Significant developments have occurred since the March 2025 blog on “The Hertel & Brown Case: Harsh Reminders for Therapy Clinics.” The federal case against Hertel & Brown Physical and Aquatic Therapy has reached a turning point. With guilty pleas from the owners and sentencing dates approaching, this case is no longer just about uncovering fraud; it is about what the fallout means for outpatient therapy clinics across the country.
Key Developments
Guilty Pleas from Leadership
In March 2025, the two business owners, Aaron W. Hertel and Michael R. Brown, pleaded guilty to conspiracy to commit wire fraud and healthcare fraud. Their admissions confirmed what investigators had alleged for years, that the therapy clinics had been involved in fraudulent billing practices for 14 years, allegedly systematically overbilling Medicare, Medicaid, and private insurers using the highest-paying billing codes. Additionally, it was identified that unlicensed employees delivered therapy services while the clinic billed as if licensed therapists had performed the treatments, resulting in approximately $22 million in fraudulent claims.
Their pleas included agreements to forfeit property in Fairview, PA, and Sarasota, FL. Sentencing is scheduled for August 28, 2025, with both facing six years in federal prison and three years of supervised release.
Other Guilty Pleas
Many other former employees included in the 21-defendant indictment pleaded guilty. A former Billing Specialist also pleaded guilty, acknowledging her role in the fraud, and she was sentenced to three years of probation. The clinic’s Compliance Officer already accepted plea deals in exchange for reduced sentences and cooperation with federal investigators.
Trial of Remaining Defendants
Three remaining individuals chose to go to trial:
- J. Johnson, licensed Physical Therapist (PT)
- A. Fachetti, Physical Therapy Assistant (PTA)
- M. Hull, Physical Therapy Assistant (PTA)
On April 23, 2025, after the jury deliberated for over two days, the two Physical Therapy Assistants (PTAs) were acquitted of all charges against them, including felonies of health care fraud and conspiracy to commit wire fraud and health care fraud. Both PTAs testified that they completed treatment notes for Physical Therapists (PTs) when unlicensed technicians rendered the actual services. However, they stated that they had no intention of committing fraud and acted according to the instructions of their superiors.
The defense’s argument centered on context and state of mind. Lawyers argued that the PTAs were misled by clinic leadership and genuinely believed their actions were compliant with clinic norms. One defense lawyer said after the trial, “In this case, context matters.”
The PT’s statement to the FBI indicated that fraud was widespread and that all the employees “turned a blind eye.” Although the PT did not testify in court and was acquitted of the conspiracy count, she was convicted of health care fraud, which is a lesser charge that carries a maximum sentence of 10 years in federal prison. This conviction also puts her at risk of losing her PT license. Her sentencing is scheduled for September 3, 2025.
These results show that while fraud can happen within organizations, it is important to prove that individual clinicians were knowingly involved in the misconduct. Convicting these individuals requires clear evidence of their actions and intentions.
Lessons from the Case
The Hertel & Brown case outcomes illustrate the difference between systemic organizational fraud and individual accountability. This case serves as a reminder that when the leadership of a therapy clinic actively promotes or encourages non-compliance with regulatory standards, the consequences can extend well beyond financial penalties. Such consequences may include severe legal ramifications, such as potential criminal charges against responsible individuals, which could result in imprisonment. Furthermore, clinicians who engage in unethical and fraudulent practices risk losing their professional licenses and ending their careers in healthcare.
Frontline Staff Are Scrutinized Differently, but Not Immune
In this case, the two PTAs, A. Fachetti and M. Hull, were acquitted of all charges. The PT, J. Johnson, was convicted of the lesser charge of health care fraud, suggesting that the jury believed there was some degree of negligence or awareness, but not full-blown intent to defraud.
Perhaps their placement in the indictment also matters; J. Johnson, PT, was listed as the seventh most important defendant, while the PTAs, A. Fachetti and M. Hull, were ranked much lower, at 17th and 19th, respectively. This reflects how the prosecution viewed their relative influence and involvement.
Even though the PTAs were acquitted, they underwent indictment, trial, and public scrutiny. The key lesson is that therapists and assistants must not depend only on clinic culture or supervisor guidance for billing practices.
Leaders Carry the Burden of Culture and Compliance
The clinic’s owners, Aaron W. Hertel and Michael R. Brown, pled guilty, as did the Compliance Officer and a former Billing Specialist. That sent a strong message: leadership bears the most significant responsibility when fraud is systemic. The defense for the frontline staff emphasized that these employees were not part of the decision-making structure and did not benefit in the way ownership did.
The prosecution argued that licensed clinicians, PTs, and PTAs should know when billing practices are incorrect. The U.S. Attorney told the jurors, “The license means something.” This argument likely influenced the conviction of the PT, even though it was for a lesser charge.
This emphasizes ethical leadership’s vital role in cultivating an environment where compliance is prioritized. By implementing clear standards and nurturing a culture of integrity, healthcare organizations can thrive operationally and ethically.
Documentation, Licensing, and Intent are Crucial
The case revolved around documentation (emails, schedules, billing logs, etc). The defense did not deny that the therapists were part of a system that overbilled. Instead, they argued that the PTAs acted in good faith, believing they were operating within clinic norms. However, prosecutors emphasized that billing for more hours than is possible in a day should have raised an obvious red flag.
Federal Prosecutors’ Strategic Approach
This case followed a strategic approach by securing early plea deals with key insiders, utilizing their testimony at trial, and aiming for broader accountability. This tactic allowed them to present valuable testimonies to support their case during the trial. It worked partially; the PT was convicted, and the PTAs walked free.
Therapy clinics that ignore the harsh reminders may follow the same path as Hertel & Brown. It is a valuable opportunity to recognize this situation as a wake-up call. Ethics and compliance are not only checkboxes. Proactively addressing ethics and compliance can strengthen their operations and build trust with payers, patients, and staff. Understanding that these are vital business practices, not just regulatory requirements, promotes a culture of integrity and accountability that mitigates risks and can lead to long-term growth and success.
LW Consulting, Inc. (LWCI) offers a comprehensive range of services that can assist your organization in maintaining compliance, identifying trends, providing education and training, or conducting documentation and coding audits. For more information, contact LWCI to connect with one of our experts!
