By: Eric Mulvey
On October 7, 2021, eighteen former National Basketball Association (“NBA”) players were charged for allegedly defrauding the NBA’s health insurance plan out of approximately $4 million. All nineteen defendants involved with the scheme were charged with conspiracy to commit health care fraud and wire fraud, while Terrence Williams (“Williams”), is facing an additional charge for aggravated identity theft for impersonating the plan employee. Williams orchestrated this scheme from 2017 to 2020 by helping players submit fraudulent claims to the NBA Players Health and Welfare Benefit Plan.
In 2016, the NBA Players Association (led by former player Spencer Haywood) and NBA owners unanimously agreed to provide healthcare insurance for retired players. The parties agreed that current players would contribute to a fund that would provide medical benefits for players with at least three years of service time in the NBA, with different benefits depending on the length of the player’s career. The motivation behind this fund was twofold: current NBA players are some of the highest-paid professionals in sports and many former players played at a time when salaries were not as large, and NBA players have the second shortest career among the four major U.S. sports leagues (NBA players average a 4.8 year career). At the time, this program was the first of its kind among professional sports in North America.
Williams was a lottery pick in 2009 and earned about $7 million before his career was cut short after he brandished a firearm at the mother of his child in 2013. Then in 2017, he allegedly began recruiting players to join his scheme in defrauding the NBA healthcare program by offering to provide former players with false invoices in exchange for kickbacks from the reimbursement. Among the former players charged include Tony Allen, Glen “Big Baby” Davis, Milt Palacio, Sebastian Telfair, Darius Miles, Ruben Patterson, Shannon Brown, Melvin Ely, Tony Wroten, and Chris Douglas-Roberts.
Williams recruited and encouraged players to file false medical claims and seek reimbursement claiming that the bills were paid out of pocket. He would provide the former players with paperwork and forms that the players could fill out and submit as proof to the league’s medical insurance firm and the firm would reimburse the players for the services. Many of the claims were for fake chiropractic procedures and dental procedures ranging from $65,000 to as much as $420,000. According to the indictment, Williams was paid $230,000 in kickbacks from players who were involved in the scheme.
Although Williams was successful at first, many of the fake invoices submitted described the same chiropractic and dental services, with the majority of dental service claims coming from two dental offices in Beverly Hills, California. Some of these invoices were not on letterheads, had grammatical errors, and one even misspelled a player’s name. In addition, travel records, emails, and GPS data proved that former players were sometimes in completely different locations, far away from the medical office where they were supposedly receiving treatment. For example, Gregory Smith submitted claims for root canals and crowns on eight teeth that supposedly occurred at a Beverly Hills dental office while he was playing basketball in Taiwan.
Wire fraud is defined as, “ whoever, having devised or intended to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce.” Wire fraud carries a maximum imprisonment of 20 years. In addition, health care fraud is defined as, “whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice to defraud any healthcare benefit program.” This carries a maximum imprisonment of 10 years.
Although there appears to be evidence of both wire fraud and healthcare fraud, players such as Tony Allen (“Allen”) and Glen Davis have pled not guilty to the charges. Allen has already paid back $350,000 of the $420,075 he allegedly stole in healthcare reimbursements, so Allen’s level of involvement in the scheme is not clear. Allen, who had a more successful career than others involved in the suit, seems to be in a better position to pay off the money owed, which could affect his sentencing. Also, Williams is facing an additional charge for aggravated identity theft for allegedly impersonating a plan employee to threaten one player into paying him, so it is unclear the level of involvement of all the players. However, Williams is likely facing the longest sentence of all those involved due to his alleged position as the ringleader.
These indictments come after fifteen former National Football League (“NFL”) players plead guilty to conspiracy to commit healthcare fraud after conducting a similar scheme, which resulted in $2.9 million false claims to the Gene Upshaw NFL Player Health Reimbursement Account Plan between June 2017 and December 2018. Although conspiracy to commit healthcare fraud carries a maximum sentence of ten years in prison, prosecutors asked the federal judge to grant the defendants lighter sentences, stating six to thirty months would be appropriate for several of the defendants. Three of the players were sentenced to two, three, and eighteen months by a federal judge in Kentucky.
Although it is unclear the punishments all nineteen defendants will face, this scheme has left many former and current NBA players heartbroken. This insurance plan was designed to help those former players who played in an era with lower pay and without the current medical technology that has been so crucial in allowing current NBA players to stay healthy and recover faster. Former player, Nate Archibald, had a heart transplant surgery covered by the insurance provided by this program, and even players, such as Bill Russell, are now covered under this program. Many former players, who currently pay little to no premiums, now worry that these actions may impact their future benefits and the healthcare program as a whole.
Student Bio: Eric Mulvey is a second-year law student at Suffolk University Law School. He is a staffer on the Journal of High Technology Law. Eric received a Bachelor of Arts Degree in Economics from Union College.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
