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.
The government alleged that Dr.
Grusd negotiated with various individuals, including a primary treating
physician, the payment of kickbacks for the referral of workers’ compensation
patients for various medical services, including MRIs, ultrasounds, Shockwave
treatments, toxicology testing and prescription pain medications. The government further claimed that after the
patients were referred for the treatment or service, one of Dr. Grusd’s
companies, California Imaging Network Medical Group, would fraudulently bill
insurance companies for the procedures, concealing from both the patients and
the insurers that substantial kickbacks had been paid in violation of
California law.
Another of Dr. Grusd’s companies, Willows Consulting Company, allegedly made kickback payments to those directing the referral of the patients
from the various clinics. Records presented at trial showed that Dr. Grusd paid
over $100,000 in referral fees (what the government called "bribes") to secure the billings for hundreds of patients, with payments allegedly made paid on a per-patient or per-body-part formula.
Dr.
Grusd and the corporations were originally indicted by a federal grand jury in
November 2015, when the U.S. Attorney’s Office and the San Diego District
Attorney’s Office, working in conjunction with the Federal Bureau of
Investigation and the California Department of Insurance, announced multiple
arrests arising from a long-term, proactive health care fraud investigation
targeting corruption and fraud in the California Workers’ Compensation
system.
Dr. Grusd’s
practice, California Imaging Network Medical Group, operated clinics throughout
California in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana,
Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and
Visalia.
In
imposing the sentence, District Judge Bashant expressed concern that by paying
incentives, Dr. Grusd applied pressure on the referring physician, and “made it
highly questionable if all services were necessary,” a harm that the laws were
designed to prevent. Judge
Bashant found that Dr. Grusd “clearly knew what he was doing.”
Dr. Grusd,
who had testified as to his extensive education, training, and expertise as a
highly-decorated radiologist, claimed on the witness stand at trial that he was
confused and did not know that what he was doing was illegal. Judge
Bashant rejected this view, stating that Dr. Grusd was someone who decided to
“find a way to defraud…then act dumb on the witness stand” when he got
caught. She imposed a sentencing penalty for Obstruction of Justice,
finding that Grusd unequivocally committed perjury and lied at trial.
The
judge said she was concerned about the need for both general and specific
deterrence: general, because health care fraud is an area where criminals are
rarely caught, requiring a significant consequence in order to deter other
would-be criminals. In this case, specific deterrence was also
applicable, because, in her view, there was a risk that Dr. Grusd could engage
in further unlawful conduct in the future. “Dr. Grusd,” she noted, was
someone who would “act smart enough to pull the wool over everyone’s
eyes.”
