New York City Hospital Executive And Consultant Charged In Multimillion Dollar Bribe-theft Scam

Attorney General Spitzer today announced that Donald Modzelewski, a former vice president of Continuum Health Partners, Inc., which operates four hospitals in New York City, has been charged by a Manhattan grand jury with accepting nearly $2 million in illegal payments from hospital financial consultant Thomas Colucci in return for steering $11 million in contracts to several of Colucci's companies.

The grand jury also charged Modzelewski and Colucci with stealing more than $2 million from Continuum and two of its hospitals – Beth Israel Medical Center and St. Luke's-Roosevelt Hospital – by having Colucci submit fraudulent payment invoices which Modzelewski, in his capacity as vice-president of reimbursement for Continuum, approved for payment. The phony invoices were for financial work never performed, for inflated amounts of what was owed, and for work for which payment had already been received.

According to prosecutors, the conspiracy to divert hospital funds ran from August 1998 to January 2002, and included the payment of massive bribes - including large cash payments, two luxury automobiles, a 28-foot motorboat, expensive electronics and a $280,000 down payment for a million-dollar house on Long Island. Modzelewski is alleged to have also misappropriated $400,000 of Continuum's funds to one of Colucci's companies through a third-party vendor.

"Today's indictment exposes an insidious pattern of corruption that, through a lack of internal controls and oversight, allowed the two defendants freely and fraudulently to siphon millions of dollars from two major New York City medical institutions," said Spitzer. "My office will continue to scrupulously monitor and vigorously prosecute such fraud."

"This case involves a fundamental breach of trust by a corporate executive," said Deputy Attorney General William J. Comiskey, Director of Spitzer's Medicaid Fraud Control Unit, which is prosecuting the case. "The illicit exchange between Modzelewski and Colucci was not merely a commercial bribe for contracts but also a means by which the two defendants stole millions from two major hospitals that serve a vast New York population."

Modzelewski and Colucci were arraigned yesterday afternoon in Manhattan Supreme Court before Justice Brenda S. Soloff on a six-count indictment. Modzelewski and Colucci were each charged with one count of Conspiracy in the Fourth Degree, one count of Grand Larceny in the First Degree, and two counts of Grand Larceny in the Second Degree. In addition, Modzelewski was charged with one count of Commercial Bribe Receiving in the First Degree, and Colucci was charged with one count of Commercial Bribing in the First Degree. If convicted, each defendant faces up to twenty-five years in prison.

Modzelewski, 59, of 17 Ryder Avenue in Dix Hills, was employed at Continuum from 1997 until March 2002.

Colucci, 54, of 28 Block Boulevard in Massapequa Park, is the sole owner and operator of various companies that perform services related to the financial operation of hospitals, including billing and reimbursement services. Among Colucci's companies are: National Revenue Group, Ltd.; National Fiscal Advisors, Ltd.; Qusimore Associates, Ltd.; Katlea Enterprise, Inc.; Advanced Graphics Corporation; and Sterling Printing Services, Inc., all of which are located on Long Island.

Continuum Health Partners, Inc., was formed in 1997, and consists of Beth Israel Medical Center, of Manhattan, St. Luke's-Roosevelt Hospital Center, of Manhattan, Long Island College Hospital, of Brooklyn, and the New York Eye and Ear Infirmary, of Manhattan. The Continuum network also encompasses ambulatory health centers and group and private practice settings throughout New York City and in Westchester County.

The case was presented to the grand jury by Special Assistant Attorney General Marie D. Spencer, of the Medicaid Fraud Control Unit's Special Projects Unit, and former Special Assistant Attorney General Michael P. Sofarelli, Deputy Director of the Special Projects Unit. Assisting in the investigation were Principal Special Auditor Investigator Granville A. Senior, Associate Special Auditor Investigator Ali H. Sencer, Senior Special Auditor Investigator Deowattie Khelawan, Special Investigator Carlos Miranda and former Special Investigator Timothy F. Cleary.

The charges against the defendants are merely accusations, and the defendants are presumed innocent until and unless proven guilty.