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Exec-Level Medicare Employee Convicted of Stealing Non-Public Info for Trades

News  |  By Steven Porter  
   May 07, 2018

A high-ranking Center for Medicare employee passed information about internal deliberations regarding coverage and reimbursement decisions to 'his close friend and former CMS colleague.'

Two people who worked for the Centers for Medicare & Medicaid Services were among four defendants convicted of conspiring to steal nonpublic government information and pass it along to healthcare investors, the Department of Justice announced Friday.

The information at issue in this case was "highly sensitive and confidential," Deputy U.S. Attorney Robert Khuzami said in a statement announcing the result of the four-week trial in the U.S. District Court for the Southern District of New York.

"Trading on confidential nonpublic government information is just as illegal as trading on corporate insider information," Khuzami said. "Our Office is committed to policing and prosecuting both."

  • The confidential CMS information included insight into the agency's radiation oncology rule. The resulting trades included securities transactions of Varian, Elekta, and Accuray stock, according to a superseding indictment filed in March.
  • Christopher Worrall, 40, of Linthicum Heights, Maryland—who was arrested a year ago—was a special assistant and senior technical adviser in the director's office of the CMS Center for Medicare, where he served as project manager for an internal data management system with the agency's most-current claims data, according to court records.
  • Worrall was convicted on two charges: wire fraud and conversion of U.S. government property, both for actions he took in 2012.
  • Worrall passed information to "his close friend and former CMS colleague" David Blaszczak, 42, of Isle of Palms, South Carolina, a political intelligence consultant who had worked as a CMS special assistant and health insurance specialist, according to the superseding indictment.
  • Blaszczak, acting as a consultant, then passed the CMS information along to investors with Deerfield Management Company, including defendants Theodore Huber, 56, of Westport, Connecticut, and Robert Olan, 47, of Rumson, New Jersey, partners and analysts for the firm.
  • Blaszczak also passed information to former Deerfield partner and analyst Jordan Fogel, who pleaded guilty then cooperated with the prosecution of his former colleagues, according to the DOJ's statement.
  • Deerfield used the CMS data to earn more than $7 million in profits, the DOJ said.
  • A separate action filed by the Securities and Exchange Commission was put on pause while the criminal case proceeded.
  • Before being caught, in 2013, Blaszczak boasted an email to a finance executive, "I am a beast that cannot be stopped."

Sentencing is scheduled for September 13 before Judge Lewis A. Kaplan.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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