​Medicare Fraud Exposed After Patient’s Shocking Death

After his mother's death, Dillinger's 29-year-old son Aaron lashed out on Dolson Avenue Medical's Facebook page: "My mother entered this facility at approx. 5pm to receive a lidocaine injection from DR. BAGELY. Shortly after receiving her shot, my healthy 47-year-old mother was dead. She was promised pain-free treatment, and she got just that. Now she's f---in gone forever, and her three sons and husband are left without a mother/wife. A big F--- YOU to Dolson Avenue Medical."

Alarmed by the post, Jay tried damage control. His attorney sent Aaron a cease and desist notice. Bagley's practice and the Spinas’ Dolson Avenue Medical "are not affiliated in any way," the attorney wrote. "Please be advised that legal action will be commenced against you in the event that it is discovered that you made even one negative disparaging or false statement … or disrupt our client or Dolson Medical's practice in any way."

It turned out that even before Debbie Dillinger's final facet injection, undercover FBI agents, tipped off by a confidential source about suspicious billing, had been trying to get a close look at the Spinas’ clinic. One agent showed up seeking treatment for trauma supposedly suffered during a car accident. He checked in, went to the bathroom and left without ever seeing anyone. His insurance provider was billed for two treatments.

Not long after Dillinger died, the FBI reached out to Bagley to ask about the Spinas and his work at the clinic. Fearing criminal charges for his role in Dillinger's death and hoping he could gain some leniency, Bagley agreed to wear a wire to gather more material for the FBI's probe. His cooperation soon turned fruitful, gathering evidence of even more wrongdoing: a plot to transfer ownership of a company the Spinas secretly controlled by backdating a sales contract and forging the signature of a dead business partner. The FBI raid of the Dolson Avenue office came soon afterward. Within two years, all the people charged in the Spinas’ scheme had pleaded guilty.

In mid-2021, four years after Debbie Dillinger's death, Bagley was sentenced to a single year in jail and ordered to pay $360,000 in restitution. (A legal filing shows that the court was petitioned to permit a settlement award of $487,500 in a civil lawsuit brought by the Dillinger family.) When I last emailed with Bagley, he had moved to Duluth, Minnesota, and was taking a course to become a truck driver.

Jay Spina was sentenced in April 2021. More than 75 of his supporters, including schoolteachers, former patients and his daughter's boyfriend, had written letters or submitted video testimony, pleading for leniency from federal judge Kenneth M. Karas of the Southern District of New York.

Jay didn't get it.

Judge Karas called him a "Jekyll and Hyde" who, alongside his charitable work, committed "a massive, long-running, callous fraud" to squeeze money out of the health care system. Although the insurance industry was the victim of the wide-ranging scheme, Karas said the biggest loser was "everybody who gets medical care, because those costs just get passed on."

Elements of the case, Karas said, made his blood boil. Most of all, even after Bagley's injections caused adverse reactions in several patients, Jay had encouraged "the YouTube expert," as the judge called Bagley, to keep doing the procedure: "Did he say … ‘Bagley, maybe you should stop’? ‘Maybe we’re not really qualified to do this’? ‘Maybe we should find other ways to make money’? Nope."

Furthermore, the judge continued, Spina had the gall to say he had nothing to do with Bagley, and to retaliate against Dillinger's family.

The sentence Karas handed down: nine years in prison. Restitution: $9.76 million.

Jay was incensed. "The government offered Dr. Bagley a legal bribe," he told me in an email from prison, "allowing him to plea while pointing the finger at me to avoid facing manslaughter charges that would likely have resulted in him dying in federal prison."

At Grossman's sentencing, Karas asked, "Who wants to sentence a grandma to jail? Nobody." And yet, he said, "the law doesn't immunize grandparents from dealing with the consequences of their conduct." She received a year in prison and was ordered to pay $9.1 million in restitution.

Kimberly Spina, Karas decided, had played a minimal role and had provided the government with helpful information. He sentenced her to two years of supervised release and $1,550 in restitution.

Five days before his arrest in August 2018, Jeff Spina posted on Facebook, "Karma: Think good thoughts, say nice things, do good for others. Everything comes back."

After his arrest, Jeff worked toward that karma by cooperating with the Justice Department, talking not only about the Dolson Avenue conspiracy but also about other health care providers allegedly involved in illicit activities. Aware that Jeff was working with the Feds, family members cut him out of their lives.

At Jeff's sentencing last October, Karas scolded him for his role in fraud with the ripple effect of making health insurance unaffordable for many Americans. The costs "get spread over all of the people who are insured by those companies," Karas said, "because to the extent that they don't recover the millions of dollars that were stolen here, somebody's got to pay for that."

Acknowledging Jeff's cooperation, Karas ended up sentencing him to three years of supervised release and a restitution payment of $9.76 million. "He's now committed to new life outside of health care," Jeff's attorney, James Monroe, told me afterward.

Jay now lives at the Otisville Federal Correctional Institution's prison camp, a 20-minute drive from his old office. If he serves his full nine-year sentence, he’ll be 72 years old upon release.

Today the Dolson Avenue clinic operates under the direction of the brothers’ younger sibling, David, who was never charged with wrongdoing. The clinic has a new name, though: Pain Relief & Wellness Center. Ex-cop Jacqueline Padilla still goes there. "David is just as friendly and caring," she told me. "I still get the same treatment."

It's not clear if patient complaints played any role in bringing the Spinas down, but people in the legal and medical community say patient reports are valuable in flagging health care fraud. In a recent interview with AARP, U.S. Attorney General Merrick Garland advised looking at your explanation of benefits every time you get a statement from Medicare or another health insurer to check for any inaccuracies — for example, records of a test you never underwent. "That may just be a mistake, but it may be fraud," Garland said. "That's the kind of thing we need people to report."

You should also be concerned, he said, if a health care provider requires you to take an exotic test in order to get regular medical care. "That should be suspicious — if somebody is asking [you] for something that sounds nonsensical," Garland said.

To report suspicious activity about Medicare or Medicaid, contact the HHS inspector general's office at 800-447-8477 or online at tips.oig.hhs.gov. For suspected fraud affecting another insurer, contact that company directly, says the FBI. If it doesn't have a reporting system in place, call or write the company headquarters.

Investigative journalist Rene Ebersole has written for National Geographic, The Washington Post, The Marshall Project and other publications.

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