Laconia business owner settles for $300K in Medicaid fraud case

A virtual telehealth company owned by a Laconia resident has reached a settlement agreement with the U.S. Attorney’s Office after allegations of health care fraud.

The investigation into the case details how the company was improperly billing Medicaid for services by a provider excluded from the Medicaid program. That excluded clinician was Dr. Erik X. Alonso, of Miami, Florida, whose fraudulent activity went unknown to owner Dr. David Ferruolo, who has lived in the Lakes Region his whole life.

The situation caught him by surprise, Ferruolo said, although he said he hired Alonso knowing he’d previously been in prison.

“It’s a classic case of you think you hire an angel, and it’s actually a dance with the devil,” Ferruolo said in a phone interview. “He exceeded expectations, and people were raving about him. That went on and on.

"Until it didn’t.”

In early 2022, Ferruolo took a chance on hiring Alonso as a clinician for his virtual health care company, LifeWorks Counseling Associates, thinking he'd “struck gold.”

Just two years later, he was part of federal investigation that resulted in a settlement agreement of $300,000 and jail time for Alonso.

According to a press release from the Department of Justice, prosecutors believe Ferruolo submitted claims and received reimbursement from Medicaid for services provided by Alonso. At the time, Alonso was excluded from federal health care programs by the Department of Health and Human Services Office of the Inspector General.

“A provider is federally excluded from being paid to give health care for good reasons, such as prior fraud, criminal convictions, or patient abuse,” U.S. Attorney Erin Creegan said in the release. “To protect the public, we will hold accountable those who violate health care exclusions.”

Based on court documents, Alonso entered a contracted work agreement with LifeWorks Counseling on Feb. 14, 2022. The document was signed by both parties on March 4, 2022.

Almost two years later, on July 17, 2024, Alonso was suspended from LifeWorks. A copy of the suspension email reads, “I don’t think you fully grasp the depth of this situation and the catastrophe that could have or could still result from your actions.

“I find this situation unfortunate, frustrating, and I am distraught that you put LifeWorks in this position. However, I do wish the best for you and I hope this passes and you find green pastures in your near future.”

Alonso pleaded guilty to one charge of health care fraud on Oct. 23. Background information provided in the plea agreement states Alonso pleaded guilty “on or about Oct. 14, 2015, to conspiracy to commit health care fraud” in Florida.

There is no longer mention of him on the LifeWorks website, but court documents state his background includes over 25 years of counseling and executive coaching experience, and he holds a doctorate in forensic psychology. 

His personal life-coaching website is still active, and he's been posting regularly on social media channels. A request to Alonso for comment was not returned by deadline. 

Earlier this year, Alonso alleged Ferruolo breached their contractor-provider work agreement by failing to pay for services rendered in the amount of $10,948.88. Several certified letters were sent to LifeWorks Counseling seeking damages.

While Ferruolo sees this as a blip on the radar — he’s confident his business will spring back — the federal government does not tolerate the abuse of taxpayer funds.

“This settlement should put others on notice that exploiting federally funded health care programs will not be tolerated and those who engage in this type of activity will be identified and held accountable,” said Ted E. Docks, special agent in charge of the FBI’s Boston Division, according to the media release. “The FBI will continue to work with our partners to protect taxpayers’ resources from those who would take advantage of such programs for their own greed.”

The settlement agreement states, “The United States acknowledges that the Lifeworks parties fully cooperated with its investigation.”

An agreement was reached Dec. 10, and Ferruolo paid his $300,000 bill for violations of the federal False Claims Act by tapping into his retirement savings, selling his home, second vehicle and motorcycle. Additionally, as a direct result of the investigation, several of Ferruolo’s clinicians resigned and contracts were lost to the tune of $400,000.

“That’s three-quarters of a million dollars this company lost in 18 months,” he said. “The government has been paid back, there was no criminal investigation, no sanctions. We just have to rebuild.”

Despite the situation, Ferruolo remains positive — and even glad this happened to him and not some other, smaller provider.

“This doesn’t affect my character and it doesn’t affect LifeWorks and the work we’ve done. I am glad it happened to someone like me. Other people; it would have destroyed them.”

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Katlyn Proctor can be reached at katlyn@laconiadailysun.com or by calling 603-524-0150.