McALLEN — A former city of Pharr commissioner will serve a 22-month prison sentence for his role in a healthcare fraud scheme that defrauded insurance companies of nearly $1.8 million, court records show.
Oscar Elizondo went before U.S. District Court Judge Randy Crane Wednesday for a sentencing hearing related to his July 2017 arrest in connection with the federal investigation.
According to the Southern District of Texas U.S. Attorney’s Office, Crane characterized the scheme as “blatant fraud.”
“Crane further noted that although the fraudulent claims were submitted to BCBS, the scheme also defrauded local school districts, municipalities and small businesses, who had self-funded health insurance programs through BCBS,” the release stated.
The government alleges Elizondo and another man, Omar Espericueta, defrauded Blue Cross and Blue Shield of Texas out of $1,794,969 million through fraudulent claims for costly pain patches and scar creams.
The 48-year-old Pharr native served as a marketer for Peñitas Family Pharmacy, also known as Riverside Pharmacy, while Espericueta, 48, owned the pharmacy.
“The defendants allegedly targeted employers who carry employee health insurance through Blue Cross, such as the city of Mission, city of Pharr, Frontera Produce and Point Isabel Independent School District, among others,” the release stated.
Elizondo and Espericueta worked with contacts at those entities to offer meals, drinks and promises of free prescription pain patches and scar creams in exchange for their insurance information, but many never received any of the products or saw a doctor to obtain a valid prescription, the investigation revealed.
Federal authorities said the pair used the information they collected to submit fraudulent and medically unnecessary claims to Blue Cross.
“Other employees saw a doctor, but it was a doctor to whom Espericueta was allegedly paying kickbacks in the form of cash, loans, and prescription drugs,” the document stated. “In some instances, the defendants set up a temporary office for the doctor in a vacant office or a rented recreational vehicle near the restaurant where they solicited employees for the sole purpose of writing fraudulent prescriptions.”
The indictment stated the duo utilized an RV as a temporary mobile doctor’s office for Dr. Pedro Garcia for the purpose of writing fraudulent prescriptions for employees of insured entities. The RV was parked in the parking lot outside restaurants where employees were recruited. Through the dinner, employees were directed to the RV.
Elizondo, who originally faced two counts of healthcare fraud, two counts of aggravated identity theft, and one count of conspiracy to commit healthcare fraud, was facing up to 10 years in prison.
Eventually, Elizondo pleaded guilty to one count of healthcare fraud in November 2017, with an agreement that prosecutors would dismiss the remaining counts filed against him at the time of sentencing.
In addition to the punishment Crane handed down Wednesday, and as part of the plea agreement signed by Elizondo in November 2017, Elizondo will be required to pay back $1,484,268.05 to Blue Cross and Blue Shield of Texas, court records show.
Espericueta, a native of Palmhurst who pleaded guilty to one count of healthcare fraud in December 2017, appeared for his own scheduled sentencing hearing Monday, but after a brief sealed conference with the court, his sentencing hearing was reset for May 2019.
Elizondo will have to serve three years of supervised release upon completion of his 22-month prison sentence.
The court permitted Elizondo to remain free on a $75,000 bond “and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future,” the release stated.