For more than four years, a personal trainer who called himself "Dr. Dave" fraudulently billed major health insurers for about $25 million, collecting about $4 million in cash, Marshall Allen writes for ProPublica/Vox. Here's how he did it—and what finally brought him down.

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Who was Dr. Dave?

"Dr. Dave" was a nickname adopted by Dave Williams, who was not in fact a medical doctor. Williams had a doctorate in kinesiology and worked with clients as a personal trainer.

Even before he began his latest fraud scheme, Williams had been convicted of two felonies, Allen reports. Back in November 2008, Williams plead guilty to felony theft related to a false billing scheme he created to get "reimbursement" for therapy services from a Texas county agency. Then a few years year, he pleaded guilty to causing bodily injury to a child after his son came to school with bruises on his face. That, alongside a bail violation, put him in jail for about two years.

The million-dollar scam known as 'Get Fit with Dave'

While in jail, Williams revised a business plan for his personal training company, Get Fit With Dave. The secret to success, he determined, was to get paid by insurers.

Under his new plan, Williams would sell customer personal training fitness services that he claimed their insurance would cover. However, Williams' services weren't legitimately covered by insurance. As Allen reports, insurance companies reimburse for care only when provided by licensed medical professionals, and Williams' Ph. D. in kinesiology didn't fit the bill.

In a text to a friend explaining the scam, Williams wrote, "95% of my clients are paid for by insurance, which does not cover 'personal training,' I have to bill it as 'therapeutic exercise.' It is the same thing, but I have to play the insurance game …. "

Playing 'the insurance game'

To make himself out to be a medical provider for billing purposes, Williams had to acquire a National Provider Identifier (NPI) number—an ID number provided by Medicare that allows providers to bill Medicare.

People who fraudulently request an NPI could face a $250,000 fine and up to five years in prison, Allen reports. But between 2008 and 2017 Williams was able to take advantage of what Allen calls an "astonishing loophole": Medicare doesn't verify that people who apply have the credentials they claim to have.

According to Allen, Williams obtained 20 NPIs using his real name, phone number, and email address. He referred to himself as "Dr." and noted that his credentials were a "PhD." Under medical specialty, Allen reports Williams often identified himself as a "sports medicine" doctor and provided a false medical license number.

Williams launched his insurance-covered personal training business when he got out of jail in November 2012, and over time, the company expanded to employ about 12 trainers and around 1,000 clients, Allen reports.

During that time, Williams fraudulently billed Aetna, Cigna, and UnitedHealthcare as an out-of-network provider for $25 million, including about $4 million he received in payments. When he was finally taken to court, a judge ordered him to pay $3.9 million back in restitution. (The Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group. UnitedHealth Group separately owns UnitedHealthcare.)

How Williams was caught

Around Christmas of 2013, Williams' ex-wife, Amy Lankford, noticed the iPad Williams had gifted their son was linked to one of her ex-husband's devices. The son's iPad showed scores of messages with Williams' personal training clients, who were providing not only their names and birthdates, but also their insurance information.

Lankford, who worked as a physical therapist, was suspicious as to why personal training clients would have to provide their insurance information. Together with her father, Jim Pratte, they went through Williams' text messages and discovered his fraud scheme. Immediately, Lankford and Pratte called the insurers to report Williams.

But it wasn't until January 2015 that the insurers started to take action. According to Allen, Cigna appeared to be the first to determine that Williams wasn't a licensed medical provider. The insurer told Williams that he owed $175,528, and had to stop billing them for his training services.

But since Williams had multiple NPIs, he simply switched numbers and kept billing Cigna. Cigna caught up to him again in May 2016. All told, he billed the insurer about $323,000—none of which he paid back, Allen reports.

Aetna also sent Williams a letter in January 2015 saying it had discovered he wasn't a licensed medical provider and that the insurer had overpaid him $337,933. However, after three months, the two reached a settlement whereby Williams agreed to pay the company $240,000 "without admission of fault or liability by either party," Allen writes.

Williams then went on to bill Aetna for another $300,000 using a new NPI.

A similar pattern unfolded with UnitedHealthcare.

In September 2015, UnitedHealthcare sent a letter to Williams noting that he was not a licensed medical provider and that he'd received $636,637 in wrongful payments. However, according to Allen, UnitedHealthcare said if Williams didn't respond, the insurer would pay itself back out of "future payments."

Williams took UnitedHealthcare up on that offer, writing, "Please offset future payments until the requested refund amount is met."

Then, he switched to a new NPI number and kept billing UnitedHealthcare, Allen writes.

The FBI takedown

In spring 2017, UnitedHealthcare reported Williams to the FBI, and in May, FBI agents arrived at Williams' home.

Williams refused to let them in or answer questions, saying his attorney had taken care of the payments in question, Allen writes. After that, Williams billed UnitedHealthcare with a new NPI until October 2017, when the FBI finally arrested him.

Williams ultimately was convicted of four counts of health care fraud, for which he was sentenced to more than nine years in federal prison and ordered to pay $3.9 million in restitution to United, Aetna, and Cigna, Allen writes.

The 3 loopholes Williams leveraged

There were main three loopholes that Williams took advantage of that could be closed to prevent future fraud, Allen writes.

1. Medicare doesn't verify NPI applicants. According to Allen, the federal government could verify NPI applicants "in less than a minute online or in milliseconds if the process is automated," Allen writes. However, a Medicare official said the agency would require "explicit authority" from HHS to verify medical licenses, which it doesn't have. Medicare said it does verify the credentials of providers who want to bill Medicare.
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3. Insurance companies often don't verify who they're paying. Williams billed insurers as an out-of-network provider, which reduced scrutiny, Allen writes. To prevent this, "insurers could ensure that anyone billing them has the proper licensing before a payment is made," Allen writes.
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5. Insurers don't always report fraud cases to state and federal regulators. Several states require insurers to report suspected fraud cases to state regulators, but these states have varying requirements, and many don't do audits to ensure reporting, Allen writes.

At least three insurers discovered Williams did not have a medical license, but the Texas Department of Insurance received only one referral about the case, Allen writes. Had all three insurers referred Williams, he may have been caught sooner (Allen, Vox/ProPublica, 7/19 [1]; Allen, Vox/ProPublica, 7/19 [2]).