Why Are Older Physicians More At Risk for Criminal Prescribing Charges? Recent Case: Older Santa Rosa Doctor Indicted For Unlawfully Prescribing Fentanyl And Oxycodone

I often see older physicians caught up in criminal prescribing cases. Part of it may due to impairment and part of it may be due to trusting others including patients. Older physicians need to seriously question their conduct and business arrangements since failure to follow the standard of care can be criminal if it involves scheduled drugs. The standard of care for pain management has changed drastically the last 10 years and the record keeping requirements have also increased.  

A recent case illustrates this issue. On October 2, 2018, a federal grand jury indictment against Santa Rosa neurologist Thomas Keller, age 72, was unsealed charging him with distributing Schedule II and IV controlled substances outside the scope of his professional practice and without a legitimate medical need. Dr. Keller was also charged with two counts of health care fraud related to billing. An indictment merely alleges that crimes have been committed, and Dr. Keller, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. 

According to the indictment filed September 27, 2018, and unsealed on October 2, 2018,  in June of 2017, Dr. Keller, 72, of Santa Rosa, was a licensed physician when he knowingly distributed Oxycodone to a person knowing that the distribution was outside the scope of his professional practice and not for a legitimate medical purpose.  

Healthcare Partners (a Medicare Advantage Provider) to Pay $270 Million To Settle False Claims Act Liabilities

It is not only health care physicians, hospitals, medical groups, laboratories and other companies that can get sued in qui tam cases. Recently a California-based independent physician association reached a settlement in a false claims act with the government. 

The settlement came after a voluntary disclosure. While the voluntary disclosure is expensive, in the long run it is much more effective and helps ensure that the provider will not be excluded from Medicare. This settlement also resolves a whistleblower lawsuit. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC, agreed to pay $270 million to resolve its False Claims Act liability for providing inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments. DaVita is headquartered in El Segundo, California.

Owner of MRI and Diagnostic Companies Sam Solakyan Indicted for Honest Services Mail fraud for Alleged Payments for Referrals

Workers' compensation fraud cases relating to alleged payments for referrals or "scheduling services" are still being filed here in California. In addition, cases that spin out of other prosecutions can take a few years to be charged. 

On September 25, 2018, an Indictment was unsealed against Sam Sarkis Solakyan for alleged conduct that related to other federal criminal cases pending in the Southern District of California (San Diego) against other defendants. Mr. Solakyan is presumed innocent and Indictments are not evidence. 

Mr. Solakyan owns a number of diagnostic companies (Vital Imaging, Inc., San Diego MRI Institute, Global Holding LLC, Empire Radiology LLC, Access Integrated Healthcare LLC, Access Imaging LLC, Paramount Management Services LLC and Capital Edge Holding LLC).  Mr. Solakyan is charged with conspiracy to commit honest services mail fraud as well as aiding and abetting and criminal forfeiture.  

The charges arise primarily out of payments that are allegedly for referrals. First, cash payments that Mr. Solakyan's companies allegedly made to chiropractor Steven Rigler DC for referrals.  Dr. Rigler was charged in 2015 and already pleaded guilty. 

This case received some publicity, in part, because Mr. Solakyan hired the former District Attorney for Los Angeles County as chief legal counsel for his company Global Holdings but it is not known whether there will be reliance on the advice of counsel as a defense.  

Former California Medical Doctor Sentenced To Over Three Years In Prison For Unlawfully Prescribing Oxycodone to a Patient. Judge Noted Doctor Did Not Run a Pill Mill But Feeding One Patient's "Habit" Is Enough.

Previously, only physicians who went far over the line and ran "pill mills" got targeted for prosecution. Times have changed. One recent case shows a prosecution for a prescription of opioids to a single patient over a couple of years who was an addict. That patient died and local police declined to file charges so federal charges were brought on the prescribing.

On September 18, 2018, former California physician Christopher Owens was sentenced to 41 months in prison for unlawfully prescribing oxycodone hydrochloride without a medical purpose. The sentence was handed down by the Judge Alsup, U.S. District Judge in San Francisco, California.

The former Dr. Owens pleaded guilty on March 20, 2018.  In sentencing Dr. Owens, Judge Alsup stated, “[Owens] was not running a pill mill, . . . but he was doing something just as bad . . ..  He used that prescription pad to feed a habit.”  

Dr. Owens acknowledged he prescribed the drugs without a legitimate medical need and outside of the course of medical practice.  According to his open plea application filed with the court, Dr. Owens of Indianapolis, Indiana was a medical doctor when he prescribed oxycodone hydrochloride, a Schedule II controlled substance, to an individual. His guilty plea came after an Indictment. On July 11, 2017, a federal grand jury indicted Dr. Owens charging him with distributing oxycodone without a medical need, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C).  

In addition to the prison term, Judge Alsup ordered Owens to serve three years of supervised release to begin after his prison term is completed and a $7,500 fine. Judge Alsup ordered Owens to surrender and begin serving his sentence on December 3, 2018.  As a consequence of the issues in this case, Dr. Owens lost his license to practice medicine.

 

Sentencing Update: California Doctor Sentenced To 63 Months In Federal Prison For Health Care Fraud. Doctor's Testimony At Trial Resulted in Longer Sentence. Doctor Husband Sentenced to One Year and One Day. Case Is On Appeal.

In federal court, one important issue is whether to testify or not testify. It is a more critical issue in federal court due to a federal judge's ability to increase the sentence for "obstruction" if the judge thinks the defendant misrepresented the truth. 

These same concerns are in state court but there is not usually the concern about the impact on sentencing. Instead there is the usual concern about making it appear that the burden of proof has shifted to the defense.

In a recent case, a doctor defendant received a harsh sentence based in part on the judge adding time for "obstruction" due to her testimony at trial.  On August 28, 2018, family practitioner Dr. Vilasini Ganesh was sentenced to 63 months in prison for health care fraud and making false statements related to a health care benefits program. We had reported on this case previously after the 8-week trial when she and her partner were convicted.

During Dr. Ganesh’s sentencing hearing, Judge Koh specifically stated that Dr. Ganesh  "obstructed justice" by misrepresenting her understanding of the legal system, the amount of money she was paid by insurers, and whether she understood that it was improper to “upcharge” when submitting claims to insurers. The jury had rejected a defense as well that the doctor's mental state contributed to her lack of understanding of the billing rules.

Internal Medicine Physician Convicted in Los Angeles Federal Court After Six-Day Trial of Conspiracy to Pay or Receive Kickbacks for Medicare Referrals and Four Counts of Receiving Kickbacks.

Health care fraud and kickback cases can be difficult to defend due to the amount of documentation and when there are numerous cooperating witnesses. A recent case, seemed to have a number of weak, inconsistent witnesses who had already plead guilty and were caught in direct mistruths and changing stories. However, the jury nevertheless convicted the doctor defendant.

On August 23, 2018, after a six-day trial, a federal jury convicted Dr. Kanagasabai Kanakeswaran an internal medicine doctor with a practice located in Lancaster, California of one count of conspiracy to pay and/or receive kickbacks for Medicare referrals and four counts of receiving kickbacks for Medicare referrals.

The government contended that the evidence presented at trial showed that from 2008 to 2016, Dr. Kanakeswaran and others engaged in a conspiracy to refer Medicare patients to Star Home Health Resources (Star), a home health agency located in La Verne, in exchange for illegal kickback payments. The government alleged that Dr. Kanakeswaran received kickback payments in cash, as well as through checks payable to a company Kanakeswaran owned, Digital Perfection Corporation.The defense denied that there were any payments for referrals. 

The witnesses against the doctor who owned or operated Star or worked as marketers had all plead in a separate criminal case and were shown to have misrepresented numerous facts and were caught in a number of lies. The defense moved to dismiss the case based on prosecutorial misconduct and under Rule 29 but these motions were not successful. 

“ABUSE OF LOYALTY”: THE PLAYERS, A FREE PRESS INTERVU - LAWYER PLAYERS IN SPECIAL COUNSEL AND COHEN INVESTIGATIONS

"ABUSE OF LOYALTY": Free Press Intervu with White Collar Crime Expert Tr...

Tracy Green, White Collar Expert Interview, on Special Counsel Investigation, Michael Cohen, FEC Issues, Etc. With Free Press Journalist Heidi Cuda

Dateline: Los Angeles, August 23, 2018. Independent investigative reporter and Free Press activist Heidi Cuda interviewed me to break down the prosecution tactics of Special Counsel Robert Mueller and his team. 

This is a "low-tech" interview that we set up impromptu via Skype...so hopefully the lags and tech issues don't bother you too much and you can listen to it like a podcast.

Here's a link to the interview which is posted on YouTube and entitled: "ABUSE OF LOYALTY": Free Press Intervu with White Collar Crime Expert Tracy Green"

I did my best, in a "just the facts, m'am" approach without being partisan to explain how the prosecution thinks and why these cases are so challenging. Regardless of political issues, I'm a believer in due process and I hoped to shed light on why Mueller as Special Counsel has proceeded in this manner so far and what we can expect as citizens watching from the armchair.

By the way, to read Emmy award-winning investigative producer Heidi Cuda's Free Press writings on the Trump-Russia investigation and media accountability, go to: https://maewestside.tumblr.com  

In my view, Heidi's style is unique and reflects her prior life as a music reporter for the Los Angeles Times and her punk rock approach to journalism. This was not her asking me for 5 two-sentence sound bites like I've had in mainstream interviews. She purposefully doesn't give questions beforehand or "practice" and wants it "real." So you'll see us having a conversation (with the informality that happens in normal conversations) from my home office to her home office. It's also different because we are not limited to 3 minutes of air time and luckily, I do not have to shout over other people on a panel. 

Among the highlights from the 40-minute interview: "PAPER DOESN'T LIE": "Particularly in a high profile case, the prosecution can't risk making any mistakes. They need evidence and documents that no one can challenge in court. Whatever case they file, they want to make sure it's gonna be bulletproof." "TRUMP" TACTICS: "Trump doesn't use email. He doesn't even like to use the mail. He likes to have things personally delivered. And he likes to have other people handle the communications. He doesn't appear to be texting. He delegates so it insulates him. When you come to try to make a white collar case...it makes it difficult because he's not leaving a paper trail."

Manafort Is Not Only One Charged With Failing to File an FBAR. Los Angeles Man Pleads Guilty to Not Reporting over $1 Million Held in Israeli Offshore Accounts.

The Justice Department just publicized this plea relating to FBAR at the same time that Paul Manafort has a jury deciding whether or not he willfully failed to file an FBAR. This may satisfy some pundits who claim that no one is ever prosecuted for failing to file an FBAR. This recent case relates to a bank with U.S. branches that had already signed a deferred prosecution agreement. The bank had likely been cooperating to reveal U.S. customers with foreign accounts.

On August 20, 2018, Ben Zion Birman pleaded guilty in U.S. District Court in Los Angeles to willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR), which would have disclosed his foreign bank accounts.

According to court documents, Mr. Birman held offshore accounts in Israel at Bank Leumi Le-Israel B.M. ("Leumi") from 2006 to 2011. Mr. Birman indicated in his plea that he willfully failed to file with the Department of Treasury an FBAR for calendar year 2010, despite having over $1 million in Bank Leumi accounts. 

The factual basis of the plea agreement alleges that in an effort to further hide his money, Mr. Birman instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans, which were designed to enable borrowers to tap their concealed accounts. These lending arrangements permitted Mr. Birman to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel.

Former CEO of Non-Profit Medical and Dental Clinic Who Is Also Licensed Nurse Practitioner Pleads Guilty to Health Care Fraud in Fresno

We are seeing an increased focus on nonprofit health care entities that are run by individuals. One recent case shows how nonprofits can face scrutiny that includes conflict of interest issues and concern over whether payments to executives or employees.

On August 13, 2018, Sandra Haar pleaded guilty to health care fraud and conspiracy to receive kickbacks in federal court in Fresno.

Ms. Haar was the founder and chief executive officer of Horisons Unlimited, a nonprofit public benefit corporation that provided health and dental services in Merced and surrounding communities. Ms. Haar was also a nurse practitioner. Horisons is now closed but once had eight clinics.

According to court documents, between January 1, 2014, and March 2017, Ms. Haar allegedly orchestrated the billing to Medicare and Medi-Cal for services she knew were not reimbursable, and she allegedly profited by over $3.7 million from her fraud. For example, Ms. Haar allegedly billed Medi Cal for health and dental services that were not rendered and for unnecessary health care services.

Owner of Drug Rehab Facility Who Paid For Some Patients' Initial Health Insurance Payments and Waived CoPays and Deductibles Charged With Insurance Fraud by Riverside County District Attorney

There are times when health care facilities may contribute to paying a patients' insurance. For example, a patient who is hospitalized for some time where it is documented properly and financial need exists and it is disclosed.

However, can a health care facility pay for the initial premium that allows the patient to get treatment? Not usually. There are also some situations where copay and deductibles can be waived, but there are times when doing so is not allowed. These are two of the issues in a recent criminal case against the owner of a drug rehabilitation facility.

On March 25, 2018, David Leo Johnson, the owner of Southern California Detox Treatment and Recovery (SCDTR) in Temecula, was charged with 30 counts of insurance fraud and an aggravated white collar crime enhancement by the Riverside County District Attorney. The case is set for a felony settlement conference on August 29, 2018. The bail was set at $270,000 which is usually indicative of the alleged loss.

According to court pleadings, from February 2015 to May 2016, Mr. Johnson is accused of billing more than 90 Health Net policies for treatment SCDTR provided to its clients. This was a joint investigation by the DA’s Bureau of Investigation and the Federal Bureau of Investigation.

One issue is the payment of health insurance. It is alleged that an examination of the Health Net policies billed by SCDTR showed some policy applications used the SCDTR address as the policyholder’s residence and that Mr. Johnson's credit card was used to make the initial premium payments on 62 percent of the policies. 

Interviews with clients allegedly showed that they did not submit the applications for their health insurance policies and were not aware of how the coverage was obtained. When interviewed, the clients also allegedly advised that Mr. Johnson did not charge them any of the required patient costs, including deductibles and copayments.

California Physician Charged in Self-Referral Case With Felony Insurance Fraud and Perjury for Allegedly Referring Workers Comp Patients to a Laboratory and Surgery Center In Which He Allegedly Had Ownership Interest

Referring patients to other business entities that a physician has an ownership interest in can be a violation of the law depending on the type of patient (Medicare, workers' compensation) and it is important to ensure that the rules are being followed. California workers' compensation rules can be as more complex as those governing Medicare patients.

A recent case shows what can happen if the government contends that self-referral rules under the California Labor Code are violated for workers' compensation patients. There may be very good defenses here where the surgery center was part of the same practice and there was an in-office laboratory that is CLIA certified. 

A Corona physician (anesthesiologist who specializes in pain management), Dr. Sanjoy Banerjee, is charged with felony workers’ compensation insurance fraud (two counts Ins. Code Section 550(a)(1)) and perjury (five counts Penal Code 118(a)) by the Riverside County District Attorney’s Office after investigators claimed he referred patients to a clinical laboratory and surgical center he allegedly owned or had some ownership interest. Dr. Banerjee is presumed innocent.

Dr. Banerjee works as a pain management doctor who saw workers’ compensation patients  (probably among other types of patients) at a medical clinic he owned called Pacific Pain Care. The prosecution contends that Dr. Banerjee signed under penalty of perjury five workers' compensation doctor’s reports stating that he had not referred workers’ compensation patients to companies he owned. I doubt that is what the doctor's reports stated but it was probably just a form statement that there was no violation of Labor Code Section 139.3.

Investigators alleged that Dr. Banerjee had referred some of his patients to a "different business" he owned, Rochester Imperial Surgical Center, also located in the Pacific Pain Care office suite.  The prosecution alleges that Dr. Banerjee billed for more than $180,000 worth of urine toxicology testing and epidural injections through the laboratory and surgical center. One of the key issues will be whether this was a "different" business if it was owned by the same physician in the same office suite and met the exceptions of the in-office ancillary exception. If it met the exception, there is NO criminal case.

California Meat Processing Company and Two Company Officials Plead Guilty to Selling Misbranded Beef, Pork and Poultry They Falsely Claimed Had Been Inspected

Regulatory cases can turn criminal and the resolution often takes years. A recent case began on the regulatory side in 2012 and became a criminal case which has taken six years to resolve. The case has also cost the company millions of dollars in product seizures, recall requirements, legal fees and fines. It shows the potential risk of non-compliance.

On August 1, 2018, a meat processor Golden Key Food, Inc. dba AA Meat Products Corp. was investigated in 2012 by the U.S. Department of Agriculture (USDA) for selling meat that was produced without federal inspection. The government alleged that AA Meat products had a plant in Maywood that was operating under a USDA grant of inspection where meat and poultry food products were properly federally inspected, but that they had a second facility in Commerce did not have USDA inspection grant. USDA alleged that AA Meat produced and sold meat (such as trip, duck feet, and other less expensive parts) from its Commerce plant that had not been inspected but was stamped as if it had been inspected.

In 2012, the USDA investigators came in and seized approximately 568,000 pounds of meat and poultry products. The USDA then issued a Class I recall led to the recovery of another nearly one-half million pounds of meat – all of which had to be destroyed.

Psychiatrist Who Saw Patients by "Skype" Pleads Guilty to Health Care Fraud for Treatment and Billing for Workers' Compensation Patients

When health care providers tell me that "telemedicine" is now "legal," I respond that the same standard of care applies and that they need to be very careful regarding how the patients are seen, referred, examined and ensure that the medical record keeping and reports also meet the standard of care. 

Health care providers who do telemedicine as a subcontractor also need to make sure they know who they are working for and how the visit is going to be billed. In addition, they need to see whether they are paying a third party for management fees or billing that could be classified as payment for referrals.

The number of health care fraud cases that arise where the patients have been treated or prescribed after "telemedicine" consultations or exams is on the rise.  A recent case shows how Skype was used to allow a psychiatrist to see patients but it appears the reports and billing may not have met the standard of care and even delved to the abyss of false billing.

Dr. John Thomas Terrence of Marina del Rey pleaded guilty on July 16, 2018  to health care fraud involving the alleged defrauding of California workers’ compensation insurers. This was an Indictment that had been filed in July 2015 and related to conduct from 2005 to 2012. Criminal cases often deal in ancient history or acts occurring years prior. 

Owner of Ventura County Cleaning Company Sentenced to 365 Days and Probation for Workers' Compensation Premium Fraud

Audits by State Compensation Insurance Fund and other workers' compensation insurance carriers (Zenith, Travelers, etc.) can turn into criminal cases if there is intentional evidence of underreporting of payroll. 

A recent case shows how a state case was handled in Ventura County which is known to be tough on sentencing. The last case we had in Ventura County resulted in a no time sentence and a corporate plea but full restitution was made in that matter.

On June 6, 2018, Victor Vega of Oxnard, the owner of Vega Cleaning Service, was sentenced to serve 365 days in Ventura County jail for committing workers’ compensation insurance fraud and 72 months' probation. Mr. Vega had plead guilty in April 2018 to four counts of Insurance Code Section 11760(a) relating to operation of his cleaning business from January 2010 to December 2015 and underreporting the number of employees and the total payroll.

Mr. Vega admitted the loss was $460,197 and had paid $100,000 in restitution at the sentencing hearing which was probably one reason why the sentence was 365 days in county jail (not state prison and which will mean that only 6 months will be served). One large advantage of a 365 day county jail sentence is that with no state prison time, the charge can be reduced to a misdemeanor upon sufficient proof to the Court and can be expunged.

The time to address these cases is early on and to ensure that any independent contractors are properly classified and to make sure that any reporting is accurate. If there are any errors, they should be fixed as soon as possible. If audits show issues, it is important to be proactive.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law

Medical Device Maker AngioDynamics Agrees to Pay $12.5 Million to Resolve False Claims Act Allegations

Medical device companies are being held responsible for false and misleading promotional claims as well as advising medical providers on what billing codes to use. A recent case shows how these cases can proceed.

On July 18, 2018, it was announced that medical device manufacturer AngioDynamics, Inc. agreed to pay the United States a total of $12.5 million to resolve allegations that the company caused healthcare providers to submit false claims to Medicare, Medicaid, and other federal healthcare programs relating to the use of two medical devices, LC Bead and the Perforator Vein Ablation Kit (PVAK). 

The claims resolved by the civil settlements are allegations only, and there have been no determinations of liability.  

AngioDynamics will pay $11.5 million to resolve allegations that the company caused false claims to be submitted to government healthcare programs for procedures involving an unapproved drug-delivery device that was marketed with false and misleading promotional claims.  

St. Louis County Doctor Pleads Guilty to Obstructing FBI Investigation When He Responded to Subpoena Requesting Medical Records

One way for the government to build a case against someone is by issuing a subpoena for records and seeing whether the business or person responding produces record that are false or misleading. This allows the government to not have to prove fraud or other criminal acts.

On July 13, 2018, Dr. Vidal Sheen of St. Louis County, Missouri pled guilty to obstructing an investigation by the Federal Bureau of Investigation (“FBI”) regarding whether he billed the Medicare program and private insurers for “face to face” office visits performed on dates when he was actually traveling outside of Missouri, and sometimes traveling outside of the United States.

According to his plea agreement, Dr. Sheen operated a medical office in St. Louis County, Missouri.  At the medical office, Dr. Sheen created medical records using a template that  recited patients’ symptoms and histories, and sometimes recorded vital signs (e.g. pulse rates) that did not change between patients’ visits. 

Moreover, from time to time, Dr. Sheen traveled to various destinations, including the Dominican Republic and Florida.  For the times when Dr. Sheen was out of town, the government alleged he created office notes with false entries reflecting that he had seen patients in his office, using his electronic signature.  Dr. Sheen's medical records did not discuss the role of the other employees in his office during the out-of-town visits, or his absence from the office on the dates of service. 

The United States served Dr. Sheen’s office with a subpoena requesting medical records regarding his office visits in late 2016.  In response to the subpoena, on December 1, 2016, Dr. Sheen produced medical records to the FBI in which he had made entries about face-to-face office visits when he was out of town.

California Pharmacy Pays $75,000 Settlement for Failing to Keep Accurate Records of Controlled Substances Inventory

As part of the Drug Enforcement Administration's (DEA) increased enforcement on prescription addiction and prescribing, pharmacies are facing an increased number of inspections and audits on their inventory and recordkeeping. 

Recently, in June 2018, a pharmacy in Lakeside, California known as Archana Corporation doing business as Leo’s Lakeside Pharmacy and its owners paid $75,000 to resolve allegations that they failed to properly account for controlled substances. This is a civil settlement but it can also raise issues with the Pharmacy Board. 

Failure to comply with DEA rules and regulations can result in fines or loss of DEA permit. Schedule II prescription and inventory records must be available for two years. It is always a good idea for pharmacies to review their procedures and ensure that these records are being maintained properly since an audit can turn into an expensive and time-consuming dispute with the DEA and create collateral issues with the Pharmacy Board. 

Posted by Tracy Green, Esq.

Green and Associates

Orange County Psychiatrist Arrested on Federal Charges Alleging Illegal Prescriptions for Opioids Without Legitimate Medical Need

The use of undercover officers who pose as "patients" are standard where physicians are charged with prescribing without legitimate medical necessity. A recent case used at least one undercover officer in its investigation.

A psychiatrist Dr. Robert Tinoco Perez who practices at a Santa Ana clinic was arrested on June 30, 2018 by special agents with the Drug Enforcement Administration on federal charges that allege he issued prescriptions for scheduled drugs, such as the opioid oxycodone, without a medical purpose.

    

Dr. Perez was named in a 14-count indictment returned by a federal grand jury on June 27. An indictment contains allegations that a defendant has committed a crime and is not evidence. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt in court.

Investigation Into Compound Prescription Marketing by TYY-Affiliated Pharmacies Charges a Marketer and Two Podiatrists in Los Angeles

Marketing payments are driving many of the federal criminal cases involving compounding pharmacies. A recent Los Angeles federal case fits that profile. 

An indictment unsealed on June 26, 2018, alleged a wide-ranging conspiracy that was responsible for more than $250 million in claims for prescriptions (allegedly fraudulent or involving illegal referral fees or kickbacks) that were filled by compounding pharmacies in Nevada and Southern California. An Indictment is not evidence and the defendants charged are presumed innocent. 

The indictment charges Irena Shut with allegedly paying kickbacks to two podiatrists to authorize prescriptions written on pre-printed prescription pads designed to maximize insurance payments, regardless of the medical need for an expensive compounded formulary for each “patient.”

The indictment alleges that TYY Consulting, a Las Vegas, Nevada-based company used a nationwide network of marketers to refer prescriptions to TYY-affiliated pharmacies (New Age Pharmaceuticals, Roxsan, Concierge Compounding, Precise Compounding) in exchange for payments that the government is alleging are "kickbacks." 

It is alleged that  the health care plans paid out nearly $175 million to the pharmacies. Ms. Shut, who worked as a marketer for TYY, received approximately $6.8 million, some of which was, in turn, allegedly given to the charged podiatrists.

The charged podiatrists, Domenic Signorelli of Irvine and Robert Joseph of Huntington Beach, along with several other unnamed co-conspirator doctors, allegedly received improper payments (kickbacks) for “writing” the prescriptions. Once the prescriptions were filled, it is alleged that other members of the conspiracy submitted fraudulent claims to federal, state and private insurers for the compounded drugs. The insurers include the Department of Defense’s TRICARE program as well as federal and state workers’ compensation programs.

In addition to paying the charged podiatrists and other medical professionals, the Indictment alleges that TYY induced other doctors to participate in the scheme by offering prostitutes, fancy meals, and expensive event tickets.  

This case is related to other pending federal cases and there are numerous alleged unindicted marketers and doctors. It seems there will be other federal cases - whether plea agreements or further indictments - coming out of this matter. 

California Orthopedic Doctor Charged With State Insurance Fraud for Allegedly Providing Unnecessary and Excessive Medical Treatment for Ortho Patients

California county district attorney offices continue to prosecute health care providers for insurance fraud and workers' compensation insurance fraud. They are also using Indictments more often to put more pressure on the defense as a recent case demonstrates.

On May 30, 2018, a San Joaquin County criminal grand jury indicted Dr. Gary Royce Wisner on 11 felony counts of insurance fraud for allegedly defrauding insurers of more than $700,000 for providing unnecessary and excessive medical treatment including x-rays for orthopedic patients.  Dr. Wisner will be arraigned on June 26, 2018 in San Joaquin County Superior Court.  

The case may have overlapped with a Medi-Cal complaint or allegation since in May 2017 the Bureau of Medi-Cal Fraud and Elder Abuse executed a search warrant and seized documents. The investigation was multi-agency and also included the California Department of Insurance and the U.S. Department of Health and Human Services.

Philadelphia Personal Injury Law Firm Agrees to Start Compliance Program and Reimburse the United States for Clients’ Medicare Debts

Medicare is watching personal injury settlements and seeking to hold personal injury lawyers responsible for Medicare liens on settlements or judgment proceeds. 

On June 18, 2018, a Philadelphia personal injury law firm, Rosenbaum and its Associates, and its principal  entered into a settlement agreement with the United States to resolve allegations that they failed to reimburse the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients who sought medical care.

The government’s investigation arose under the Medicare Secondary Payer provisions of the Social Security Act, which authorizes Medicare, as a secondary payer, to make conditional payments for medical items or services under certain circumstances. When an injured person receives a settlement or judgment, Medicare regulations require entities who receive the settlement or judgment proceeds, such as the injured person’s attorney, to repay Medicare within 60 days for its conditional payments. If Medicare does not receive timely repayment, these same regulations permit the government to recover the conditional payments from the injured person’s attorney and others who received the settlement or judgment proceeds.

California Radiologist Sentenced to 10 Years in Federal Custody for Alleged Workers’ Comp Fraud

Federal prosecutors are much more likely to prosecute health care fraud involving private insurance companies than they were years ago. A recent case involved workers' compensation insurance and no Medicare or Medicaid or Medi-Cal. This case also shows the perils of a doctor defendant testifying at trial where the Judge decides that the doctor is not being truthful and imposes a sentencing enhancement for "obstruction." 

On June 18, 2018, radiologist Ronald Grusd and two of his corporations, California Imaging Network Medical Group and Willows Consulting Company, were sentenced in federal court  after a jury trial in December where Dr. Grusd was represented by attorney Tom Mesereau resulted in convictions on 39 felony fraud counts. Dr. Grusd hired a different attorney for the sentencing phase of his case.

U.S. District Judge Cynthia A. Bashant imposed a sentenced of 10 years in custody and a fine of $250,000, and remanded Dr. Grusd into custody. His companies, California Imaging Network and Willows Consulting Company, were each required to pay a $500,000 fine, and an additional $15,600 in special assessments.

According to evidence presented at trial, the government claimed that Dr. Grusd and his companies paid kickbacks for patient referrals from multiple clinics in San Diego and Imperial counties in order to fraudulently bill insurance companies over $22 million for medical services.

Three Orthopedic Surgeons Charged In Los Angeles Federal Indictments Relating to Alleged Kickbacks for Surgeries at Pacific Hospital

Three orthopedic surgeons (David Hobart Payne, Jeffrey David Gross and Lokesh Tantuwaya) have been charged in three separate cases for their roles in alleged kickbacks paid for surgeries performed at now-closed Pacific Hospital. The facts underlying this case were from 2008 to 2013 and this has been a longstanding investigation. The case is pending in the Central District of California in Los Angeles.

All three physicians have plead not guilty.  An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court. 

After Losing At Trial, Mississippi Physician Sentenced to 42 Months in Prison for Role in Prescribing Allegedly Medically Unnecessary Compounded Medications to Patients and for Falsifying Patient Records to Make it Appear He Had Examined Them Before Prescribing

Physicians who consider "telemedicine" or writing prescriptions to patients they have not physically seen or any other unusual arrangement for seeing patients and prescribing medications or supplies should consider a recent case. 

In this case, a 78 year old Mississippi physician, Albert Diaz, M.D., went to trial after the key people in the compounding pharmacy and marketing plead guilty. I often see older or impaired physicians get brought into these arrangements and this case fits the pattern.

On March 2, 2018, after a five-day jury trial, Albert Diaz, M.D. in the Southern District of Mississippi was convicted of one count of conspiracy to commit health care fraud and wire fraud, four counts of wire fraud, one count of conspiracy to distribute and dispense a controlled substance, four counts of distributing and dispensing a controlled substance, one count of conspiracy to falsify records in a federal investigation and five counts of falsification of records in a federal investigation. 

On June 8, 2018, Dr. Diaz was sentenced to 42 months in federal prison and was denied bail pending surrender. According to government evidence presented at trial, between 2014 and 2015, Dr. Diaz participated with others in defrauding TRICARE and other insurance companies by prescribing medically unnecessary compounded medications, some of which included ketamine, a controlled substance, to individuals he had not examined.  The government's trial evidence claimed that, based on the prescriptions signed by Dr. Diaz, Advantage Pharmacy in Hattiesburg, Mississippi, dispensed these medically unnecessary compounded medications and sought and received reimbursement from TRICARE and other insurance companies totaling more than $3 million. 

Los Angeles Clinic Owner, Physician, Office Manager, Insurance Biller and Former Insurance Investigator Indicted for Health Care Fraud. Charged With Billing for Services Not Provided and Giving Patients Free Cosmetic Procedures for Insurance Information.

On May 22, 2018, five people linked to two Los Angeles (San Fernando Valley) clinics were arrested on federal health care fraud charges for allegedly inducing patients to visit the clinics with promises of "free" cosmetic procedures, using the patients' insurance information to submit fraudulent claims to at least eight health insurance companies and then using some of the fraud proceeds to provide patients with the free cosmetic procedures.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

The government’s unsealed Indictment claims that Roshanak (“Roxanne” or “Roxy”) Khadem operated two clinics – R and R Med Spa, which was located in Valley Village until early 2016, and its successor company, Nu-Me Aesthetic and Anti-Aging Center, which operated in Woodland Hills. Ms. Khadem was arrested and charged along with four others:

Dr. Roberto Mariano, 59, of Rancho Cucamonga, a physician who helped operate the clinics; 

Marina Sarkisyan, 49, of Panorama City, who was the office manager at the clinics;

Lucine Ilangezyan, 38, of North Hills, an employee and insurance biller for the clinics; and

Gary Jizmejian, 44, of Santa Clarita, a former senior investigator at the Anthem Special Investigations Unit, the anti-fraud unit within Anthem that is responsible for investigating health care fraud committed against the insurance company. 

Northern California Pain Management Doctors Agree To Pay $260,000 To Settle Civil Claims Following DEA Inspection Regarding Adequacy of Controlled Substances Records

Drug Enforcement Administration (DEA) inspections can have significant financial repercussions if the logs and records of controlled substances are not properly maintained. A recent case illustrates how this happens and is a reminder for practices and pharmacies to be sure their business is compliant in this regard.  

In January 2014, the DEA inspected the controlled substance ordering and dispensing records relating to Pain Medicine Consultants, Inc., a medical practice which had offices in multiple Bay Area locations (Novato, Pleasant Hill, and Pleasanton). 

The government alleged that the DEA inspection uncovered multiple violations of the Controlled Substances Act, 21 U.S.C. § 801 by the practice and the physicians in the group who have the DEA registrations. The government specifically alleged that between January 10, 2012, through January 17, 2014, the medical practice and the physicians failed to:

(1) keep and maintain adequate records pertaining to controlled substances, as required by 21 C.F.R. § 1304, et seq.;