OPERATION BRACE YOURSELF!

I asked JS Contributor Barry Zalma to share any recent and significant Florida fraud cases Florida agents should be aware of. While his answer was not in my usual Property & Casualty subject area, this Medicare scam was still noteworthy for two reasons: one; its amount, which was $10.8 million; and two; the perpetrators punishment, which was a 17.5 year prison sentence along with substantial restitution.

Thanks to Barry Zalma, Esq. for sharing.  Please enjoy “Operation Brace Yourself!”

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Lino Mallari Gutierrez, a/k/a “Joe Gutierrez,” 59 of Palm City, Florida was sentenced by District Judge Virginia M. Hernandez Covington to 17 years and 6 months in federal prison and ordered to pay more than $5.6 million in restitution for his role in a scheme to defraud Medicare.

Gutierrez and his co-conspirators submitted over $10.8 million in fraudulent claims for durable medical equipment (DME) that Medicare beneficiaries did not want or need and that were procured through the payment of kickbacks. (See Note #1 below)

Gutierrez was convicted at trial in April 2025, of eleven health care fraud-related offenses, including conspiracy, health care fraud, and paying kickbacks.

According to court documents and testimony, over a six-month period from October 2018 to April 2019, Gutierrez conspired with others and created sham companies that shipped braces (I.E. canes, limb supports, etc.) to Medicare beneficiaries—some of whom co-conspirators identified through telemarketing and others whose personal identifying information they stole to submit fraudulent Medicare claims.

Gutierrez and his conspirators paid kickbacks to other companies in exchange for signed doctors’ orders. These companies used overseas call centers to solicit patients and fraudulent telemedicine companies to procure fake prescriptions for “braces” for Medicare beneficiaries.

As part of the conspiracy, Gutierrez, a licensed broker, also filed false records with his employer and a private regulatory organization of brokers to conceal his involvement in the DME companies.

On April 9, 2019, multiple federal law enforcement agencies participated in a nationwide action referred to as “Operation Brace Yourself.”

Even P&C agents should be aware anytime someone offers a fee or kickback for you to perform anything. This specific operation by authorities targeted ongoing schemes, such as Gutierrez’s, in which companies were paying illegal bribes to secure signed physicians’ DME brace orders to buttress fraudulent claims submitted to federal Medicare programs.

In the Middle District of Florida, the April 2019 operation included, among other efforts, the execution of search warrants (and civil actions) at numerous DME storefronts.

Before the operation, Gutierrez was in the process of establishing six more DME shell companies–all thwarted by law enforcement.

To hide the profits Gutierrez and his conspirators laundered the Medicare proceeds.

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NOTE #1—Durable Medical Equipment (DME) is designed to help patients complete daily activities by making things more convenient or comfortable–it usually includes walkers, wheelchairs, oxygen tanks, etc. and may also include bracing that supports injured limbs.

By Barry Zalma, Esq, CFE, Expert Witness–Adapted from his book Insurance Fraud – Volume I & Volume II Second Edition available as a Kindle book; a hardcover; and, as a paperback.

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