Saturday, August 15, 2009

Los Angeles Federal Jury Convicts DME Suppliers Of Medicare Fraud For Medically Unnecessary Power Wheelchairs And Kickbacks To Clinics

On July 17, 2009, after a one-week trial in federal court in Los Angeles, the jury convicted the owners and operators of CHH Medical Supply a Los Angeles-area durable medical equipment. The jury found Gevork Kartashyan guilty of conspiracy to commit health care fraud and health care fraud; and found Eliza Shurabalyan guilty of health care fraud. U.S. District Judge Stephen V. Wilson scheduled sentencing for October 5, 2009.

At trial, the government alleged that Ms. Shubaralyan and Mr. Kartashyan owned and operated CHH Medical Supply, a durable medical equipment (DME) supply company. Ms. Shubaralyan was the listed owner. It was further alleged that between January 2005 and June 2008, Ms. Shubaralyan and Mr. Kartashyan, through CHH Medical Supply, billed Medicare $949,859, and were paid $597,750. Virtually all of these bills were for power wheelchairs and wheelchair accessories which the government contended were medically unnecessary.

The trial illustrated the interrelationships between beneficiaries, referring physicians and clinics and medical supply companies. At trial, elderly Medicare beneficiaries testified about how they were recruited and taken to Los Angeles-area medical clinics. At the clinics -- which were not operated by the defendants in this case -- the beneficiaries turned over their Medicare numbers and other personal identifying information. Some were promised vitamins, diabetic shoes, and other items that they never received.

It was alleged that the clinics were in the business of generating fraudulent power wheelchair prescriptions that could be sold to DME company owners who would bill Medicare for the wheelchairs. In other words, CHH Medical Supply was alleged to have paid kickbacks to the clinics for the wheelchair prescriptions. Many of the beneficiaries testified they did not know they were getting a wheelchair until it was delivered to them by CHH Medical Supply. All of the beneficiaries testified that they did not need or use the wheelchair.

Five physicians from the clinics testified that they never authorized or approved the power wheelchair prescriptions written under their names, often by physician's assistants. Three of these physicians testified that they never even worked at the clinics listed on phony prescription pads.

A government witness, who recently pleaded guilty to health care fraud in connection with one of the clinics at issue in this case, testified that Mr. Kartashyan would regularly come into the office where he and others worked in order to pick up power wheelchair prescriptions that he had purchased. Upon delivery, Mr. Kartashyan would then generate phony forms stating that the beneficiaries' homes were appropriate for the use of a power wheelchair, even though no home assessment was done.

Ms. Shubaralyan, who was the listed owner of CHH Medical Supply, prepared the billing and submitted all of the company's claims to Medicare. Power wheelchairs and accessories constituted over 98 percent of the company's billings to Medicare. In addition, Ms. Shubaralyan withdrew over $195,000 in cash from the company's bank account in order to pay for the kickbacks to purchase the power wheelchair prescriptions.

Any questions or comments should be directed to:  Tracy Green is a principal at Green and Associates. They focus their practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices. Their website is:


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