In the bustling world of New York City’s physical rehabilitation clinics, where patients rebuild strength after injuries and surgeries, trust is everything. Patients rely on therapists and doctors to guide their recovery; insurers depend on accurate billing to keep premiums in check; and physicians stake their reputations on the integrity of every claim submitted in their name. But last week, that delicate ecosystem cracked wide open with a guilty plea that exposed a brazen scheme: the owner of a chain of rehab facilities admitted to defrauding health programs of over $20 million by billing for services that never happened—under the forged signature of an unwitting doctor.
Nosson Sklar, a 56-year-old New Yorker and CEO of his unnamed rehabilitation company, pled guilty on December 11, 2025, in the Southern District of New York to one count of health care fraud. From January 2020 through July 2024, Sklar orchestrated the submission of fraudulent claims to three major health benefit programs, falsely attributing physical therapy and rehab services to a physician known only as “Victim-1.” This doctor, according to prosecutors, had no involvement with Sklar’s facilities during that period, provided none of the billed services, and never authorized the use of his credentials. Of the $20 million-plus in bogus bills, about $12.4 million was actually paid out by the plans before the scheme unraveled.
It’s a stark reminder that in the high-stakes game of healthcare reimbursement, the line between legitimate care and criminal exploitation can blur all too easily—especially in outpatient settings like physical therapy, where sessions are routine, documentation is voluminous, and oversight feels distant. For American physicians, this case isn’t just a New York headline; it’s a cautionary tale with national ripples, underscoring vulnerabilities in billing practices that could ensnare even the most diligent practitioners.
At its core, Sklar’s fraud exploited a common pain point in rehab billing: the reliance on physician oversight for therapy plans. Federal rules under Medicare and private insurers often require a doctor’s sign-off on treatment protocols, making a physician’s name a golden ticket for reimbursement. Sklar didn’t just fabricate visits; he impersonated an entire professional relationship, turning Victim-1’s identity into a phantom provider. “Nosson Sklar defrauded health care programs of more than $20 million by submitting illegitimate claims with forged unauthorized physician signatures,” said FBI Assistant Director Christopher G. Raia in the Department of Justice announcement. The fallout? Victim-1 now faces the nightmare of disentangling his professional record from years of ghost services, potentially triggering audits, credentialing headaches, and lost trust with colleagues and patients.
This isn’t an isolated incident. Healthcare fraud enforcement hit record highs in 2025, with the Department of Justice’s National Health Care Fraud Takedown charging 324 defendants for schemes totaling over $14.6 billion in intended losses—the largest ever. While telemedicine and genetic testing dominate headlines, outpatient rehab has quietly become a hotbed for abuse. A 2024 Cotiviti report highlighted fraudulent durable medical equipment (DME) billing tied to therapy—braces, supports, and modalities billed without delivery—as a top scheme, often layered with phantom physician encounters. In New York alone, the state’s aggressive Medicaid fraud unit has pursued dozens of similar cases in recent years, from upcoded therapy minutes to kickback-fueled referrals. Nationally, the HHS Office of Inspector General estimates that improper payments in Medicare Part B— which covers physician and outpatient services—topped $25 billion in 2024, with billing errors and fraud accounting for a significant slice.
Why does this matter so urgently to U.S. doctors? First, the direct threat: identity theft in billing. If you’re a physiatrist or primary care provider signing off on rehab referrals, your NPI (National Provider Identifier) could be hijacked without your knowledge. The False Claims Act doesn’t care about intent—if fraudulent bills bear your name, you might end up defending yourself in a qui tam lawsuit or OIG investigation. We’ve seen it before: physicians dragged into probes not as perpetrators, but as unwitting enablers, facing repayment demands or exclusion from federal programs.
Second, the systemic squeeze. Fraud like Sklar’s inflates costs across the board, prompting payers to tighten reimbursements for everyone. Medicare’s 2025 physician fee schedule already slashed rates for evaluation and management codes by 2.8%, partly to offset fraud losses. Private insurers follow suit, implementing AI-driven audits that flag routine PT claims as suspicious. For a solo practitioner or small group relying on rehab referrals for steady revenue, this means more denials, shorter sessions approved, and patients paying out-of-pocket—straining relationships and practice viability.
Ethically, it’s a gut punch. The AMA’s Code of Medical Ethics emphasizes safeguarding patient data and reporting suspected fraud, yet many physicians feel caught between loyalty to colleagues and fear of reprisal. Sklar’s Victim-1 likely discovered the misuse through a routine credentialing renewal or patient complaint—scenarios any doctor could face. And with private equity snapping up rehab chains (up 30% in outpatient services since 2020), the pressure to maximize billings intensifies, blurring lines for employed physicians.
So, what can physicians do? Start with vigilance: Review billing logs quarterly for unfamiliar claims under your name via the NPPES registry or your EHR’s audit trails. Partner with compliance officers to train staff on red flags—like sudden spikes in therapy units or unauthorized modifier use. If something smells off, report it anonymously through HHS-OIG’s hotline; whistleblower protections under the FCA are robust, and recent settlements have rewarded insiders handsomely.
Sklar faces up to 10 years in prison, with sentencing pending—a stiff penalty that signals DOJ’s zero-tolerance stance under the new administration. But punishment alone won’t stem the tide. For doctors on the front lines, this case demands proactive armor: robust documentation, tech-savvy monitoring, and a commitment to calling out shadows in the system. In an era where every CPT code counts, preserving integrity isn’t just ethical—it’s essential for survival.
Sources:
1. U.S. Department of Justice. “Owner Of Physical Rehabilitation Company Pleads Guilty To Submitting More Than $20 Million In Fraudulent Medical Bills To Health Benefit Programs.” December 11, 2025. https://www.justice.gov/usao-sdny/pr/owner-physical-rehabilitation-company-pleads-guilty-submitting-more-20-million
2. HHS Office of Inspector General. “Owner Of Physical Rehabilitation Company Pleads Guilty To Submitting More Than $20 Million In Fraudulent Medical Bills To Health Benefit Programs.” December 11, 2025. https://oig.hhs.gov/fraud/enforcement/owner-of-physical-rehabilitation-company-pleads-guilty-to-submitting-more-than-20-million-in-fraudulent-medical-bills-to-health-benefit-programs/
3. HHS Office of Inspector General. “2025 National Health Care Fraud Takedown.” 2025. https://oig.hhs.gov/newsroom/media-materials/2025-national-health-care-fraud-takedown/
4. Cotiviti. “Busted: The Top Fraud Schemes of Q1 2025.” 2025. https://resources.cotiviti.com/fraud-waste-and-abuse/busted-the-top-fraud-schemes-of-q1-2025
5. American Bar Association Health Law Section. “Healthcare Fraud Enforcement Trends from 2024 and Issues to Watch in 2025.” June 4, 2025. https://www.americanbar.org/groups/health_law/resources/esource/2025/healthcare-fraud-enforcement-trends-2024-issues-watch-2025/
6. HHS Office of Inspector General. “Fraud & Abuse Laws.” Accessed December 2025. https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/
7. Arnold & Porter. “Learning From 2025 FCA Trends Targeting PE In Healthcare.” December 2025. https://www.arnoldporter.com/-/media/files/perspectives/publications/2025/12/law360—learning-from-2025-fca-trends-targeting-pe-in-healthcare.pdf
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