Sunday, January 1, 2017

Minnesota Chiropractors Who Paid Referral Fees to Marketers Charged in Federal Criminal Case for Personal Injury Auto Insurance Accident Cases

For years, health care providers in personal injury or workers' compensation cases were rarely prosecuted federally unless they billed Medicare or Medi-Cal (Medicaid). That is changing rapidly as recent federal criminal cases in Minnesota show which target personal injury fraud. It is clear that federal prosecution will increasingly include all types of health care fraud even where Medicare is not involved.

Across the country, including in California, we are expecting a large increase in prosecuting health care cases where there are allegedly illegal referral fees and alleged unnecessary medical services in private insurance, workers compensation and personal injury cases.  

On December 21, 2016, federal charges were brought against 21 defendants, including 6 chiropractors alleging that between 2010 and 2015 chiropractors engaged in activities with others to defraud automobile insurance companies by submitting fraudulent no-fault insurance claims. Chiropractors Angela A. Schulz, Preston E. Forthun, Huy Ngoc Nguyen and Adam J. Burke were indicted and arrested. Chiropractors Marlyn Comes and Darryl Hummeny were charged in an Information which likely means that a plea deal has been or will be made. All defendants are presumed innocent and Indictments are not evidence.

It is alleged that the chiropractors cumulatively charged billed “no-fault” insurance policies for more than $20 million dollars. The defendants were charged with conspiracy to commit health care fraud and conspiracy to commit mail fraud.  These 21 defendants were charged in 6 separate cases: 4 indictments and 2 felony informations. In cases like this, the government usually relies on cooperating witnesses to record or obtain evidence recorded on video or in texts or emails to show the knowledge of fraud and lack of medical necessity. More charges are expected according to the government. 

According to the charging documents, the charged chiropractors allegedly submitted claims and receive reimbursements for chiropractic services that either were not medically necessary or were never rendered. The charged chiropractor would allegedly prescribe and provide services that were not determined medically necessary by the physical condition of each patient, but were instead designed to fraudulently maximize reimbursement from the patients’ automobile insurance companies.

According to the charging documents, in order to get more patients to come to chiropractic appointments for treatment they did not need, the chiropractors charged would make illegal payments to patient recruiters or marketers, known as “runners.” Runners typically made upwards of $1,000 per automobile accident patient in exchange for bringing the patient into the chiropractor’s office. Runners were often not paid, or paid only in part, until after the patient had attended a minimum threshold number of treatment sessions.  In order to keep the patients coming back for medically unnecessary appointments, the runners allegedly often paid illegal kickbacks to the patients.

According to the charging documents, some of the charged chiropractors would conceal the kickback payments in various ways. For example, one chiropractor wrote checks to runners and falsely described those checks on the memo lines as payments for services such as “transportation” or “marketing.” Another chiropractor defendant encouraged runners to form corporate entities such as LLCs with names that sounded like legitimate businesses to which he made kickback payments. And a third chiropractor defendant tried to conceal kickback payments by making checks out to “cash” for several thousand dollars and often wrote multiple such checks each week, falsely characterizing them as having been for “chiropractic supplies” of “office supplies.”

Posted by Tracy Green, Esq.
Phone: 213-233-2260
Green and Associates, Attorneys at Law


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