The former vice president of reimbursement for four-hospital Continuum Health Partners in New York was charged with taking nearly $2 million in kickbacks from a hospital financial consultant in return for routing $11 million in contracts toward the consultant.
A Manhattan grand jury also charged the executive, Donald Modzelewski, 59, and the consultant, Thomas Colucci, 54, with stealing more than $2 million from Continuum, 992-bed Beth Israel Medical Center and 724-bed St. Luke's-Roosevelt Hospital Center. Modzelewski allegedly approved the payment of fraudulent invoices for inflated amounts, services that already were paid for, and financial work that was never performed by Colucci's various companies.
Prosecutors in New York Attorney General Eliot Spitzer's office said the conspiracy ran from August 1998 to January 2002 and involved bribes that, besides large cash payments, included two luxury automobiles, a 28-foot motorboat and a $280,000 down payment on a million-dollar home on Long Island. Modzelewski diverted $400,000 of Continuum's money to one of Colucci's companies, prosecutors said.
Modzelewski and Colucci were arraigned May 29 in Supreme Court in Manhattan on a six-count indictment that included charges of conspiracy and grand larceny. Modzelewski also was charged with receiving a bribe and Colucci with bribery. Both men face prison terms of up to 25 years if convicted, prosecutors said.
Modzelewski's lawyer, Adrian DiLuzio, said he had no comment.
Colucci's attorney, Mark Arisohn, said his client is pleading not guilty and is prepared to demonstrate in court that he performed the services for which he was paid. "He did a lot of work for the hospital as a consultant whereby the hospital recouped many millions of dollars in Medicare and Medicaid claims that had been denied. We have yet to see the proof that the attorney general's office claims (to have)," Arisohn said.
Continuum officials said Modzelewski was fired from the company in March 2002-as soon as they learned of the allegations. The system, which is cooperating with investigators, since has instituted stricter protocols for internal financial procedures, they added.
Continuum last year filed a lawsuit against Modzelewski seeking to recover the money he took from the hospitals, and Modzelewski shortly afterward filed a countersuit for wrongful termination, said Jim Mandler, a Continuum spokesman.
"The entire Continuum family is outraged by the egregious acts of Mr. Modzelewski as charged in these indictments, and we intend to seek restitution for the monies wrongfully taken," officials said in a written statement.
Colucci is the sole owner and operator of several Long Island-based financial services companies, including National Revenue Group, National Fiscal Advisors, Qusimore Associates, Katlea Enterprise, Advanced Graphics Corp., and Sterling Printing Services.