Sept. 11, 2019 federal indictment are Amanda Lowry and Lydia Henslee. Lowry, also of Texas, pleaded guilty to conspiracy to obtain information from a protected computer and is due to be sentenced later this month.

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Henslee, also of Texas, was charged in a superseding indictment with one count of conspiracy to unlawfully transfer, possess and use a means of identification and nine counts of unlawfully transferring, possessing and using a means of identification. In March, Henslee pleaded guilty to conspiring to possess and use a means of identification in connection with various offenses and will be sentenced later this year, although no date for sentencing has been set.

Henslee was also charged in a separate superseding indictment along with three men from Florida – Samson Solomon of Palm Beach and Steven Churchill and David Warren of Boca Raton – and Daniel Stadtman of Allen, Texas. The defendants were charged with one count of conspiracy to commit illegal remunerations. The defendants were allegedly involved in conspiring to pay and receive kickbacks in exchange for physician orders that were used to obtain payments from federal healthcare programs. In total, around $2.9 million is alleged to have been illegally obtained over an 8-month period.

If convicted on the charges, the four men face a maximum of 5 years in jail while Henslee faces a maximum jail term of 15 years.

The cases were investigated by the U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation, U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Department of Defense, Office of Inspector General, and Defense Criminal Investigative Service.

Author: Steve Alder is the editor-in-chief of HIPAA Journal. Steve is responsible for editorial policy regarding the topics covered on HIPAA Journal. He is a specialist on healthcare industry legal and regulatory affairs, and has several years of experience writing about HIPAA and other related legal topics. Steve has developed a deep understanding of regulatory issues surrounding the use of information technology in the healthcare industry and has written hundreds of articles on HIPAA-related topics.