Van Rhyn Brothers Indicted in $41M Healthcare Fraud Scheme

Two brothers with deep ties to Puerto Rico’s insurance elite are facing federal charges in a brazen $41.2 million healthcare fraud and money laundering scheme that gutted a major insurer while funding a spree of luxury purchases. Pedro Van Rhyn Soler and Edgardo Van Rhyn Soler were indicted on November 29, 2016, by a federal grand jury in San Juan, accused of exploiting their dual roles at National Life Insurance Company (NALIC) and their private firm, Option Health Care Network, to redirect government healthcare funds for personal gain.

Between 2004 and 2012, the Van Rhyn brothers co-owned Option, a third-party administrator that signed a lopsided Service Agreement with NALIC in April 2006—granting Option 95% of NALIC’s income. Edgardo Van Rhyn Soler served as Vice President and later President of NALIC from 2006 to 2011, positioning him to steer state healthcare money through the arrangement. From January 2009 to December 2011, the Puerto Rico Department of Treasury (Hacienda) disbursed $41,225,539.33 to NALIC and Option under contracts managed by ASES, the island’s Health Insurance Administration.

Instead of paying healthcare providers—doctors, hospitals, labs—the defendants allegedly funneled the bulk of the funds to themselves. Court documents reveal they used corporate credit cards and direct transfers from Option to buy massages, groceries, jewelry, private boats, gas, and accessories—items with no legitimate business purpose. Meanwhile, Option’s unpaid debts to providers ballooned from under $2,000 in 2006 to over $1 million in 2010 and more than $2 million by 2011.

The fraud came to a head after NALIC rebranded as Multinational Life Insurance Company (MLIC) in November 2011 following a change in ownership. In February 2012, MLIC was forced to pay over $4 million to settle Option’s outstanding provider debts—a cost passed directly to the new owners and not part of the original business risk, prosecutors say. The payout represented a direct loss of revenue and profit due to the scheme’s fallout.

The indictment charges both Pedro Van Rhyn Soler and Edgardo Van Rhyn Soler with one count of health care fraud and two counts of money laundering. Each count carries a maximum penalty of 20 years in prison, hefty fines, or both. The case was investigated by the Internal Revenue Service, Criminal Investigation (IRS-CI) and the Federal Bureau of Investigation (FBI), and is being prosecuted by Assistant United States Attorney Edward Veronda.

An indictment is not a conviction—defendants are presumed innocent until proven guilty in a court of law. But the allegations paint a damning portrait of insider betrayal at the highest levels of Puerto Rico’s healthcare financing system. With taxpayer funds in play and millions diverted to personal luxuries, the case underscores vulnerabilities in public-private insurance partnerships—and the federal resolve to crack down on those who exploit them.