Thursday, December 31, 2009

Wishing You A Very Happy, Healthy And Prosperous 2010!


Happy 2010!

Here are some well-known New Year's Day quotes to help us bring in 2010:

"Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man." - Benjamin Franklin

"New Year's Day: Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual." - Mark Twain

"For last year's words belong to last year's language. And next year's words await another voice. And to make an end is to make a beginning." - T.S. Eliot "Little Gidding"

"Good resolutions are simply checks that men draw on a bank where they have no account." - Oscar Wilde

"Glory to God in highest heaven, who onto man his son hath given. While angels sing a tender mirth, a glad new year to all on earth." - Martin Luther

Posted by Tracy Green. Wishing all of you a wonderful 2010! Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. The firm website is: http://www.greenassoc.com/

Monday, December 28, 2009

Los Angeles Publisher Of Russian-Language Newspapers And Magazines Sentenced To 8 Years For Cash-Back Payments Related To Health Care Fraud


On December 7, 2009, a publisher of Russian-language newspapers and magazines, Andranik Petrosian, of Burbank, California was sentenced to 96 months in prison by United States District Judge Stephen V. Wilson in the Central District of California. In addition to the prison term, Judge Wilson ordered Petrosian to pay $521,845 in restitution to the Internal Revenue Service.

This sentence followed his trial in April 2008 where a federal jury convicted him of conspiracy to defraud the Internal Revenue Service and making false statement to special agents with the IRS.

The allegations in this case were that Mr. Petrosian used his publications – which included the newspaper Contact Weekly and the magazines Kakadu and Tet-a-Tet – as fronts to launder more than $10 million for medical companies some of which were alleged to be entirely fraudulent. It was essentially a phony or inflated invoice arrangement - masquerading as a check cashing arrangement.

As detailed in the indictment, the "cash back" or laundering arrangement worked as follows. Beginning in 2003 and continuing through 2007, the medical companies wrote checks to Mr. Petrosian's companies for advertising or graphic design services that were significantly in excess for the services provided. Mr. Petrosian's companies provided invoices for the "advertising" or "graphic design services" which allowed the medical companies to falsely deduct the entire payments on their tax returns. While Mr. Petrosian did place advertisements in his publications, these advertisements were worth only a small fraction of the price paid by medical companies across the Southwest.

Mr. Petrosian would deposit the checks made payable to his businesses and, subsequently, would give cash back, less a fee of up to 10%, to his "advertisers." The "advertisers" would use the false invoices to fraudulently substantiate expenses used in the preparation of their tax returns which were subsequently filed with the IRS.

In the trial, it was alleged that Mr. Petrosian returned approximately 90 percent of the money from the checks back to the medical company administrators in cash. The cash was allegedly handed over in white envelopes during back-office meetings at Petrosian’s office on Glenoaks Boulevard in Burbank. Mr. Petrosian allegedly obtained large quantities of cash, either by smuggling cash into the United States derived from wire transfers to Armenia, or via an elaborate Hawalla-type money-changing system.

It was also alleged that the medical company administrators used the cash Mr. Petrosian returned to make cash payments to patients and cappers/marketers. Based on my experience in these cases, these arrangements were also used as a means of the businesses who are "advertising" to obtain tax free money for other purposes as well.

The U.S. Attorney's Office contended that Mr. Petrosian's operation fueled medical insurance fraud schemes by providing a steady stream of untraceable cash. In one such scheme, it was alleged that a clinical laboratory used the cash Mr. Petrosian provided to make illegal kickback payments to clinics in exchange for the clinics referring blood samples to the laboratory for analysis. The payments motivated the clinics to refer patients for medically unnecessary tests that were paid for by Medicare.

At the sentencing hearing, Judge Wilson said the evidence at trial showed that Petrosian was at the “fulcrum” of a money-laundering scheme that helped perpetrators of health care fraud avoid paying federal taxes.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

California To Receive $21.3 Million In Qui Tam Settlement Regarding Pharmacy Reimbursement For Albuterol And Other Drugs


There was a recent qui tam settlement by the State of California. On December 17, 2009, the California Attorney General's Office announced a $21.3 million settlement with Schering-Plough Corporation, resolving allegations the company "deliberately inflated" the price of Albuterol and other drugs, causing California's Medicaid (Medi-Cal) program to overpay millions of dollars in pharmacy reimbursement.

Albuterol is a widely prescribed generic drug, delivered through inhalers, nebulizers and masks, and used to treat asthma and other breathing problems.

The settlement stems from a lawsuit filed by a whistleblower against several pharmaceutical companies accused of Medicaid fraud. The case is still proceeding against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co.

California's $21.3 million agreement is one of three settlements negotiated with Schering-Plough, collectively totaling $69 million, over falsely inflated drug prices. The three lawsuits were originally filed by a whistleblower, Ven-A-Care of the Florida Keys, Inc., on behalf of California, Florida and the federal government. Schering-Plough also reached settlements with Florida and the federal government, the latter for approximately $44.5 million.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported to California for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drug manufacturers.

California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, some drug manufacturers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursement. Medi-Cal is funded on a roughly 50% - 50% basis by the federal government and the State of California.

Reporting fraudulent AWPs is a violation of the California False Claims Act. Ven-A-Care filed a lawsuit under seal in Superior Court, then it was removed to the U.S. District Court for the Central District of California and finally transferred to U.S. District Court of Massachusetts. The Attorney General's Office investigated the claims, and in 2005, intervened in the lawsuit with its own complaint, currently being litigated in federal court in Boston.

The California Department of Health Care Services, which is responsible for administering Medi-Cal, will receive $20.1 million, and the Attorney General's False Claims Fund will receive just over $1.2 million.

A copy of the settlement agreement can be found at
http://ag.ca.gov/cms_attachments/press/pdfs/n1842_all_signatures_final_version_ca_sp_vac_settlement.pdf

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Sunday, December 20, 2009

Elderly Audiologist Sentenced to Six Months in Prison for Medicare Fraud In Federal Court In Fresno, California


On December 11, 2009, an 88-year old audiologist Adam John Sotrini was sentenced by United States District Judge Oliver W. Wanger, to six months in prison to be followed by 15 months of home confinement, plus restitution of $100,000, for his scheme to defraud the Medicare program by submitting false billings for audiology services.

A jury found him guilty of 17 counts of mail fraud and one count of health care fraud on November 4, 2008. According to the Assistant United States Attorneys who prosecuted the case, the evidence introduced at trial showed that Mr. Sortini visited skilled nursing facilities throughout Northern California and billed for hearing tests that were not reimbursable by Medicare because they were routine in nature and were performed without a referring physician’s order.

It was contended at trial that Mr. Sortini also did not perform all of the tests for which he billed Medicare, and when he was audited by Medicare, he submitted forged physician referrals to justify his Medicare billings. The government presented evidence at trial that Mr. Sortini billed Medicare for unwarranted and unnecessary hearing tests, including tests for patients with severe mental deterioration including Alzheimer’s disease, dementia, and senility, and claimed on certain days to have tested between 25 and 50 or more patients at skilled nursing facilities located more than 100 miles apart.

Mr. Sortini billed and was paid hundreds of thousands of dollars for these services. This continued from January 1998 to January 2003, when the FBI conducted a search warrant at his office in Merced.

Mr. Sortini testified at trial which, based on the judge's comments at sentencing, was in hindsight a mistake. At sentencing, Judge Wanger found that Mr. Sortini had obstructed justice by committing perjury at trial, had abused the trust of the Medicare program, and had taken advantage of vulnerable, elderly victims, many of whom were mentally incompetent. The judge took into account Mr. Sortini’s age and medical condition, but determined that a prison sentence was warranted given the nature of the defendant’s fraud.

Attorney Commentary: This case illustrates why there are so many plea bargains in the federal court system. With this loss amount, a prison sentence normally would have been unlikely. However, when a trial is lost by a criminal defendant -- prison term is the likely outcome. In addition, when the trial is lost and the defendant has testified -- the judge has the discretion to say that he did not believe the defendant's testimony and increase his or her sentence for obstruction of justice.

There has been significant fraud and abuse in the Los Angeles area for audiology. However, medical necessity is not usually the stuff of federal health care fraud cases. In this case, the forging of records helped establish fraud.

It is also not uncommon for elderly doctors and health care providers to be taken advantage of by entrepreneurs in the health care business. It is quite unusual for someone of the age of 88 to be sentenced to prison but the judge's comments reflect his outrage. The climate in federal sentencing does not favor health care fraud defendants especially when the health care system and federal and state budgets are in a crisis. Sentencing in federal court is practically a separate trial in itself since it is vastly different than state court sentencing.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Thursday, December 3, 2009

Miami Man Arrested for Obstructing a Health Care Fraud Investigation: Bail Condition Set Of Not Working In Health Care Industry While Charges Pending


On December 1 2009, Luis A. Baez of Miami was arrested and charged with obstruction of a health care fraud investigation in violation of Title 18, United States Code, Section 1518. The Indictment charging him was also unsealed.

An Indictment is only an accusation is not evidence of guilt. Mr. Baez is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

According to the Indictment, statements made in court, and documents filed in court, in January 2007, Mr. Baez allegedly told an FBI Special Agent who was conducting an investigation involving Med-Pro of Miami, Inc., that he had no knowledge of an entity known as the L. Baez Corporation or activities associated with the L. Baez Corporation. Mr. Baez allegedly knew this information was false.

The Med-Pro investigation ultimately resulted in several indictments and convictions of various individuals for health care fraud and money laundering schemes involving millions of dollars in fraudulent reimbursement claims submitted to Medicare. According to documents filed in one of the Med-Pro cases, the L. Baez corporation was used in connection with laundering proceeds of health care fraud.

At Mr. Baez's initial appearance in court, it was reported that Mr. Baez had been working at two local hospitals up until the time of his arrest. Mr. Baez’s bond was set at $50,000. As a condition of his bond, Mr. Baez is prohibited from working in the health care industry while charges are pending. Mr. Baez faces up to five years’ imprisonment and a fine of up to $250,000 if convicted.

Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

Attorney Commentary: The lessons to be learned from this arrest and bail setting are two-fold. First, being interviewed by the government when you are going to be less than truthful is a terrible idea to be avoided at all costs. If an interview is in your best interest, you must have an attorney with whom you have been completely truthful so an objective person can evaluate whether or not you should be interviewed and whether or not you can be truthful by an objective standard. At that point, the attorney can negotiate the proffer with the prosecution or investigating agency.

If you are not truthful, you will either (1) be charged separately with obstruction of justice or (2) if other charges are filed against you, at sentencing in federal court there could be an upward adjustment for obstruction of justice. In addition, if the prosecution was considering not charging you and using you as a witness, your lies to the FBI agent, OIG special agent or other law enforcement official could result in your being charged since your lies could render you useless as a witness. Assume that the government investigators know much more than you think and that a good portion of your interview will essentially be a lie detector test to determine if you are being truthful.

Second, it is becoming more common for the condition of not working in the health care industry to be a condition of bail in federal cases. I will probably become more common in state cases. This condition should be anticipated before the initial appearance and if there are ways to differentiate your work (especially if it does not involve billing government programs) this should be brought forth to the government and there should be an effort to resolve this bail issue before the court appearance. I have seen in court the prosecution ask for this condition and the defense attorney and defendant are caught off-guard and without any ability to offer other work alternatives or the idea of having pretrial services supervise or approve the work position.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Wednesday, December 2, 2009

Los Angeles’ Kerlan Jobe Orthopaedic Clinic Pays $3 Million to Settle Kickback Allegations


The Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay the United States $3 million to settle allegations that it received illegal kickbacks from HealthSouth Corporation. The Justice Department announced this civil settlement on December 1, 2009.

The settlement resolves allegations that HealthSouth paid kickbacks to Kerlan Jobe in the form of stock option grants, donations to the Kerlan Jobe Foundation, loan forgiveness on an equipment lease, and a disproportionately high ownership interest in a jointly owned ambulatory surgery center.

In exchange for the illegal kickbacks, Kerlan Jobe allegedly referred patients to HealthSouth facilities. As a condition of continued participation in government healthcare programs, Kerlan Jobe was required to enter into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services to address Kerlan Jobe’s financial relationships with referral recipients.

This settlement follows a December 2007 settlement between the United States and HealthSouth in which HealthSouth paid the United States approximately $14.7 million to resolve HealthSouth’s liability for improper financial relationships with Kerlan Jobe and an Alabama sports medicine clinic, which HealthSouth’s then-new management self-reported to the government.

The investigation was a joint effort by the Civil Division of the Justice Department, the U.S. Attorney’s Office for the Central District of California and the Office of Inspector General of the Department of Health and Human Services.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Monday, November 30, 2009

Oxnard Man Pleads Guilty To Auto Insurance Fraud From 2007 Accident


Another case has arisen where a person's financial concerns about repairing their vehicle caused them to submit a false insurance report which resulted in criminal prosecution. On November 13, 2009, Ronald Lewis Dixon, of Oxnard, pleaded guilty in Ventura County Superior Court to one count of felony auto insurance fraud arising out of a 2007 auto accident.

The facts underlying the plea are as follows. On November 25, 2007, at 1:20 a.m., an Oxnard Police officer was dispatched to a traffic collision at the intersection of Ventura Boulevard and Alvarado Street. The officer found a 2006 Nissan truck crashed into a retaining wall. The truck was abandoned but locked. The officer noticed there was no evidence of forced entry or damage to the ignition lock. The officer checked the license plate and learned the vehicle was registered to Mr. Dixon , who lived less than half a block from the collision scene.

The officer went to Mr. Dixon 's residence. When Mr. Dixon opened the door, the officer noted that Mr. Dixon was dressed as if he just returned from a night out and his breath smelled of alcohol. Mr. Dixon would not admit he was driving his truck, fearing he would be arrested for DUI.

Two days later Mr. Dixon contacted his insurance company, Infinity Insurance, and reported someone stole his truck and crashed it. The following day, Mr. Dixon went to the Oxnard Police Department and tried to file a stolen vehicle report. After giving his account of how his truck was “stolen, but later found,” the Oxnard Police Department refused to take the report.

Infinity Insurance referred the case to the California Department of Insurance, Fraud Division. Fraud detectives eventually arrested Dixon for insurance fraud. Once arrested, Mr. Dixon admitted he crashed his truck and lied because he thought the insurance company would not repair his truck if it discovered he had been drinking prior to the accident.

Mr. Dixon will be sentenced on January 5, 2010, at 1:30 p.m., in courtroom 13 of the Ventura County Superior Court. He faces a maximum penalty of five years in state prison and a $50,000 fine. When Mr. Dixon pleaded guilty he turned over a cashier's check for $3,749 (the amount of restitution due to the victim in the case, Infinity Insurance).

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have developed an expertise in insurance fraud cases over the past 20 years. The firm website is http://www.greenassoc.com/

Friday, November 20, 2009

California Doctor Sentenced To Nearly 5 Years In Prison For Writing Controlled Substance Prescriptions For Cash


On November 16, 2009, Vu Le, a physician who operated a medical clinic in Westminster was sentenced to 57 months in federal prison for illegally writing prescriptions for “patients” who paid cash for painkiller prescriptions for people he did not examine. Dr. Vu Le had faced a statutory maximum sentence of 135 years imprisonment and possible fines of $6,750,000. Dr. Le, who is 46 years old, was sentenced by United States District Judge James V. Selna in Santa Ana, California.

This sentence followed a guilty plea in June 2009 to all 15 felony counts contained in an indictment that accused him of charging up to $150 to write prescriptions for painkillers. Most of the prescriptions were for Oxycodone (sold in various forms, including the brand name OxyContin) and the painkiller Hydrocodone (available in various forms, including the brand name Vicodin).

When he pleaded guilty, Dr. Le admitted that in 2005 and 2006 he provided prescriptions to persons seeking controlled substances without a legitimate medical reason in exchange for cash payment. These individuals came to Dr. Le's medical office in Westminster and paid $150 in cash to be seen by the doctor. After claiming that they had pain and needed medication, Dr. Le prescribed controlled substances, usually Hydrocodone (a Schedule III controlled substance) and Oxycodone (a Schedule II controlled substance). Le wrote the prescritions without examination, without referral slips and without any other documentation showing a legitimate medical reason for the prescription.

As part of the investigation into Dr. Le, special agents with the Drug Enforcement Administration (DEA) conducted undercover operations in which they posed as individuals seeking controlled substances. During the undercover meetings, Dr. Le did not examine the undercover agents, nor did he take a thorough medical history from them. Instead, he simply wrote prescriptions for Oxycondone and Hydrocodone in a manner that he admitted was outside the usual course of professional practice.

After his arrest in December 2006, Dr. Le told the DEA that 70 percent of his total revenue came from his “pain management” and that he made approximately $50,000 a month from his practice.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Thursday, November 19, 2009

Reminder To Adopt Compliance Plan: U.S. Intervenes In False Claims Act Suit Against Psychiatric Treatment Facility For Adolescent Boys



On November 4, 2009, the United States and the Commonwealth of Virginia intervened in a False Claims Act suit in the Western District of Virginia against the Medicaid providers Universal Health Services Inc., Keystone Marion LLC and Keystone Education and Youth Services LLC. The facilities at issue were Keystone Marion Youth Center, a residential facility in Marion, Virginia, that receives Medicaid funds to provide psychiatric counseling and treatment for boys ages 11-17.

This False Claims Act lawsuit was filed by several former therapists who worked at the Marion residential facility. The lawsuit alleges that the facilities provided sub-standard care to adolescents in violation of federal and state Medicaid requirements, falsified records to cover up their serious violations and filed false Medicaid claims.

Under the False Claims Act, a health care provider that submits false or fraudulent claims to a federal health care program is liable for three times the government’s damages, plus a civil penalty for each false claim.

Attorney Commentary: This type of qui tam lawsuit is a reminder to all health care providers and regulated industries to have a compliance plan. The employees would receive a copy of the compliance plan and they would sign a document acknowledging receipt of it and agreeing to follow it. In essence, they they would agree to report any alleged program violations or any wrongdoing to the employer.

In addition, it is necessary to have personnel policies in place to follow up and ensure that the employees believe they can report any perceived wrongdoing or perceived violations of policies. Where employees do not feel like team members, there can be problems. Many cases we handle were initiated by complaints by former employees.

In qui tam lawsuits which are contingency, the employees also will be compensated without having to spend any money for legal fees. Thus, terminated employees have an incentive to report alleged fraud or abuse to a qui tam attorney. Terminations of employees need to include exit interviews where specific questions are asked regarding any actual or perceived wrongdoing. If they report it then, the employer can take actions to investigate (internal or outside) and take actions in accordance with the compliance plan.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Tuesday, November 17, 2009

Miami Residents Sentenced In Federal Court For Roles At HIV Infusion Clinics That Fraudulently Billed Medicare


The Florida health care fraud cases continue to be the sore spot of the country. This was a case of outright fraud and abuse but it shows how the system allows $12 million in Medicare payments to be made where the HIV clinics were based on fraud and kickbacks.

On November 13, 2009, Manuel Camacho, was sentenced in Miami federal court for his participation in a Medicare fraud scheme at HIV infusion clinics in Miami-Dade and Broward Counties, providing infusion drug therapy treatments to patients suffering from AIDS or HIV.
Alejandro Gonzalez was sentenced on October 1, 2009 and Roberto Rodriguez was sentenced on November 3, 2009. These men were indicted in April 2009 and their sentences follow guilty pleas.

According to documents filed with the court, between November 2003 and November 2006, Mr. Gonzalez and Mr. Rodriguez established medical clinics in South Florida, purportedly to administer infusion therapies for the treatment of AIDS patients. In the plea agreement, it was admitted that no treatments were rendered and patients received a kickback for signing-in at the clinic. Messrs. Gonzalez and Rodriguez admitted to billing Medicare for millions of dollars for treatments that were not rendered and, were not medically necessary. In sum, they billed Medicare for approximately $40 million, of which Medicare paid about $12 million.

The role of Mr. Camacho according to court documents is that he was recruited by Messrs. Gonzalez and Rodriguez to be the nominee owner of one of the clinics and was listed on the clinic’s bank accounts. Mr. Camacho admitted to writing checks and purchasing boats and luxury automobiles as directed by Messrs. Gonzalez and Rodriguez to launder the proceeds of the Medicare fraud. Mr. Camacho admitted that he was involved in laundering more than $1 million from the clinic.

Manuel Camacho plead guilty to one count of money laundering conspiracy and received the lightest sentence. He was sentenced to 18 months’ imprisonment, to be followed by two years of supervised release. His lighter sentence reflects his role as having been recruited to be the nominal owner. In addition, based on the fact that he was sentenced last, it appears he also cooperated with the government against the other two men charged.

Roberto Rodriguez plead guilty to one count of conspiracy to commit mail fraud and was sentenced on November 3, 2009 to 102 months’ imprisonment, to be followed by 3 years of supervised release, and was ordered to pay restitution of $9,555,269.

Alejandro Gonzalez plead guilty to one count of conspiracy to commit mail fraud and was sentenced on October 1, 2009 to 96 months’ imprisonment, to be followed by 3 years of supervised release, and was ordered to pay restitution of $11,935,761.76.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is: http://www.greenassoc.com/

Monday, November 16, 2009

Ventura County Employer Is Charged Criminally For Not Having Workers' Compensation Insurance


A recent Ventura County District Attorney's case shows a new willingness to prosecute employers criminally for not having workers' compensation insurance. On November 6, 2009, Edward Anthony Cortez of Lompoc, California was arraigned in Ventura County Superior Court on a misdemeanor criminal charge of violating California Labor Code section 3700.5 which is operating a business without obtaining workers' compensation insurance.

A criminal complaint is only an accusation is not evidence of guilt. Mr. Cortez is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Mr. Cortez is the operator and principal owner of TC Construction Company, a construction company headquartered in Lompoc, California , and doing business in Ventura County. Not surprisingly, this case arose out of a bad factual situation. The complaint arises out of a March 30, 2009, incident when a construction worker hired by Mr. Cortez was injured at a job site in Santa Paula. The injured employee fell about 15 feet and broke his back.

The state becomes involved in these cases since injured employees who work for uninsured employers are forced to seek compensation for their injuries from a program funded by taxpayers known as the Uninsured Employers Benefit Trust Fund. This program is administered by the California Department of Industrial Relations.

An investigation was conducted by the Contractors State License Board and the Ventura County District Attorney's Office Bureau of Investigation. Ventura County District Attorney's Office has a special Workers Compensation Fraud which Unit filed the criminal complaint against Mr. Cortez on or about October 16, 2009.

Labor Code §3700.5 is a misdemeanor and the punishment can include imprisonment in county jail for up to a year and/or a fee up to $10,000.00 for knowingly being uninsured for workers' compensation insurance.

Attorney Commentary: I forecast greater prosecution of these regulatory cases as crimes where state budgets are constrained and there are special prosecution units in the county District Attorney's Offices. In addition, in economically difficult times, employees will be more likely to file workers' compensation claims. We frequently see employees who were paid under the table file claims much to the employers' surprise and chagrin. Employers are being targeted by insurers and the government for premium fraud (underreporting payroll or misclassifying employees) and for not having workers' compensation insurance. Now is the time for employers to comply with the law.

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have handled numerous workers' compensation fraud cases representing individuals, businesses, medical providers and attorneys. The firm website is http://www.greenassoc.com/

Saturday, November 14, 2009

Virginia Doctor Sentenced For Writing Prescriptions Over Internet And Tax Evasion

On November 4, 2009, Dr. Torrino Jennings of Hanover County, Virginia, was sentenced in Boston federal district by Judge Richard Stearns to one year and a day in prison, to be followed by three years of supervised release, after pleading guilty on July 19, 2009 to seven counts of Introducing Misbranded Drugs into Interstate Commerce and four counts of Tax Evasion. The maximum sentence that could have been imposed was 5 years.

As part of the plea, the doctor admitted that he wrote prescriptions over the Internet for people whom he had never met or examined. It was alleged that the drugs -- shipments of the muscle relaxant SOMA -- were misbranded as a matter of law because they were dispensed without a valid prescription.

The factual basis for the plea agreement was that between 2004 and 2007, Dr. Jennings issued between 50,000 and 100,000 prescriptions over the Internet for SOMA and other drugs to individuals on whom he had never performed a physical examination and whom, indeed, he had never met. He did so based on brief forms completed by individuals for online pharmacies. The online pharmacies paid Dr. Jennings between $5.00 and $7.00 for each prescription he wrote based on one of these forms. It was alleged that virtually no request for drugs submitted by the online pharmacies to Dr. Jennings for endorsement was ever rejected by him.

The tax portion of the case was based on the admission that Dr. Jennings knowingly and intentionally did not report to the Internal Revenue Service hundreds of thousands of dollars he was paid by the online pharmacies for issuing the prescriptions.

This prosecution shows that certain jurisdictions such as Massachusetts which is active in prescription and health care fraud prosecutions will seek to prosecute physicians in other states. The Internet allows other states and federal agencies to have jurisdiction to prosecute. Cases like this are a shock to the physician, his family and his practice. Physicians need legal advice before working at any Internet pharmacies and it cannot be assumed that simply because an Internet pharmacy is large or multi-state that its practices will be deemed legal.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Monday, November 9, 2009

Chiropractors And Attorneys Charged In Staged Accident And Auto Insurance Fraud Case In Los Angeles County


On October 27, 2009, four chiropractors were among those arrested and charged with grand theft and insurance fraud by the Los Angeles County District Attorney's Office (Automobile Insurance Fraud Division) in LASC Case No. BA363494. A few days earlier, four attorneys were similarly charged in the same case. A total of 28 defendants were charged in this case.

Chiropractors Mark A. Stolyar, Babak Naghi, Dmitriy Sklyut, and Christopher Manuel Cleveland were charged. Attorneys Leon Rubin Laufer, John Akopian, Edward Leonid Katsnelson and Stephen Marshall Weiss are charged with numerous counts of insurance fraud, grand theft of personal property and false and fraudulent claim. Mr. Akopian was also charged with money laundering, receiving stolen property and possession of an assault weapon.

A criminal complaint is only an accusation is not evidence of guilt. All the defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

The attorneys and chiropractors charged are accused of defrauding 15 insurance companies by allegedly filing false claims for staged accidents. Prosecutors allege that the defendants are part of a larger conspiracy involving more than 300 suspects.

There was allegedly a network of of attorneys, chiropractors, doctors, marketers or cappers, and body shop owners who are believed to have worked to defraud auto insurance companies. In addition, the drivers or insureds were involved as well in the fraud. In many of these cases, it is alleged that the accidents only happened on paper. In some of these cases it is alleged that conspiring body shops inflicted physical damages to vehicles reportedly involved in staged accidents.

These charges relate to hundreds of staged auto accident cases and is related to another Los Angeles County case , LASC No. BA340194, in which Alexander Igor Gutman and Laszlo Aldar Bango were charged last year. These defendants plead guilty in February 2009, are cooperating and are awaiting sentencing. Mr. Gutman allegedly was involved in staging some 2,600 “paper accidents” and Mr. Bango was purportedly his co-conspirator. The investigation leading up to Mr. Gutman's case was known as "Operation Big Fish."

Attorney Commentary: There are numerous related issues in these types of cases in order to prove whether or not the attorneys and chiropractors knew that the accidents were staged. It is my experience that the professionals are not told that the cases are staged.

Often circumstantial evidence will be used to show knowledge of intent to defraud. For example, in many of these cases there may have been "marketing" fees or kickbacks for the referral of patients or clients. These referral or marketing fees may be used to show that the attorneys or chiropractors knew or should have known that the accidents were staged. One reason I tell clients that marketing is dangerous in personal injury cases is that once marketers run out of real cases they will create cases to keep their income flow.

Another way the prosecutors may prove fraud is to show that the chiropractors did not have the patients receive all the treatment that was billed to the insurance company. For example, did the patients sign in for treatment that was not received and did the chiropractor bill for it? This allows the prosecutors to prove a false billing claim which is easier to prove than knowledge of a staged accident. However, it could also be used as circumstantial evidence that the chiropractors knew that there was no real injury. The billing statement is provided to the attorneys who then submit it to the insurance carriers in support of their settlement demand.

The sheer number of claims can also be used to show that the attorney or chiropractor must have known that the accidents were staged or exaggerated. Looking at these cases in hindsight with the cooperating testimony of Mr. Gutman and the patients/clients can be difficult to face at trial.

One of the other issues will be whether the attorneys or chiropractors had office managers who had significant authority in their office including, but not limited to, client or patient marketing. The role of other office personnel and whether they are cooperating or not will have significant impact on this case.
In some of these cases, I have seen attorneys use as a defense the fact that when they are told by the insurane carriers that the case is fraudulent that they drop it. However, this is not always a great defense since the prosecutors use it to show that the cases are only dropped once the fraud is discovered. Moreover, often there is no investigation to find out how this fraud case came into the office and no questioning of the referring person or client.

Prevention and compliance is very important in a personal injury or workers compensation practice for attorneys and treating physicians. A compliance plan and audit is important to avoid these type of allegations and charges. Referral and marketing fees cause much of the fraud in my experience.

In addition, during economically depressed times or among low-income populations, there are clients/patients who will lie to insurance companies and their doctors and attorneys in order to make a couple of thousand dollars. However, at the end of it all, the prosecuting agencies will want the persons with licenses charged and will put as a lower priority the patients and clients who agreed to the fraud. The prosecutors will reason that if they can prevent the professionals from facilitating the fraud -- it will be much more difficult to perpetrate.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. Ms. Green focuses her practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. She has significant experience in defending individuals, licensed professionals and businesses in insurance fraud investigations. The firm website is: http://www.greenassoc.com/

Monday, October 26, 2009

CBS 60 Minutes Reports On The $90 Billion Fraud In Medicare


This Sunday (October 25) 60 Minutes reported on the new face of Medicare fraud and how it can be surprisingly easy to execute. (Rent a location, find a frontman, buy lists or identities of Medicare patients often stolen from doctor's offices or hospitals, bribe a doctor and then bill since the government is required to pay within a certain period of time.) There are very few checks and balances in the system until the billing reaches certain critical levels. There are also few resources available at the provider enrollment level.

There was emphasis on the Miami area where it was reported that health care fraud is bigger than drugs. It's not just Miami, the show reported on Detroit and Los Angeles. There is an interview of one unsophisticated man "Tony" who described how he ran sham Durable Medical Equipment supply companies and billed Medicare for $20 million.

The entire 60 Minutes segment is available at CBS News website:

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Sunday, October 25, 2009

Legislative Language Of S. 1796 - America's Health Future Act


On October 19, 2009, the Senate Finance Committee provided the text of the bill they have proposed for health care reform, America’s Healthy Future Act. Because of its significance to our shared interest in health law, here is a link to the bill so you may access it immediately.


In the byline, the purpose of the bill is listed as: "To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes." The Act is lengthy - 1,502 pages long. There is much public discussion regarding this bill and few people have read the Act.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Saturday, October 24, 2009

More On Los Angeles Indictments Relating To Health Care Fraud And Kickbacks In DMEs


On Thursday, October 22, 2009, I wrote about three of seven DME health care fraud cases filed in the Central District of California within the last few weeks.

An indictment merely contains allegations that a defendant or defendants have committed a crime. Every defendant is presumed innocent unless and until proven guilty at trial.

Here is a brief summary of the remaining four cases:

4th DME Health Care Fraud Case: Anait Garanfilyan, 47, of Los Angeles, was arrested on October 15 after being indicted on multiple counts related to the alleged payment of illegal kickbacks for Medicare patient referrals to two medical clinics in Los Angeles between February 2005 and May 2006.

In Case No. 2:09-CR-00919, Ms. Garanfilyan is charged with one count of 42 U.S.C. 1320a-7b(b)(2)A) for payment of kickbacks for patient referrals and one count of 18 U.S.C. 2 (aiding and abetting). Ms. Garanfilyan is scheduled to be arraigned on Monday, October 26.

5th DME Health Care Fraud Case: Mariya (Mary) Bagdasaryan, 54, and Edgar Srapyan, 26, both of Glendale, Calif., were indicted in Case No. 2:09-CR-00957 on charges of conspiring to commit health care fraud from October 2007 to December 2008.

Specifically, they are charged with (1) one count of 18 U.S.C. Section 1349 of conspiracy to commit health care fraud; (2) one count of 42 U.S.C. Section 1320a-7b(b)(2)A) for payment of kickbacks for patient referrals; and (3) and one count of 18 U.S.C. 2 (aiding and abetting).

Ms. Bagdasaryan allegedly operated a fraudulent DME company called Goldberg Medical Supply and allegedly submitted approximately $779,028 in false claims to Medicare for medically unnecessary power wheelchairs and wheelchair accessories. Ms. Bagdasaryan also is charged with paying illegal kickbacks for the referral of Medicare patients to Goldberg Medical Supply.

Mr. Srapyan, though an alleged fraudulent DME company, True Care Medical Supply, is alleged to have submitted approximately $647,356 in false claims to Medicare for unnecessary power wheelchairs and wheelchair accessories.

6th DME Health Care Fraud Case: Adejare Ademefun, 55, of Inglewood, was indicted for allegedly conspiring with others to submit more than $850,000 in false claims to Medicare for medically unnecessary power wheelchairs in Case No. 2:09-CR-00979.

Mr. Ademefun is charged with (1) one count of 18 U.S.C. Section 1349 of conspiracy to commit health care fraud; (2) five counts of 18 U.S.C. Section 1347 (health care fraud); and (3) and one count of 18 U.S.C. 2(b) (causing an act to be done). Mr. Ademefun is scheduled to be arraigned on Monday, October 26.

This case may be related to another health care fraud case, Case No. 08-1159-JFW, U.S. v. Floruncho Tosin Adeshina, since a notice of related case was filed. This indicates that Mr. Ademefun may be a witness in this other case.

7th DME Health Care Fraud Case: Sylvester Ijewere, 49, of Arleta, Calif., was named in a criminal complaint charging him with one count of health care fraud. Mr. Ijewere is associated with a DME company called Maydads that allegedly was used to submit nearly $500,000 in false claims to Medicare. Mr. Ijeware was arrested on October 21.

Attorney Comments: Each of these cases are ones where kickbacks and/or pure fraud -- billing for services not provided or not medically necessary -- are alleged. The vast majority of DMEs do not conduct themselves in this manner. However, these cases should alert DMEs to the fraud that exists in the system and make their best efforts to ensure that any prescriptions are valid and issued by the physician on the order form.

For example, assume a DME hires a marketing company. The marketing company assures the DME owner that they have all these contacts with physicians and can bring legitimate business to them. The order forms begin to arrive. The DME needs to contact the referring physicians on the order forms, check them out and ensure that this was ordered. It would also be wise to visit the office of the referring physician.

There is a market out there for fraudulent prescriptions and beneficiaries who sell their provider numbers. If a legitimate provider is caught up in this scheme, it can cause administrative problems (pre-payment review or loss of a provider number) and potential criminal problems.
Further, if the marketer has paid a kickback to a patient or physician, that order form will be a "false claim." That false claim will affect your DME's reimbursement. It is a chain reaction.

Marketing is fraught with issues and it is important for DME providers to be cautious and paranoid. An experienced health care attorney can advise as to the legality of the marketing arrangement and the type of due diligence that should be done to avoid future problems.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal  at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers including, but limited to, DME providers. Their website is: http://www.greenassoc.com/

Thursday, October 22, 2009

Seven Federal Criminal Indictments In Los Angeles Target Durable Medical Equipment Owners, Employees And Marketers



On October 21, 2009, the U.S. Attorney's Office for the Central District of California in Los Angeles announced that over the past few weeks there have been seven separate criminal cases filed involving durable medical equipment (DME) providers. In addition to the arrests, on October 21 federal agents executed search warrants at four locations in Los Angeles County. These cases were the result of investigations by the Medicare Fraud Strike Force.

Here is a summary of three of the cases. A subsequent blog post will discuss the other four cases.

An indictment merely contains allegations that a defendant or defendants have committed a crime. Every defendant is presumed innocent unless and until proven guilty at trial.

1st DME Health Care Fraud Case: Seven people were charged with conspiracy to commit health care fraud and for making false statements to the government: (1) Michael Martinez, 30, of Long Beach; (2) Angel Michel, 36, of San Diego; (3) Guadalupe Alcaraz, 30, of Corona.; (4) Theresa Padilla, 23, of Moreno Valley; (5) Pedro Franco, 28, of Torrance; (6) Ricardo Navarro, 49, of Corona; and (7) Martin Padilla, 42, of Moreno Valley. This is Case No. 2:09-CR-0997.

The indictment alleges that Martinez recruited relatives and individuals linked to the Santa Ana-based Brook Street Gang to act as straw owners for four fraudulent DME companies. The six other defendants allegedly each received approximately $5,000 from a Martinez associate to act as the nominal owners of the fraudulent DME companies. In this way, they could allegedly deceive Medicare by concealing the true identities of those who actually owned the companies.

The indictment alleges that as part of the conspiracy, the fraudulent DME companies—Mercy Medical Supplies Inc.; Chatsworth Medical Equipment Inc.; All Your Needs Healthcare Products Inc.; and Global Meridian Management Inc.—submitted approximately $11.2 million in fraudulent Medicare claims for medically unnecessary power wheelchairs and orthotic devices.

This case may be related to another DME health care fraud case, U.S. v. Levon Sedrakyan, Case No. CR 08-1066-PSG which was filed in September 2008.

2nd DME Health Care Fraud Case: On October 15, 209, six persons were arrested (owners of four DME companies and two of their employees) after being indicted for allegedly submitting more than $12 million in false claims to Medicare for power wheelchairs, orthotics and other medical equipment that the conspirators either did not supply, supplied to beneficiaries who did not need the equipment, or allegedly supplied to deceased beneficiaries. This is Case No. :09-CR-1008.

Christopher Iruke, 57, of Los Angeles (the owner of Pascon Medical Supply) and employee Darawn Vasquez, 25, of Inglewood, Calif., are alleged to have acquired fraudulent prescriptions and documents from individuals who recruited Medicare beneficiaries or were associated with fraudulent medical clinics.

Mr. Iruke, Ms. Vasquez and Iruke’s wife, Connie Ikpoh, 47, also of Los Angeles; as well as Jummal Joy Ibrahim, 54, of Las Vegas; and Asia Fowler, 38, of Pacoima, Calif. (who were the alleged owners of Horizon Medical Equipment and Supply Inc., Contempo Medical Equipment Inc., and Ladera Medical Equipment Inc.) are alleged to have used the fraudulent prescriptions and documents Mr. Iruke and Ms. Vasquez acquired to submit approximately $12.1 million in false claims to Medicare.

The indictment also charges a sixth defendant, Aura Marroquin, 28, of Los Angeles, with participating in the scheme.

3rd DME Health Care Fraud Case: Maria Nela Moreno, 56, of Parlier, Calif., was arrested on October 21 after being indicted along with a codefendant for allegedly conspiring to submit approximately $828,835 in fraudulent claims to Medicare for medically unnecessary power wheelchairs through a DME company in Canoga Park, Calif. These defendants also are charged with six counts of submitting false claims to the Medicare program. The statutory maximum possible for these charges is 70 years.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers including, but limited to, DME providers. Their website is: http://www.greenassoc.com/

Wednesday, October 21, 2009

Employee Receives Four Month Jail Sentence In Workers' Compensation Fraud Case And Is Ordered To Pay Restitution And Investigation Costs


This is an update on the September 25, 2009 post regarding the prosecution of employee Armando Landa for one count of felony workers' compensation fraud in Ventura County Superior Court. On October 21, 2009, Mr. Landa was sentenced pursuant to a plea agreement (1) to serve 120 days in jail, (2) placed on 60 months formal probation, (3) ordered to pay $28,723 in restitution to Intercare Holdings Insurance Services, and (4) ordered to pay $10,000 to the California Department of Insurance, Fraud Division, for investigative costs.

The facts relating to this case were as follows. On May 4, 2007, while working at Chicago For Ribs in Ventura, Mr. Landa filed a workers' compensation claim following an alleged injury to his right elbow. He received treatment for his injury and was granted leave from work. From May 25, 2007, to August 13, 2008, Mr. Landa was given tax-free, bi-weekly checks for living expenses, totaling $30,651. On December 19, 2007, while still off work and receiving benefits, Mr. Landa obtained employment as a bus boy at Teppan's Steak House in Oxnard. At a deposition, under oath, Mr. Landa denied working anywhere since the time of his injury, despite the fact that he was working at Teppan's Steak House at the time of the deposition.

The prosecution, plea agreement and sentence followed. There was no indication whether any restitution was paid prior to the plea agreement or sentence. In Ventura County, the sentences tend to be longer than in other counties. However, we are seeing a trend of longer sentences in white collar cases such as workers' compensation fraud cases. Restitution, however, tends to be an important factor in the resolution of these cases. Just as the criminal prosecutions of employers have increased, so has the prosecution of employees.

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have handled numerous workers' compensation fraud cases representing individuals, businesses, medical providers and attorneys. The firm website is http://www.greenassoc.com/

Saturday, October 17, 2009

California Attorney General Issues Opinion On Corporate Practice Of Medicine Involving Radiology Services


On September 24, 2009, California Attorney General recently issued an Opinion reinforcing California's ban on the corporate practice of medicine with respect to radiology services. 08 Ops.Atty.Gen. 803 (2009).

The issue presented was: "whether an entity or individual who is not licensed to practice medicine in California may perform professional radiology services for a Medical Provider Network."

The phrase "professional radiology services" was deemed to include "creating, reading and interpreting radiological images, [and] related professional services such as [1] the selection of suitable radiologist, [2] the selection of a radiology site with appropriate equipment and personnel, as well as [3] collecting fees for such services."

The conclusion was: "An entity or individual not licensed to practice medicine may not perform professional radiology services, either as part of a Medical Provider Network or otherwise.We conclude that they may not."

As part of its analysis, the Attorney General Opinion "reiterate[d] [its] view that professional radiology services—specifically including the selection of a suitable radiologist, and the selection of a suitable radiology facility with appropriate equipment and personnel, as well as preparing and interpreting radiological images—involve the exercise of professional judgment as part of the practice of medicine. Unless otherwise provided by law, it is unlawful to practice or attempt to practice medicine without a license.

The Opinion restated the ban on the corporate practice of medicine: "California law establishes a general rule that a license to practice medicine may be issued only to a properly qualified person, and not to a corporate entity."

"The practice of medicine by a corporate entity, except a professional medical corporation, is prohibited because 'it is incongruous in the workings of a professional regulatory licensing scheme which is based on personal qualification, responsibility, and sanction . . . [and] the interposition of a lay commercial entity between the health professional and the patient would give rise to divided loyalties on the part of the professional and would destroy the professional relationship that is based on trust and confidence.' The ban applies to for-profit and not-for-profit corporations alike."

A copy of the Opinion 08-803 can be found at:
http://ag.ca.gov/cms_attachments/opinions/pdfs/o548_08-803.pdf

Attorney Comments: This opinion should be of concern for the viability of Independent Diagnostic Testing Facilities under California law and other referral or management arrangements involving radiology. This opinion is broad and there are numerous arrangements where radiologists work with entities that are not professional medical corporations for leasing equipment, technologists, and for billing and collection.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Thursday, October 15, 2009

California Attorney General Files Medi-Cal Fraud Charges Against Former Manager Of Mt. Shasta Clinic



Medi-Cal prosecutions are beginning to show up even in rural areas such as beautiful Mt. Shasta. On October 9, 2009, the California Attorney General's Office filed criminal charges against Denise Fairhurst, the former manager of a Mount Shasta-based medical clinic, in Siskiyou County Superior Court. Ms. Fairhurst was charged with five criminal counts of grand theft, insurance fraud and submitting false claims to the government. Bail was initially set at $1 million dollar. Bail is often initially set at the amount of the alleged loss.

The criminal complaint contends that between January 2004 and December 2007, Ms. Fairhurst, acting as the manager of Alpine Healthcare Clinic, billed Medi-Cal $2.2 million for services not rendered to beneficiaries to help pay Alpine's operations and management. It was further alleged that Ms. Fairhurst used $33,492 of the funds to pay personal credit card bills.

According to the complaint, Alpine Clinic had financial problems which stemmed from Ms. Fairhurst's inability to set appropriate compensation rates for employees and physicians. The complaint alleges that a member of the maintenance staff was paid $1000 a month to work one hour a week. Other medical clinics in town allegedly lost employees to Alpine because they could not compete with its pay structure. The clinic also allegedly lost income because of an agreement Ms. Fairhurst made with doctors to provide care to patients when they were admitted to a hospital.

The fraud allegedly began to occur when, with costs rising, Mr. Fairhurst submitted false claims to Medi-Cal. She allegedly forged Medi-Cal forms, claiming that patients had received care at the clinic, even though some patients had not been to it in years. It is alleged that approximately two-thirds of the claims Ms. Fairhurst submitted were fraudulent.

A member of Alpine Clinic's board of directors allegedly discovered that payment claims had been submitted for patients who had not been seen at the clinic. The board of directors hired an accounting firm to conduct an audit of the clinic's finances. Ms. Fairhurst allegedly refused to provide any information to the firm and resigned in June 2008. The audit uncovered further evidence of Fairhurst's activities, including the use of a personal credit card that was linked to the clinic's bank account. Alpine Clinic's board of directors referred its findings to the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse for prosecution earlier this year. If convicted, Fairhurst faces up to five years in prison.

Attorney Comments: We have had number of cases where managers have made billing decisions or taken actions that put the medical office at risk for allegations of Medi-Cal fraud billing. In cases where the office manager was working for an individual provider or group it is often difficult to prove that the manager acted on his or her own without the owners being involved. We have had cases where the medical office has decreased business and the manager has billed inappropriately in order to keep the office financially solvent.

We have also had cases where billers have made mistakes that have later resulted in referrals for criminal investigations. Physicians and health care providers often rely on managers and billers to bill correctly and place too much trust in their skill and ability to navigate the health care billing rules.

Compliance plans and periodic audits need to be instituted at all offices that bill Medi-Cal, Medicare or insurance companies. Even if it is at a small scale (review of random charts and billing every quarter) it needs to be done. So much of billing is invisible to the medical providers. Many clinic managers and billers at small offices and clinics are not MBAs and do not have college degrees. Instead, they often learned their skills on the job.

Small providers should look to the way in which hospitals and larger clinics operate to find methods through internal controls for ensuring that billers and managers have an independent set of eyes reviewing their work on a periodic basis. Through early detection and reporting, providers can reduce their exposure to false billing claims, overpayments from audits, civil damages and penalties, administrative remedies, and even criminal sanctions.

Any questions or comments should be directed to:
tgreen@greenassoc.com. Tracy Green is a principal  at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is: http://www.greenassoc.com/






Tuesday, October 13, 2009

Los Angeles Fire Department Inspector Pleaded Guilty To Accepting Bribes From Small Nursing Care Facilities


On September 23, 2009, Dennis Martin Archie, a Los Angeles Fire Department inspector, pleaded guilty to accepting a bribe. Mr. Archie was charged in July by the Los Angeles County District Attorney's Public Integrity Division with soliciting and accepting bribes from operators of small nursing care facilities run out of private homes in the San Fernando Valley.

According to the felony complaint, Mr. Archie, a career firefighter, had been assigned to the San Fernando Valley as a fire inspector. He worked out of the Van Nuys office and part of his job was to inspect small nursing homes for the elderly that were operated out of private homes. Mr. Archie was charged with accepting or soliciting bribes ranging from $500 to $2,000 from seven victims in 2008 and this year. Prosecutors said some operators paid him in exchange for clearances and some did not. The victims operate homes in Reseda, Northridge, Winnetka, Burbank, Chatsworth and West Hills.

Under the plea, Mr. Archie is facing six months in jail and a $10,000 fine when he returns on October 7 for sentencing in the early disposition court before Judge David Horwitz. In exchange for his plea, the other seven felony counts will be dismissed when he is sentenced.

Attorney Comments: One collateral consequence for the nursing homes that paid the bribes could be a negative effect on their licenses. Where there have been bribes that were later discovered, the health care providers have had trouble with licensing and certification. Providers must understand that paying bribes to federal or state officials are serious offenses. Obtaining a license or certification through a bribe -- even if solicited -- is extremely dangerous. If you are solicited, you should contact an attorney immediately and determine how to proceed.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. Their website is: http://www.greenassoc.com/


Saturday, October 10, 2009

Lesson for Alternative Health Care Practitioners: L.A. Physician Charged With Federal Mail And Wire Fraud Charges For Selling Chinese Herb Treatments To Cancer Patients


On October 8, 2009, a Los Angeles doctor Christine Daniels was arrested and charged by federal prosecutors with two counts of wire and mail fraud after allegedly claiming that her herbal treatments could cure cancer. Prosecutors allege that Dr. Daniels claimed her "C-Extract" was an alternative to chemotherapy and other medical cancer treatments.

Prosecutors also allege that some of those patients took "C-Extract" instead of getting conventional medical treatment. Prosecutors allege that she collected more than $1 million from patients from 2001 to 2004, some of whom later died of cancer or complications from the disease. The prosecutors further alleged that Dr. Daniels is also an ordained Pentecostal minister and that Dr. Daniels allegedly discussed her treatment on the TBN Christian cable channel and said the herbs had a “60% cure rate” and “people are living today because of our treatment.”

According to the Wall Street Journal, Dr. Daniel had already been investigated by the U.S. Attorney's Office and the Medical Board back in 2007 and that previously there was an article on the front page of the Wall Street Journal regarding the investigation.

An indictment is only an accusation is not evidence of guilt. Dr. Daniels as a defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt. 

Attorney Comments: First, cases like this should remind alternative or complementary health care practitioners to remember to have any clients or patients sign consent forms that are quite specific as to what is being provided. For example, it is not illegal to sell Chinese herbal supplements to people that have cancer. However, if there are promises that it will heal, treat or cure a disease that can lead to issues with the FDA, Medical Board, and local law enforcement. Without written documentation signed by the patient or client, it can turn into a he said-she said situation.

Second, although I do not know the facts of this case, I am amused when the evidence showing that alternative treatments are part of a fraud is a statement by the prosecutor such as "Mrs. X took the Chinese herbs, which cost $10,000 and then died of cancer." Most conventional treatments do not truly "cure" cancer and there are many people who undergo chemotherapy and other treatments which cost $50,000 or more and then pass away from cancer.

There is a place for preventative, alternative and conventional treatments which help bolster the immune system and help one's body fight cancer cells without actually curing or treating the disease. Alternative practitioners need to be careful with the language used with clients or patients.

Third, alternative or complementary practitioners need to have their websites, brochures or public statements reviewed for compliance purposes. An attorney's opinion can help avoid future problems. Patients or clients who want conventional and alternative medicine often know what they seek and what is being promised. However, after someone passes away, the anger may come from the survivors who saw their loved one do everything to fight to live. There are some people who turn to alternative treatments when conventional medicine has failed them. Yet, when conventional medicine fails the patient, the physicians are not prosecuted.

Fourth, this case is not the typical case in that it is also a tax evasion case. Thus, there may be additional reasons why this doctor was selected for prosecution. 

The United States is a place where people have choice. As an alternative health care provider, however, you need to make sure that you protect yourself from false claims that you promised to "cure" cancer, diabetes or any other disease. 

Posted by Tracy Green, Esq. Any questions or comments  should be directed to Tracy Green, a very experienced California naturopathic doctor attorney, Los Angeles alternative health care attorney, and Los Angeles physician attorney at tgreen@greenassoc.com or call her at 213-233-2260

The firm focuses its practice on the representation of professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers including those in alternative and preventative medicine in structuring businesses, compliance audits, administrative board and discipline matters in California and throughout the country. Our website is: http://www.greenassoc.com/


Friday, October 9, 2009

RN Prosecuted And Sentenced To Federal Prison For Diverting Controlled Substances From Patients And Using Them For Her Own Benefit



There is an increase in health care professionals being prosecuted criminally for the illegal diversion of drugs. In the past, if a health care professional were found to have diverted controlled substances, he or should would be fired and face disciplinary charges. There is now a trend of the Drug Enforcement Agency becoming involved and filing federal criminal charges.

A case from this summer is an example of the Drug Enforcement Agency (DEA) taking a much tougher stance on those professionals who are addicted to prescription drugs. On July 27, 2009, in federal court in Minneapolis, a Minnesota Registered Nurse, Julie Crystal Fronk, was sentenced to one year in prison and one year of supervised release for obtaining a controlled substance for her own use by fraud while employed as a registered nurse at a home health care agency. In addition, Ms. Fronk was the former assistant head of nursing at the home health agency.

Ms. Fronk's sentence came after she was charged on March 4 and plead guilty on March 23, 2009. According to Ms. Fronk’s plea agreement, she admitted that from May 2008 through July 2008, she knowingly and intentionally obtained Vicodin by misrepresentation, fraud and deception after the pills had been prescribed to others. Ms. Fronk also admitted she failed to dispose of the Vicodin properly. Instead, she admitted acquiring the pills for her own use and benefit.

Ms. Fronk's case had some aggravated facts that triggered prosecution and the seeking of prison time since there were allegations that critically ill patients were harmed due to Ms. Fronk's actions. During sentencing, testimony was taken from a patient representative regarding the theft of Morphine diverted from a patient who was dying and on hospice care. It was alleged that this patient died in unimaginable pain due to the actions of Nurse Fronk.

Attorney Comments: Seeing an addict sentenced to prison is done every day in state and federal courts. When it is a licensed professional who will face discipline of their license there is a type of "double jeopardy" that makes these cases more painful. The government takes the position that Ms. Fronk or other addicted licensed professionals like her are abusing their position of trust as medical professionals by stealing pain medication prescribed for patients and using it for their own personal use. As a nursing board attorney, medical board attorney and attorney for other health care providers, we have handled many cases involving substance abuse by professionals.

The tougher stance by the DEA and other government agencies should be one reason for any addicted professionals to seek help as soon as possible before their addiction causes them to lose their license and/or be prosecuted criminally. The time to take action if before any prosecutions or disciplinary actions are brought. Those of us who work with addicted professionals know that without serious action and intervention, it is a matter of time before the unthinkable happens to them or someone under their care. Health care professionals are at special risk for developing addiction problems due, in part, to the stress on the job and the easy access to controlled substances.

Moreover, diversion programs are no longer as available as they were in the past due to public outcry that the disciplinary boards are allowing addicted professionals to work and endangering the public. In California, for example, the Medical Board eliminated its diversion program.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers including nurses before disciplinary boards. Their website is: http://www.greenassoc.com/

Wednesday, October 7, 2009

Two Recent Auto Fraud Prosecutions In Ventura And San Bernardino Counties For Filing False Stolen Vehicle Claims With Insurance Companies


Here are two recent automobile insurance fraud cases from Ventura and San Bernardino Counties. There has been a significant increase in the prosecution of these cases. In addition, the time for investigation and prosecution of these types of cases has shortened. For example, in the Ventura County case, there was an arrest and sentence within two months of the alleged false stolen vehicle report.

Venutura County

On September 24, 2009, Jose Jesus Quiroz of Oxnard was sentenced to felony probation for a period of three years and ordered to serve 90 days in the Ventura County jail. He was also ordered to pay restitution to Infinity Insurance in the amount of $4,293. This sentence follows his guilty plea to felony auto insurance fraud.

The alleged facts in this case are as follows. On the morning of August 10, 2009, Mr. Quiroz called the Oxnard Police Department to report that his 2002 GMC Denali was stolen. Mr. Quiroz told the police he parked and locked his vehicle in front of his house the previous day, August 9, but when he came outside the following morning, the vehicle was gone. He then reported the “theft” to his insurance carrier, Infinity Insurance.

Infinity was notified by the National Insurance Crime Bureau that Mr. Quiroz's car was impounded in Mexico on August 8, 2009. When questioned by Infinity Insurance, Mr. Quiroz said he had his vehicle on August 9, 2009, and denied taking it to Mexico. Infinity then referred the case to the California Department of Insurance Fraud Division (CDI) for investigation.

Mr. Quiroz eventually confessed to CDI investigators that he had financial problems and could no longer afford his monthly car payments. A friend allegedly told him that he could “leave” his truck with people in Mexico who would get rid of it for him. Mr. Quiroz then admitted reporting the vehicle as stolen in an attempt to collect insurance money.

San Bernardino

On September 14, 2009, Gustavo Garcia of Fontana was arrested at his place of employment and charged with (1) perjury (Penal Code Section 118), (2) insurance fraud (Penal Code Section 550 (A) (1) PC) and (3) Penal Code Section 550 (B)(1).

A felony complaint is only an accusation is not evidence of guilt. Mr. Garcia as a defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

It is alleged that Mr. Garcia claimed someone stole his 2005 GMC Yukon from his driveway in Fontana on June 29, 2008. It was recovered on July 12, 2008, in Ontario. He allegedly claimed prior to the theft that he had a company install over $9,000 in after market electronic accessories in his vehicle, as well as new tires and rims. He produced a receipt to State Farm that stated all of the items he purchased were installed in his vehicle. Experts hired by State Farm examined his vehicle and said the items were never installed. The owner of the company that Garcia said installed the tires, rims and other electronic items stated he never put them in the vehicle and never received any money from Garcia. Bail was set at $100,000.

It is also alleged that Mr. Garcia filed a similar claim in September 2007. He reported his 2005 GMC Yukon stolen to State Farm. He had submitted a receipt to State Farm, from a company that he said installed new tires, rims and the same electronics he claimed in the theft nine months later. State Farm paid the first claim, but when Garcia made the same claim again, they began looking into both claims. State Farm denied the second claim due to the lack of cooperation by Garcia.

Attorney Commentary: First, the Ventura County case involved the person suspected of the offense speaking with investigators and ultimately confessing. This confession was most likely made without any immunity or agreement of leniency. If you are interviewed by an insurance company's Special Investigations Unity (SIU) or are asked to submit a declaration under oath, you would be well-advised to seek legal counsel. If you have legal exposure, you want to analyze whether you should make further statements in support of a problem claim.

Remember that anything you say or write is evidence that can be used to prosecute you. Do not think that by being helpful or confessing that there will not be a criminal filing. Even if the investigators tell you that if you admit the truth they will go easier on you, remember that this is not a promise binding on the government prosecutors. Also, do not make the mistake of thinking that if you hire an attorney you will "look guilty." It is better to have an attorney give you sound advise rather than to make statements or sign documents that will later be used against you.

Second, remember that the insurance companies have a database of prior claims. If there is a pattern or similar claim, that can trigger an investigation. Merely having a number of auto accidents or claims within a year can trigger an investigation. The insurance companies and government agencies share information.

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have developed an expertise in defending insurance fraud cases over the past 20 years. The firm website is http://www.greenassoc.com/

Saturday, October 3, 2009

Unusual Case Of Man Posing As Fertility Doctor In Los Angeles Is Charged With Unlicensed Practice Of Medicine, Identity Theft And Other Charges



In an unusual practicing medicine without a license case, Jeffrey Lynn Graybill was charged by Information in Los Angeles County Superior Court with stealing the identity of a real doctor, posing as a fertility doctor in Marina del Rey and performing medical exams on college-age men who believed their sperm donations were being used for medical research.

Mr. Graybill was arraigned on October 1, 2009 at the Airport Branch where he plead not guilty to two counts of practicing medicine without a license, two counts of false personation, two counts of identity theft, two counts of sexual battery by fraud, and three counts of sexual penetration by a foreign object. A judge set bail at $549,000 bail and scheduled his next court date for October 16.

An Information is only an accusation is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

According to police, although Mr. Graybill had no training as a physician, he had taken courses as an emergency medical technician. Mr. Graybill allegedly posted advertisements on the Craigslist Internet site pretendinged to be a doctor for the West Los Angeles Fertility Clinic, conducting "stem cell and other research." He offered $400 to $500 for an initial semen donation, and up to $4,000 if a donor's sample was selected for his study.

Some men responded through phone calls or e-mails. He then allegedly scheduled meetings with them at his apartments in Marina del Rey and Santa Monica. Then Mr. Graybill allegedly performed physical examinations on the men, who supplied semen samples. Two of the men reported what happened, triggering the investigation.

There is an article in the Los Angeles Times regarding this case:
http://www.latimes.com/news/local/la-me-westside-assault3-2009oct03,0,4365839.story?track=rss

Posted by Tracy Green. Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have developed an expertise in health care over the past 20 years, and have significant experience in unlicensed practice of medicine cases. The firm website is http://www.greenassoc.com/

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