Drew Pierce, a former Primary Health Network (PHN) executive from West Middlesex, Pennsylvania pled guilty to conspiracy to defraud Primary Health Network by steering the nonprofit's funds through deceptive business arrangements, including false contracts and kickbacks, for his personal benefit between 2011 and 2019.
Prosecutors charged that high-ranking officials and associated vendors used their positions and companies to divert PHN money under the guise of legitimate services, while concealing the true nature of the transactions.
Pierce agreed to financial penalties including joint and several restitution of $3,107,651 owed to Primary Health Network and forfeiture of $671,000 in property derived from the offenses, with $536,000 attributed to the fraud conspiracy and $135,000 to the money laundering conspiracy. Restitution and any other financial obligations are due immediately, and he consented to participate in the Bureau of Prisons' Inmate Financial Responsibility Program so that a portion of any prison earnings will be applied toward these amounts.
The prosecution involves five defendants whose charged conduct allegedly occurred from 2011 through 2019 and concerned the handling of Primary Health Network funds. Pierce is the fourth defendant to plead guilty, following former CEO John Laeng, who admitted to fraud and money laundering conspiracy and is responsible for nearly $2 million in restitution and $654,300 in forfeiture.
Christopher O'Brien of Masury, owner of Excel Construction, pled guilty to one fraud conspiracy count and is awaiting sentencing after several postponements, while former facilities director Mark Marriott pled guilty to filing false tax returns and to conspiracy to commit wire fraud and money laundering on October 06, 2025.
The remaining defendant, John O'Brien, associated with Tele-Data, maintains his innocence and is scheduled for trial in February 2026, with the proceeding expected to last three weeks or less.
Source: https://www.wfmj.com/story/53208644/former-mercer-county-health-ceo-pleads-guilty-in-dollar31m-fraud-case?clienttype=mobile
Commentary
In the above matter, a conspiracy was alleged between healthcare executives and vendors.
Fraud conspiracies between vendors and executive management are a critical risk for healthcare organizations because they exploit both authority and control over contracting and payment processes, allowing long-running schemes to be disguised as routine business.
Without strong segregation of duties and independent review, executives can steer work to favored vendors, inflate or falsify invoices, and use change orders and no-bid arrangements to siphon funds through kickbacks or self-dealing.
Healthcare's reliance on specialized vendors and complex projects heightens this exposure, especially where boards and audit committees lack clear visibility into vendor concentration, related-party risks and exceptions to procurement policies. A strong control environment depends on independent contracting and payment oversight, empowered audit and compliance functions, and a speak-up culture that protects employees who report concerns involving senior leaders.
Signs of internal fraud that involves vendors include:
- Repeated use of the same vendor without competitive bidding, especially for large or long-term projects
- Unusual vendor selection patterns, such as consistently bypassing qualified alternatives or justifying sole-source deals on weak grounds
- Frequent change orders, scope expansions, or price increases benefiting the same vendor, often approved quickly with limited documentation
- Invoices that are vague, lack supporting detail, bill for "consulting" or "miscellaneous" services, or do not match contract terms or work performed
- Payments split into multiple smaller invoices that appear designed to avoid secondary approvals or spending thresholds
- Vendors with ownership, management, or family ties to executives, or vendors introduced and aggressively championed by a single leader
- Executives pressuring staff to fast-track approvals, override normal procurement rules or keep certain vendor arrangements "off the books" or "need-to-know"
- Resistance to independent review, audit testing, or data access related to specific vendors, projects, or cost centers
- Unusual lifestyle indicators for involved employees, such as sudden wealth inconsistent with known compensation
- Patterns of complaints, rumors, or ethics hotline reports about favoritism, conflicts of interest or unusual vendor relationships that are minimized or dismissed by leadership
