Los Angeles Orthopedic Surgeon Sentenced to 30 Months in Federal Prison for Receiving Kickbacks for Referring Surgeries to Pacific Hospital and Using Medical Hardware From Hospital-Related Entity

On November 22, 2019, an orthopedic surgeon specializing in spinal surgeries, Dr. Daniel Capen, was sentenced to 30 months in federal prison after he pleaded guilty. Dr. Capen pleaded guilty in August 2018 to conspiracy to commit honest services fraud and to soliciting and receiving kickbacks for health care referrals relating to Pacific Hospital and related entities. 

In his plea agreement, he agreed that he received at least $5 million in kickbacks for performing hundreds of spinal surgeries that were mostly for workers' compensation patients. 

U.S. District Judge Josephine Staton who sentenced Dr. Capen also ordered him to forfeit $5 million to the United States and pay a $500,000 fine. 

Dr. Capen is 70 years' old and the sentence appears to have taken into account his age and his acceptance of responsibility for the plea. One reason the sentence is 30 months is due to the total loss related to the kickbacks. When there is an illegal referral fee, the entire bill is considered a false or fraudulent claim. Given the cost of hospital bills for such surgeries, the plea agreement indicated that the illegal referral fees resulted resulted in more than $580 million in fraudulent bills being submitted, mostly to California’s worker compensation system.

This kickback arrangement centered on the now-closed Pacific Hospital in Long Beach, which specialized in surgeries, especially spinal and orthopedic procedures. Pacific Hospital’s owner, Michael Drobot who is serving a 5-year sentence for conspiracy and illegal kickbacks, paid kickbacks to doctors, chiropractors and marketers in return for the referral of thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the California workers’ compensation system.

New Civil Qui Tam Lawsuit Filed Against South Dakota Neurosurgeon and His Physician-Owned Distributorships (PODs) Alleging Kickbacks for Devices Used in Spinal Surgeries

2016 Senate Report on PODs

The issue of physician owned distributorships (PODs) is still an issue with orthopedic surgeons and neurosurgeons. The Justice Department is still filing qui tam actions and joining actions filed by whistleblowers. Physicians need to be very careful when forming their own device companies or distributorships. Since 2013, OIG has stated that PODs are "inherently suspect" under the federal anti-kickback statute.

Recently, on November 14, 2019, the United States filed a civil qui tam complaint against South Dakota neurosurgeon Wilson Asfora M.D. and his medical device companies Medical Designs LLC and Sicage LLC. The complaint alleges False Claims Act violations arising from the alleged payment of kickbacks to Dr. Asfora tied to the devices he used in spinal surgeries which were purchased from his own distributorships Medical Designs and Sicage.          

The Anti‑Kickback Statute prohibits offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, and other federal healthcare programs.  The government’s civil complaint alleges that Dr. Asfora, Medical Designs, and Sicage engaged in multiple kickback schemes designed to pay Dr. Asfora hundreds of thousands of dollars in exchange for Dr. Asfora using spinal devices distributed by Medical Designs and Sicage in his spine surgeries. 

The civil lawsuit also alleges that despite receiving numerous warnings that he was performing medically unnecessary procedures with the devices in which he had a financial interest, Dr. Asfora allegedly continued to perform such procedures while personally profiting from his use of devices sold by Medical Designs and Sicage. 

The case is captioned United States ex rel. Bechtold, et al. v. Asfora, et al., No. 4:16-cv-04115-LLP (D.S.D.).  The claims asserted against the defendants are allegations only, and there has been no determination of liability.

Former Merced Health Care Provider CEO Sentenced to 5 Years in Prison for Medi-Cal and Health Care Fraud

Health care fraud prosecutions continue to focus on nonprofit and community health clinics. At times, the community health centers are not run as rigorously as hospitals or larger entities but they are held to the same standard. Non-profits have special rules and founders or executives cannot run them for their own benefit. A recent case shows an aggressive prosecution against the founder and CEO of a nonprofit in California.

Photo: mvelez@mercedsunstar.com

On November 5, 2019, Sandra Haar, 59, of Merced, was sentenced in Fresno by U.S. District Judge O’Neil to five years in prison and ordered to pay $6,107,846 in restitution for health care fraud and conspiracy to receive kickbacks. Ms. Haar was ordered to self-surrender on Jan. 15, 2020, to begin serving her sentence. 

This sentence came after a guilty plea as there was no trial.  She had plead guilty in 2018 and as part of the plea agreement her daughter and husband would not be prosecuted. This is often an important part of the plea where other family members have been involved in a business.

Sugar Daddy Website Users: Pay Attention. San Diego Attorney Who Used Site Has Entered Federal Guilty Plea to Enticing and Coercing a Female to Engage in Prostitution.

Sugar Daddy websites that offer a “mutually beneficial relationship” are being investigated as part of human trafficking when they involve minors and young women. A recent case, has a San Diego attorney pleading guilty which will probably lead to prison time and potential loss of bar license. 

I hope this case causes people to think twice about the nature of these websites and how vulnerable young women can be lured to them. Professionals especially should be very careful since they are held to a higher level of conduct. This case did not involve an agent posing as a young woman but an actual minor female who claimed to be 18 year's old but was still in high school.  

On October 30, 2019, San Diego attorney William David Turley plead guilty in federal court to enticing and coercing a female to engage in prostitution in violation of 18 U.S.C. § 2422(a). U.S.D.C., So Dist, CA, Case No. 18-CR-4574-AJB.

According to his plea agreement, on or about April 30, 2018, Mr. Turley began communicating with an adult female victim whom he met on the website sugardaddymeet.com. Mr. Turley and the victim discussed entering into a “mutually beneficial relationship,” meaning that Mr. Turley would provide the victim with financial support and the victim would provide companionship for and engage in sexual acts with Mr. Turley.

Prosecutions for Immigration Fraud Are On the Rise: Federal Grand Jury Indicts Lawyer and Accountant in Visa Fraud Conspiracy for South Korean Nationals

While federal prosecutions for white collar crime have been cut in half the past three years, there is an increase in immigration fraud cases in large part due to the current administration's emphasis on preventing illegal immigration. A recent case illustrates this trend. 

On November 4, 2019, in the Central District of California, an indictment was unsealed charging two men with conspiracy to commit visa fraud by having a plan to obtain lawful permanent resident (LPR) status for South Korean nationals by allegedly submitting fraudulent visa applications that falsely claimed American businesses wanted to hire skilled foreign workers.

The named defendants are Weon Keuk Lee, a South Korean national who is also a licensed California attorney who previously operated an immigration law firm in Los Angeles; and Young Shin Kim, a naturalized United States citizen, who previously operated an accounting firm in Diamond Bar, California. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.