In order to prove that payments for rent, consulting, management or other professional services were, in fact, illegal payments for referrals -- it appears to have been decided that "hard" evidence of conversations, text messages, emails where the parties admitted that the payments were for patient referrals were needed.
Each of the three Indictments contain details that reveal detailed conversations and unindicted coconspirators who are not named as defendants. This level of detail may be used -- as well as the Indictments filed themselves -- to persuade other targets to cooperate or plea in order to obtain more favorable treatment before an Indictment is filed.
For years, the U.S. Attorney's Office has shown little interest in prosecuting cases that did not involve federal funded government programs. The wave of Indictments that is expected to exceed fifty (50) providers within the next year will show that informal policy has changed.
In one case, United States v. Grusd, et al, Case No. 15CR2821, the federal authorities targeted a provider, Dr. Ronald Grusd, who had been part of a federal qui tam case years before. While Dr. Grusd's entities reached a settlement in July 2010 and he was ultimately dismissed, it seems the federal authorities' interest in him did not. Defendants are presumed innocent and an Indictment is not evidence.
A review of the Indictment shows how this case is being put together. Other cases will probably follow a similar pattern.
In United States v. Grusd, et al., the following Defendants are named:
1. Radiologist Dr. Ronald Grusd and his entities California Imaging and Willows Consulting. Other entities allegedly owned by Dr. Grusd are mentioned but not charged.
2. Administrator Gonzalo Paredes who allegedly worked for Dr. Grusd entities.
3. Marketer and Administrator Ruben Martinez who allegedly worked at one office for unindicted Chiropractor A and his defendant Nevada corporation, Desert Blue Moon, Inc. that was allegedly used to hide illegal referral fees. His son Alexander also allegedly worked for Chiropractor A.
4. Marketer and Administrator Alexander Martinez who allegedly worked at one office for unindicted Chiropractor A and his defendant Nevada corporation, Line of Sight, Inc. that was allegedly used to hide illegal referral fees.
Unindicted CoConspirator: Chiropractor A or Dr. A who is not named or charged in this case. He may be charged in a separate sealed case but that is not known at the moment.
There was a state search warrant that was allegedly executed in August 2011 against Dr. Grusd entities but the overt acts in this case related to 2014 and 2015 and are documented by recorded conversations, texts and emails. This is a coordinated state and federal investigation but the federal criminal case will be perceived to be stronger than state filings in other cases where the conversations relate to the alleged kickbacks charged are recorded and documented.
Indictment Allegations
1. Workers Compensation Patients are allegedly treated by "Chiropractor A" or "Dr. A" who has three clinics in San Diego area.
2. There is an alleged agreement that Dr. Grusd will pay referral fees to Dr. A for the patients referred by Dr. A or his administrators to Grusd's ancillary services companies California Imaging, Advanced Radiology, Network Medical Group, Oaks Diagnostic for diagnostic imaging, nerve conduction, EMG and shockwave therapy.
The workers compensation claims billing will be by Grusd companies. The alleged plan is to use the funds from the billings to pay another Grusd/Paredes owned entity which, in turn, will pay the referral fees to Chiropractor A through the two companies owned by Chiropractor A's two marketer/administrators. This is alleged to hide or disguise the referral fee payments.
3. The Indictment notes the following alleged payments, conversations, texts and emails:
The workers compensation claims billing will be by Grusd companies. The alleged plan is to use the funds from the billings to pay another Grusd/Paredes owned entity which, in turn, will pay the referral fees to Chiropractor A through the two companies owned by Chiropractor A's two marketer/administrators. This is alleged to hide or disguise the referral fee payments.
3. The Indictment notes the following alleged payments, conversations, texts and emails:
11/7/14 - Payment allegedly made by Grusd, Paredes and Willows Consulting to Alexander Martinez and Line of Sight, Inc. for patient referrals Dr. A's office made to the Grusd related entities
11/25/14 - Alexander Martinez emailed Paredes a list of patients referrred to California Imaging, Advanced Radiology, Grusd and Paredes.
12/3/14 - Payment allegedly made by Grusd, Paredes and Willows Consulting to Ruben Martinez and Desert Blue Moon for referrals Dr. A's office made to the Grusd related entities
12/17/14 - Payment allegedly made by Grusd, Paredes and Willows Consulting to Alexander Martinez and Line of Sight, Inc. for referrals Dr. A's office made to the Grusd related entities
3/4/15 - Dr. Grusd and Paredes allegedly met with Dr. A to discuss referral of patients for ancillary medical services and payments for them
7/16/15 - Payment allegedly made by Grusd, Paredes and Willows Consulting to Alexander Martinez and Line of Sight, Inc. and Ruben Martinez and Desert Blue Moon for referrals Dr. A's office made to the Grusd related entities
1/12/15 - Ruben Martinez and Desert Blue Moon allegedly sent payment to Dr. A and Alexander Martinez for referral payments received by Grusd entities and owed to them
3/2/15 - Dr. Grusd allegedly sent a text to Dr. A to set up meeting regarding referral of patients and payments for them
3/6/15 - Alexander Martinez and Line of Sight, Inc. allegedly sent payment to Dr. A for referrals to Grusd and Paredes entities California Imaging and Willow Consulting
4/2/15 - Alexander and Ruben Martinez allegedly emailed Paredes a list of patients referrred to California Imaging, Advanced Radiology, Grusd and Paredes for ancillary medical services.
4/6/15 - Payment made by Grusd, Paredes and Willows Consulting to Alexander Martinez and Line of Sight, Inc. for referrals Dr. A's office made to the Grusd related entities
6/5/15 - Grusd spoke to Dr. A on the telephone and confirmed the amount to be paid to Dr. A for referrals to California Imaging and Willow Consulting
It is alleged that In order to hide the fact that the referral fee is paid, one of Dr. Grusd's entities Willows Consulting pays an entity owned by Ruben Martinez (Desert Blue Moon, Inc.) and/or owned by Alex Martinez (Line of Sight, Inc.). Payments were allegedly noted for "professional services" instead of for patient referrals.
4. It is alleged that Alexander and Ruben Martinez falsely labeled list of patients referred by Dr. A's Office as "marketing hours" and similarly misleading phrases.
Ruben and Alexander Martinez allegedly exchanged emails to reconcile the lists of patients referred to the Grusd entities and the amounts now due and owing.
Attorney Commentary
These investigations gathered steam once other individuals whose cases ar still under seal began cooperating and when Michael Drobot plead and began cooperating. Now the federal authorities were privvy to the wide ranging nature of management agreements, rent payments, consulting agreements in every area of state workers' compensation patient treatment and ancillary services covering hospitals, durable medical equipment, compounding pharmacy, diagnostic services (MRI), psychological treatment, shockwave therapy, nerve conduction therapy and other servies.
The federal authorities undoubtedly noted that there were a number of players who had either prior felony convictions or qui tam cases, had been targets of state investigations or had been previously investigated by Medicare or Medi-Cal but were now avoiding government funded programs and focused on state workers' compensation.
The federal authorities have appeared to taken their time in order to obtain recordings and hard evidence to demonstrate the parties' alleged intent that these payments were for patient referrals and kickbacks. The U.S. Attorney's Office would not want to rely simply on the testimony of cooperating witnesses who have their own tattered history of engaging in fraud or illegal conduct.
The cases are taking time and it can be expected that related cases will be kept under seal or not be filed until the prosecution is ready on all related cases in order not to disturb other investigations. The next couple of years will change the landscape of workers' compensation in California and make real compliance more important than ever. The old belief that one can avoid federal scrutiny by not seeing Medicare or Medi-Cal patients and only seeing workers' compensation patients will prove to be false.
These investigations gathered steam once other individuals whose cases ar still under seal began cooperating and when Michael Drobot plead and began cooperating. Now the federal authorities were privvy to the wide ranging nature of management agreements, rent payments, consulting agreements in every area of state workers' compensation patient treatment and ancillary services covering hospitals, durable medical equipment, compounding pharmacy, diagnostic services (MRI), psychological treatment, shockwave therapy, nerve conduction therapy and other servies.
The federal authorities undoubtedly noted that there were a number of players who had either prior felony convictions or qui tam cases, had been targets of state investigations or had been previously investigated by Medicare or Medi-Cal but were now avoiding government funded programs and focused on state workers' compensation.
The federal authorities have appeared to taken their time in order to obtain recordings and hard evidence to demonstrate the parties' alleged intent that these payments were for patient referrals and kickbacks. The U.S. Attorney's Office would not want to rely simply on the testimony of cooperating witnesses who have their own tattered history of engaging in fraud or illegal conduct.
The cases are taking time and it can be expected that related cases will be kept under seal or not be filed until the prosecution is ready on all related cases in order not to disturb other investigations. The next couple of years will change the landscape of workers' compensation in California and make real compliance more important than ever. The old belief that one can avoid federal scrutiny by not seeing Medicare or Medi-Cal patients and only seeing workers' compensation patients will prove to be false.
