US Justice Department Secures Prison Terms in Multi-Million Healthcare Fraud Case

July 25, 2026
By Mintesinot Nigussie

The US Justice Department has secured prison sentences for three people convicted of running a healthcare fraud scheme that involved more than 4.8 million US dollars in fraudulent claims submitted to Medicare and Kentucky Medicaid through addiction treatment facilities. Michael Bregenzer, 53, of Houston, Texas, was sentenced to 48 months in prison, followed by three years of supervised release. Dr José Alzadon, 62, of Paintsville, Kentucky, was sentenced to 60 months in prison in February 2026, while Barbie Vanhoose, 63, of West Van Lear, Kentucky, received a 24-month prison sentence in January 2026.

The three defendants were also ordered to pay 812,881.09 US dollars in restitution. The case centred on Kentucky Addiction Centers (KAC), which operated treatment facilities in Winchester, Paducah, Paintsville and London, Kentucky. Prosecutors said Bregenzer served as KAC’s chief executive officer, Alzadon was the medical director and Vanhoose managed billing operations.

Evidence presented at trial showed that the defendants submitted false claims to government-funded healthcare programmes for medical services that were either not provided or were billed at higher levels than the treatment patients received. Prosecutors said the defendants also used the identity and medical credentials of Alzadon’s elderly father to submit claims and issue prescriptions. The father was allegedly listed as the provider for services that were either not performed or were carried out by Alzadon, who was not credentialed with certain health plans and therefore could not bill those programmes.

The defendants were also accused of using Alzadon’s father’s Drug Enforcement Administration registration number and electronic prescribing token to issue Suboxone prescriptions, despite the father not having treated the patients for whom the prescriptions were issued. A federal jury convicted Bregenzer, Alzadon and Vanhoose in March 2025 on charges including conspiracy to commit healthcare fraud, eight counts of healthcare fraud and conspiracy to distribute controlled substances using another person’s registration number. Alzadon and Vanhoose were also convicted of two counts of aggravated identity theft.

The case was investigated by the Drug Enforcement Administration, Federal Bureau of Investigation, Department of Health and Human Services Office of Inspector General, Department of Labor Employee Benefits Security Administration and the Kentucky Medicaid Fraud Control Unit. The Winchester Police Department also provided assistance. The prosecution was handled by attorneys from the Justice Department’s Criminal Division’s Fraud Section. The department said the case formed part of its wider efforts to combat healthcare fraud through the National Fraud Enforcement Division and the Health Care Fraud Strike Force programme.

Source: FSX Business News