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. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.


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/

Friday, October 2, 2009

Former Biotech CEO Convicted Of Wire Fraud Related To Press Release About Drug Actimmune But Acquitted Of Misbranding The Drug



A rare pharmaceutical fraud case, U.S. v. W. Scott Harkonen, M.D. (the former CEO of InterMune, Inc.), Case No. 08-164 MHP, that went to a jury trial for seven weeks in the Northern District of California before U.S. District Court Judge Marilyn Hall Patel, concluded on June 29, 2009.

The jury, in its third day of deliberations, found Dr. Harkonen guilty of wire fraud related to a press release issued on Aug. 28, 2002 about the efficacy of InterMune’s drug Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis ("IPF"). Dr. Harkonen was acquitted of a misbranding charge brought under the Federal Food, Drug, and Cosmetic Act.

The Food and Drug Administration approved InterMune's drug Actimmune to treat two rare childhood diseases. But InterMune also sought to market it to patients suffering from idiopathic pulmonary fibrosis, a lung disease that occurs far more frequently. In 2002, InterMune issued a press release regarding a clinical study that supposedly showed benefits for some IPF patients. Specifically, the press release's headline stated that, “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF,” with the subheading “Reduces Mortality by 70% in Patients With Mild to Moderate Disease.” One of the issues at trial is whether the press release was true or not.

This prosecution is unusual in that the criminal prosecution of the former CEO came years after he left the company and after the company entered into a deferred prosecution agreement with the Justice Department. Dr. Harkonen left InterMune in 2003. In October 2006, InterMune agreed to enter into a deferred prosecution agreement and to pay nearly $37 million to resolve criminal charges and civil liability in connection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

Because the government rarely prosecutes individual health care executives for fraud, attorneys involved in the case probably believed the company's deal would effectively end the criminal investigation. The government continued the investigation and indicted Dr. Harkonen on two counts: wire fraud and felony misbranding of a drug. A copy of the Indictment can be found at:
http://i.bnet.com/blogs/https___ecfcanduscourtsgov_cgi-bin_show_temppl_filefile06123022002607.pdf?tag=content;selector-perfector

The maximum statutory penalty for 18 U.S.C. § 1343 (wire fraud) is 20 years in prison, $250,000 fine, three years supervised release, and $100 mandatory special assessment. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Judge Patel set a December 18, 2009 hearing for post-trial motions.

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/

DISCLAIMER

DISCLAIMER: Green & Associates' articles and blog postings are prepared as a service to the public and are not intended to grant rights or impose obligations. Nothing in this website should be construed as legal advice. Green & Associates' articles and blog postings may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents and contact their attorney for legal advice. The primary purpose of this website is not the commercial advertisement or promotion of a commercial product or service and this website is not an advertisement or solicitation. Anyone viewing this web site in a state where the web site fails to comply with all laws and ethical rules of that state, should disregard this web site.

The information provided on this website is for informational purposes only. It is not intended to create, and does not create, a lawyer-client relationship with Green & Associates, Attorneys at Law. Sending an e-mail to Tracy Green does not contractually obligate them to represent you as your lawyer, or create any type of client relationship. No attorney-client relationship will be formed absent a written engagement or retainer letter agreement signed by both Green & Associates and client and which specifies the scope of the engagement.

Please note that e-mail transmission is not secure unless it is encrypted. E-mail messages sent to Ms. Green should not include confidential or sensitive information.