Dr. Robert Kolbusz Medicare Fraud Case: Trial, Appeal, and Restitution

The Dr. Robert Kolbusz Medicare fraud case ended with the Lombard, Illinois dermatologist convicted in October 2014 of defrauding Medicare and private insurers of more than $2.6 million, sentenced to seven years in federal prison, and ordered to pay nearly $3.8 million in restitution.¹ His conviction was affirmed on appeal, the Supreme Court declined review, and he was excluded from federal health care programs for 30 years.²

What the Fraud Looked Like

Between 2003 and 2010, Kolbusz falsely diagnosed more than 800 patients with actinic keratosis, a sun-induced skin condition that can turn cancerous. He then performed cosmetic laser procedures on those patients and billed them to insurers as medically necessary removal of precancerous lesions.¹ The treatments included Erbium “lunchtime laser peels,” which prosecutors described as cosmetic, ineffective for the documented conditions, and ineligible for insurance reimbursement.³

The scale was extraordinary. Kolbusz typically billed for removing 15 or more lesions per visit from repeat patients, many of whom he treated on 10 or more occasions. He falsely claimed to have removed more than 150 precancerous lesions from each of roughly 350 Medicare patients caught up in the scheme. Victims also included more than 450 Blue Cross and Blue Shield enrollees, with additional patients insured by Aetna and Humana.⁴

One patient, a teenager at the time of her treatments, testified at trial that she believed she was receiving a cosmetic procedure to lighten her freckles. Kolbusz’s records for her claimed he had destroyed approximately 491 precancerous lesions on her skin, generating a $4,597 payment from Blue Cross Blue Shield of Illinois.³ Kolbusz owned and operated the Center for Dermatology and Skin Cancer, Ltd. in Lombard, with a former office in Downers Grove.¹

Indictment and Trial

Kolbusz was charged in October 2012 as part of a nationwide Medicare Fraud Strike Force takedown.⁵ A federal grand jury in the Northern District of Illinois returned a seven-count indictment charging four counts of wire fraud and three counts of mail fraud. The case was filed as United States v. Kolbusz, No. 12 CR 782.⁶

Rather than plead, Kolbusz took the case to trial. The four-week proceeding before U.S. District Judge John Z. Lee included testimony from eight patients, several of Kolbusz’s own employees, and an expert witness. Kolbusz took the stand in his own defense. On October 20, 2014, the jury convicted him on all six remaining counts: three counts of wire fraud and three counts of mail fraud. Trial evidence established more than $2.6 million in losses.¹

Sentence and Restitution

On August 28, 2015, Judge Lee sentenced Kolbusz to 84 months in federal prison and ordered him to pay $3,764,381.69 in restitution.⁷ The restitution was allocated among the victims: $1,087,865.27 to the Medicare Trust Fund, $2,651,517.97 to private insurers, and $24,998.45 to individual patients.⁸

Judge Lee said the offense was “serious for a number of reasons” and “warranted a significant term of imprisonment.”⁷ Kolbusz was ordered to report to the federal correctional institution in Bastrop, Texas, on November 6, 2015.⁶

Appeal and Supreme Court Review

Kolbusz appealed to the U.S. Court of Appeals for the Seventh Circuit, which on September 21, 2016 affirmed both the conviction and the sentence in United States v. Kolbusz, 837 F.3d 811.⁹

He raised three arguments. First, that the trial court had effectively rewritten his indictment by allowing evidence of fraud involving patients beyond the six named in the counts. The Seventh Circuit rejected the argument, holding that because the charges were built on a “scheme to defraud” under the mail and wire fraud statutes, prosecutors were entitled to prove the scope of the whole scheme, not only the specific transactions cited as examples. Second, he argued the trial court wrongly excluded evidence that he continued submitting claims to Medicare after his indictment, which he said showed good faith. The court found no abuse of discretion, reasoning that Medicare’s later processing of his claims said nothing about his intent during the 2003-to-2010 conduct. Third, he argued that civil settlements with private insurers, in which those companies waived their right to restitution, should reduce his criminal restitution. The court held that private settlement agreements cannot bind the federal government in criminal restitution proceedings.⁹

Kolbusz then petitioned the U.S. Supreme Court for a writ of certiorari. The Court denied the petition in 2017.¹⁰

License Suspension and Federal Exclusion

The Illinois Department of Financial and Professional Regulation suspended Kolbusz’s medical license effective September 11, 2015.³ Under a consent order, his physician and surgeon license was indefinitely suspended, with restoration possible only after he completes his criminal sentence and demonstrates compliance with all court-ordered restitution payments.²

On January 29, 2016, the Office of Inspector General of the Department of Health and Human Services notified Kolbusz that he was being excluded from Medicare, Medicaid, and all federal health care programs for 30 years, effective February 18, 2016. The OIG cited four aggravating factors: the $3.76 million in financial losses, the seven-year duration of the conduct, the 84-month prison sentence, and Illinois’s indefinite suspension of his license.⁸ An administrative law judge upheld the exclusion in September 2016, finding it fell within a “reasonable range,” and the HHS Departmental Appeals Board affirmed on January 6, 2017.² The exclusion runs until at least 2046.

Restitution Collection Years Later

By June 2022, Kolbusz still owed roughly $3.45 million of the original $3.76 million restitution judgment. The government began citation proceedings to locate and seize remaining assets, targeting a Bank of America checking account containing $3,575.44, a Fidelity Management Trust Company IRA holding $8,492, and a Fidelity and Guaranty Life Insurance Company annuity worth $17,320.21.⁶

In a February 2023 ruling, Magistrate Judge Jeffrey I. Cummings granted the government’s motions to turn over those assets and denied Kolbusz’s motions to block the seizures. Kolbusz had argued that Illinois state-law exemptions, including a $4,000 “wild-card” exemption, should protect some of the funds. The court held that state exemptions do not apply to collection of federal criminal restitution under the Mandatory Victims Restitution Act. The court also rejected his argument that the government needed to trace the seized funds back to the underlying fraud, ruling that the restitution judgment could be satisfied from any of his assets.⁶

1
U.S. Department of Justice. Suburban Dermatologist Convicted of Cheating Medicare and Private Insurers of $2.6 Million
2
U.S. Department of Health and Human Services. Departmental Appeals Board Decision No. 2759
3
Chicago Tribune. Lombard Dermatologist Faces Prison Time for Defrauding Medicare, Others
4
Becker’s Hospital Review. Illinois Dermatologist Convicted of Submitting False Claims for 800 Patients
5
FBI. Chicago-Area Dermatologist and Psychologist Charged in Nationwide Medicare Fraud Strike Force Takedown
6
CaseMine. United States v. Kolbusz, 12 CR 782
7
U.S. Department of Justice. West Suburban Dermatologist Sentenced to 7 Years in Federal Prison for Defrauding Medicare and Private Insurers
8
U.S. Department of Health and Human Services. ALJ Decision, Kolbusz CR4700
9
FindLaw. United States v. Kolbusz, 837 F.3d 811
10
Supreme Court of the United States. United States v. Kolbusz, Cert. Denied, 137 S. Ct. 2147