Friday, February 18, 2022

Owner of Los Angeles Compounding Pharmacy Sentenced to 30 Months in Federal Health Care Fraud Case


Compounding pharmacies have been under intense scrutiny by Medicare, private third-party insurance and workers’ compensation insurance carriers for almost ten years. The criminal cases take so long to investigate and prosecute that there is a significant lag time between the time of operations and prosecution.

Compounding cases that proceed criminally usually involve aggressive and illegal marketing, medical necessity issues, and violation of pharmacy compounding laws and regulations. A recent case gives insight into a case involving compounding pharmacies where preprinted physician prescription pads, waiving of patients’ copays, and attempts to hide the waiving of copays caused criminal problems. 

According to court documents, Fusion Rx Compounding Pharmacy was a provider of compounded drugs. What are compounded drugs? They are non-FDA approved medications that are supposed to be tailored to the needs of a specific patient when FDA-approved medications do not meet the health needs of patient. The pharmacy obtains a compounding license and combines, mixes or alters two or more drugs. The physician is supposed to prescribe and order the compounded medication and indicate what drugs are to be compounded to make it for that particular patient. Fusion RX was owned by Navid Vahedi, a Los Angeles pharmacist. 


The prosecution alleged in its charging documents and there were admissions in the plea agreements that pharmacist Mr. Vahedi and Fusion Rx paid millions of dollars in kickback payments through the businesses of two marketers to send prescriptions for compounded drugs to Fusion Rx. It was also alleged that Mr. Vahedi and the of his two marketers provided physicians with preprinted prescription script pads that offered “check-the-box” options on the form to maximize the amount of insurance reimbursement for the compounded drugs. From May 2014 to at least February 2016, it was alleged that Fusion Rx received approximately $14 million in reimbursements on its claims for compounded drug prescriptions. 

Monday, November 29, 2021

San Joaquin County Doctor Convicted of Prescribing Opioids Without Medical Necessity to Patients in Federal Court


The problem with physicians prescribing opioid drugs to patients where there is not a proper medical and prescription history taken, lack of a proper medical examination to confirm the legitimacy of patients' pain complaints, and failure to assess the risk of addiction issues continues. 

On November 19, 2021, Dr. Edmund Kemprud, age 78, was convicted in Sacramento  federal court of 14 counts of illegally prescribing opioids and other controlled substances to patients. As is common in these cases, undercover officers went to his office in order to obtain evidence that would substantiate the charges. Usually pain medication patients do not want to testify against their physicians so undercover operations are common. 

According to evidence presented at trial, Dr. Kemprud was a physician licensed to practice medicine in California and worked in several locations around the East Bay and Central Valley. One of the more inflamatory allegations was that one of the offices was in the back room of a nail salon and medi-spa in Tracy, California. 

Dr. Kemprud prescribed commonly abused prescription drugs, including Hydrocodone, Alprazolam, and Oxycodone. The government introduced evidence that certain prescriptions were outside the usual course of professional practice and not for legitimate medical purpose. 

The government introduced evidence at trial showing that Dr. Kemprud ignored "red flags" which are indications that his patients were addicts or that they were diverting the drugs during the undercover patient visits. Dr. Kemprud charged $79 a visit and the evidence was that he often spent less than five minutes with a patient and would see 30 patients in less than a day. In family practice, those numbers are not unusual for follow up visits but when prescriptions for serious pain medications are being written -- a more extensive visit is expected.

Case Study: Federal Embezzlement Charges Against California Controller. Top 5 Things to Learn From This Indictment


As attorneys specializing in white collar crime, we have represented businesses who wanted help in presenting a fraud case to the local police or FBI as well as representing those who have been charged with such offenses. 

Recently, a controller for two Southern California companies was charged in  a federal grand jury Indictment with embezzling $3 million. After providing you with a summary of the allegations, we will delve into what can we learn from this recent Indictment. 

With respect to this particular case, remember that an Indictment does not mean that the accused is guilty, nor is it proof of guilt since our Constitution provides that the accused is presumed innocent until proven guilty beyond a reasonable doubt.

On November 18, 2021, a federal grand jury in Santa Ana, California in the Central District returned a 15-count Indictment accusing the former controller, Rosalba Meza, for two Anaheim-based companies, Trilogy Plumbing, Inc. and Matrix Management, LLC, of embezzling more than $3 million by directing the transfer of company funds to bank accounts that she controlled. She is scheduled to be arraigned on the indictment today (November 29) in United States District Court in Santa Ana.

It is alleged that in February 2019, Ms. Meza told executives in these two companies that they did not have funds to meet payroll obligations but failed to inform the executives that she had been embezzling from the companies. Several months later, while the companies were the subject of an IRS enforcement action because of unpaid payroll taxes, Ms. Meza allegedly told the executives that she did not pay the quarterly payroll taxes because she instead had used those funds to pay employees. 

The Indictment alleges that, once the funds were transferred to her accounts, Ms. Meza used the stolen money to make approximately $292,137 in cash withdrawals at bank branches and more than $1 million in withdrawals at ATMs in the United States and Mexico. Ms. Meza also allegedly wired approximately $870,209 to bank accounts in Mexico owned by a family member and another $250,000 in transfers to other family members and friends. The Indictment also alleges that Ms. Meza filed tax returns for the years 2017 through 2019 that failed to report as income the embezzled funds.

What can we learn from this Indictment? First, like most other people accused of embezzlement, Ms. Meza does not have any criminal history. Past studies have shown that less than 10 percent of people charged with embezzlement have any prior criminal history. This means that background checks alone will not protect you. 

Thursday, July 29, 2021

California Rehabilitation Therapy Company With 11 Skilled Nursing Facilities Settles Medicare False Claim Allegations for Alleged Unnecessary or Unreasonable Services

Qui Tam Case Involving SNFs

Skilled nursing facilities (SNFs) which offer rehabilitation therapy services have a large number of billing specific rules and regulations. The charting for the SNFs is also demanding on the staff. Issues with charting and following billing rules and regulations can create risks of audits and qui tam or false claim lawsuits for SNFs. A recent case shows how such issues play out. This case was initiated by a "whistleblower" who was a former director of rehab and will get a $360,000 payout as part of the settlement. The qui tam case is captioned United States ex rel. Pennetti v. Interface Rehab, et al., No. CV-14-4133 (C.D. Cal.).


On or about July 23, 2021, Interface Rehab (Interface), headquartered and operating in Orange County, California agreed to pay $2 million to resolve allegations that it violated the False Claims Act by causing the submission of claims to Medicare for rehabilitation therapy services that were allegedly not reasonable or necessary. The claims resolved by the settlement are allegations only and there has been no determination of liability. 
It is very common for these cases to settle since the legal and expert fees alone can cost hundreds of thousands of dollars. Worse, if the case goes to trial and the health care facility loses, the provider can be barred from Medicare. A settlement offers a certain result. However, these cases need to be fought aggressively in order to keep the settlement payments down or to get the cases dismissed if possible.  

Friday, February 14, 2020

Sacramento Man Pleads Guilty to Medicare Kickback Scheme Involving Hospices and Home Health Agencies



Home health agencies are routinely investigated for kickbacks and a recent case involves cash kickbacks by an insider who was discharging patients. What providers fail to remember is that if there is an illegal kickback, that the entire claim is treated as a false claim even if it was performed and was medically necessary. 

On February 6, 2020, Jai Vijay of Sacramento, pleaded guilty to conspiring with the owners of home health care agencies and a hospice agency to pay and receive illegal kickbacks in exchange for Medicare beneficiary referrals.

According to court documents, Jai Vijay’s wife, Anita Vijay, worked as the social services director at a skilled nursing and assisted living facility in Sacramento. In her role, Anita Vijay assisted Medicare beneficiaries in selecting home health care and hospice agencies following their discharge from the facility. 

Anita Vijay used her position to steer Medicare beneficiaries to home health agencies in Folsom and El Dorado Hills and a hospice agency in Folsom. In exchange for the beneficiary referrals, the agencies’ owners paid Jai Vijay and Anita Vijay illegal cash kickbacks.

Monday, February 10, 2020

Four Indicted in California for Billing Compound Cream Prescriptions to TRICARE and Labor Union Health Plans


The government has been investigating pharmacies that dispense and bill compound creams for the past 5 years as well as the marketing companies that work with them. Much of the focus has been on billings to workers' compensation carriers or billing to TRICARE, military health insurance, and billing to union health plans.

On February 4, 2020, a 48-count grand jury indictment was unsealed naming four  defendants relating to an Orange County compound pharmacy, Professional Compounding Pharmacy (PCP), that allegedly submitted fraudulent bills to the military’s TRICARE health plan and a labor union health plan for medically unnecessary compound cream prescriptions in which there was alleged illegal marketing. An indictment is not evidence and all defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt. 

The indictment – which contains charges of health care fraud, mail fraud, illegal kickbacks and money laundering – alleges that PCP, its marketers and a physician fraudulently generated prescriptions for custom-made compound cream medications. The indictment alleges that some bills charged as $15,000 per tube.

The indictment alleges that two “pain clinics” in Lawndale and National City recruited beneficiaries of TRICARE and the International Longshore and Warehouse Union’s (ILWU) Pacific Maritime Association Welfare Plan. 

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