In criminal fraud cases, restitution is usually key to obtaining favorable plea terms. In workers' compensation fraud cases, releasing the right to collect on liens or receivables at the Workers' Compensation Board is also an important part of plea deals especially in light of Labor Code 139.31.
This is evidenced in two complex workers' compensation fraud cases, known as the Aspen Medical DME cases, which plead out on May 5, 2017 in Orange County Superior Court.
The three individual owners -- Jeffrey Edward Campau, Landen Alan Mirallegro and Abraham Khorshad -- agreed to pay jointly $8,621,845.96 in restitution, dismiss liens (charged and uncharged) worth over $139 million and pay other penalties in exchange for county jail terms (with state prison suspended) and where they will be eligible for house arrest with electronic monitoring.
There are two separate but related cases. In Orange County Case No. 13ZF0179, Jeffrey Campau and Landen Mirallego plead to 24 counts of Penal Code Section 550(a)(5) [preparing or submitting false claim] and 24 counts of Penal Code Section 550(a)(8) [presenting multiple claims of same health care benefit with intent to defraud]. In Orange County Case No. 16CF1842, Campau and Mirallego also plead to 7 counts of illegal patient referrals. These claims at issue were submitted for a rented DME machine which provided both hot and cold modalities to alleviate inflammation and/or pain for patients.
The negotiated plea terms in Campau and Mirallego's cases are:
1. One year in county jail (but eligible for electronic monitoring house arrest);
2. Five years of formal probation (10 years in state prison suspended sentence);
3. Payment of $8,621,845.96 in restitution (jointly and severally);
4. Order to stop collecting and dismiss all workers' compensation claims for: Aspen Medical Resources, National Marketing dba National DME, Elite Diagnostic, Regional Imaging and Abrexis Orthocare (value worth $139,752,925.77). They are also ordered not to sell these accounts receivables to any third parties, either inside or outside of the State of California. Under Labor Code Section 4615 these liens were already stayed;
5. Each individual to pay a $250,000 fine (Insurance Code Section 1872.83)
Abraham Knorshad was charged only in one case and plead to three counts of Penal Code Section 550(a)(5). His county jail time was 9 months with 3 years probation and similar terms on not collecting and dismissing liens for Aspen Medical Resources and National Marketing dba National DME, payment of $250,000 fine and joint and severalliability for the $8,621,845.96 in restitution.
In this case, Penal Code 186.11 the white collar freeze and seize law was used by the OCDA to obtain order to prevent the transfer or dissipation of all assets of the companies, which were placed under receivership. A court appointed receiver was ordered to use these assets and liquidate the defendants' property as needed to pay the restitution.
The workers' compensation carriers and policyholders have a great interest in these type of cases. For example in this case it is reported that the workers’ compensation carriers’ reserves in excess of $186,752,925.77 will be released and the ex-mod of the policyholders will be reduced accordingly.
The collateral consequences of these pleas will be exclusion from Medicare and government health care programs such as Medi-Cal, and from the workers' compensation system. The agreement to dismiss and not collect on all liens makes sense as a negotiating tool since under Labor Code Section 139.31 (effective January 1, 2017) if the liens are not designated to be dismissed in the criminal case, the liens will be presumed to be part of the fraud and the burden shifts to lienholder to prove beyond a preponderance that the liens were not connected to the fraud and all liens will be consolidated.
Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law