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Feds drop fraud charges against Amherst addiction doctor

When the FBI looked into the billing practices of Dr. Sreekrishna Cheruvu and his addiction therapy practice, the result was a 13-count indictment accusing him of cheating local health insurers.

The allegations, if proven, meant serious prison time for the Amherst doctor.

But now, five years later, federal prosecutors have dismissed the charges against Cheruvu as part of a "non-prosecution agreement" that will allow him to avoid his upcoming trial and instead pay $99,378 to the three insurers he was accused of cheating.

"Dr. Cheruvu was innocent," said Mark E. Schamel, his Washington, D.C., defense attorney. "He never broke the law."

The agreement, which is with Cheruvu's medical practice, not him, ends a prosecution that accused the doctor of billing insurers for addiction therapy services when he was out of the country.

At the time, the government claimed he overcharged HealthNow, Independent Health and Excellus by about $628,000 over a five-year period.

Schamel said the allegations were baseless from the outset but, because of the government's overzealousness, turned a simple billing dispute into a criminal prosecution.

"This was an embarrassingly horrific excuse for an investigation," he said.

Prosecutors noted that Cheruvu is forfeiting nearly $100,000 previously seized from him. They also pointed to an ongoing review of his billing practices in explaining why the charges against him were dropped.

"Through that process, new evidence came to light and at the end of that review, we determined that a non-criminal disposition was the just result," U.S. Attorney James P. Kennedy Jr. said in a statement. "Remember, we are the Department of Justice, not the Department of Convictions.”

For years, Cheruvu, who operated a small private practice, fought the charges against him but, when his case finally went to trial last year, he suddenly changed course and took a misdemeanor plea deal.

Even then, Schamel said, he would say, "I didn't do anything wrong."

Seven months later, as he was awaiting sentencing, Cheruvu filed a new motion, this one asking to withdraw his guilty plea. He told the judge he didn't fully understand the charge he pleaded guilty to last year.

U.S. District Judge William M. Skretny held a hearing into Cheruvu's request and, in the end, allowed him to withdraw his guilty plea. Skretny said the doctor did not understand at the time of the overbilling that his conduct was a crime.

He also questioned whether he acted "willfully" when he submitted his claims.

"This wasn't fraud," Schamel said. "This was an honest disagreement over billing codes."

Cheruvu, now 60, gave up his medical license as part of the criminal prosecution but is now seeking to get it back. There is also the question of his conviction in a similar state court case.

During his trial last year, before he took his misdemeanor plea deal, Cheruvu argued that his case was about mistakes and complications, not deceit and dishonesty.

His lawyers, including Herbert L. Greenman, also pointed to Cheruvu's treatment of opioid addicts since his own recovery several years ago and his reputation as an "exceptional doctor."

"I know it's hard to believe the government got it wrong," Schamel said at one point in his opening statement, "but they did."

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