Director of California Cosmetic Surgery Center Who Fled Pending Trial Is Returned to U.S. to Face Federal Charges in Health Care Fraud Case For Billing Cosmetic Procedures to Insurance as "Medically Necessary"

Extraditions for health care fraud cases are more common now especially where the loss amounts are high. In a recent case, Linda Morrow, a Rancho Mirage woman married to a plastic surgeon, David Morrow, who had fled the United States after being named in a 31-count federal grand jury indictment in 2016, arrived in Southern California on July 1 after being deported by Israel, which had determined that she had entered that nation on a fraudulent Mexican passport. Ms. Morrow faces federal charges related to allegations that she fraudulently billed insurance companies $50 million for “medically necessary” cosmetic surgeries has been returned the United States after fleeing to Israel two years ago.

          

Ms. Morrow appeared in U.S. District Court in Santa Ana on July 2, 2019 and entered a not guilty plea to a separate grand jury indictment that charges her with contempt of court for fleeing while free on bond. During that hearing, she was ordered detained and a trial date in the contempt case was scheduled for August 27. She will make another court appearance later this month to discuss the status of the pending health care fraud case.

Ms. Morrow and her husband, David Morrow, were arrested in Israel on June 16. David Morrow, who pleaded guilty in 2016 in the health care fraud case and was sentenced in absentia to 20 years in federal prison, is pending extradition proceedings in Israel. David Morrow also faces contempt of court charges for fleeing while he was pending sentencing.

WakeMed Pays Penalties for Non-Employed Medical Director Fees. Learn From Their Experience.

Smaller hospitals and surgery centers often use medical director fees. One concern is that there is often not a great deal of effort into determining whether these medical director fees violate the bans on physician self referrals. Each case is different, howver, one case to review is a recent one involving WakeMed Health and Hospitals in North Carolina. OIG alleged that WakeMed paid remuneration to one non-employed medical director in the form of medical director fees.

After WakeMed disclosed conduct to OIG pursuant to its Corporate Integrity Agreement about payment of medical director fees, it agreed on October 26, 2016, to pay $146,235.38 for allegedly violating the Civil Monetary Penalties Law provisions applicable to physician self-referrals and kickbacks. 

Before your facility considers whether it should pay a directorship fee or whether as a physician or provider you should receive one, ensure that you have obtained a true legal opinion as to why that payment meets the safe harbor and is within federal and state laws and regulations.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Office: 213-233-2261

Three Indicted In California Federal Insurance Fraud Case Involving Allegations That Medically Unnecessary Procedures Were Performed For Free Or Discounted Cosmetic Surgery

On July 16, 2014, a federal grand jury indicted three Southern California residents in a scheme to defraud health insurance programs by submitting bills in alleged medically unnecessary medical procedures performed on insurance beneficiaries who received free or discounted cosmetic surgery. The Indictment claims that there were more than $50 million in unnecessary medical procedures billed. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

The indictment in Case No. SACR14-00110-JLSoutlines allegations in which marketers or cappers lured patients to a surgery center in Orange County, California known at various times as Empire Surgical Center, Vista Surgical Center and Princess Cosmetic Surgery. The marketers allegedly told patients that they could use their union or PPO health insurance plans to pay for cosmetic surgeries, which are generally not covered by insurance. This involved private insurance but was investigated by Department of Labor which indicates that there may have been some government beneficiaries 

When patients came to the surgery center for a consultation, they were told that they could receive free or discounted cosmetic surgeries if they underwent multiple, medically unnecessary procedures that would be billed to their union or PPO health care benefit program, the indictment alleges. The unnecessary procedures typically performed on the “patients” were endoscopies (usually esophagogastroduodenoscopies, or EGDs), colonoscopies and cystoscopies.

Once the health care benefit program paid the claims, the patients were given free or discounted cosmetic surgeries, including “tummy tucks,” breast augmentations, rhinoplasties (“nose jobs”) and liposuction. Further, according to the indictment, tummy tucks were billed as hernia repair surgeries, and rhinoplasties were billed as deviated septum repair surgeries.

The three defendants charged in the indictment are: (1) Vi Nguyen, 31, of Placentia, who was a consultant at the surgery center and who is charged with 10 counts of mail fraud; (2) Theresa Fisher, 44, of Tustin, who was another consultant at the surgery center and who is charged with five counts of mail fraud; and (3) Lindsay Hardgraves, 30, of San Pedro, who was a marketer and charged with two counts of mail fraud.

Attorney Commentary: There were similar state and federal criminal cases some years ago in Orange County with different surgery centers that also charged the physicians with performing the medically unnecessary surgeries. At this point, no physicians are charged but that could change depending on the evidence and whether these defendants later cooperate and present evidence that the physicians who performed the unnecessary procedures knew or should have known that they were unnecessary. This is a case where the fraud was driven by illegal marketing to patients. Physicians and owners of surgery centers must be careful on how patients are recruited and what promises, if any, are made in order for them to have procedures performed at a certain facility. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Phone: 213-233-2260

  

California Medical Board Under Attack

The California Medical Board is under siege. In a strongly worded article, Michael Hiltzik of the Los Angeles Times on 4/26/13 in an article entitled "Legislature Should Pull Plug On Inept Medical Board of California" urged Sacramento law makers to "sunset" the Board, fire the executive director and start fresh.  Mr. Hilltzik has reported extensively on surgical centers, especially Lap Band surgery centers. 

However, Mr. Hilltzik does not address where the funds will come for the investigations he recommends be initiated on their own without any patient or other complaints. There is an allegation that the accrediting agencies such as Joint Commission which regulates hospitals are in the pockets of the surgery centers. The article is inflammatory in my opinion and does not suggest how a "new" agency would operate or be funded. The Medical Board is self-funded from physician dues and fees. 

As an attorney who represents physicians on a regular basis, I find the proposal of just starting over or turning the agency over to the Attorney General's Office to be simplistic. There are many tasks performed by the Medical Board of an administrative nature. When there are criminal investigations, those should be addressed on a case by case basis as to which agency should handle the criminal side of the investigation. Should it be the DEA, county District Attorney Offices, city attorney's offices and local law enforcement? Each case is different and requires different skills and resources. The U.S. Drug Enforcement Agency is the one that issues physicians a certificate to prescribe medications, including Schedule II drugs.

I have seen the Board over the past 5 years become very aggressive where physicians did not document medical exams or demonstrate sufficient medical necessity when they prescribed pain medications. In one case I handled last year, the physican's state criminal case of prescribing to undercover officers was dismissed but the Board insisted on revocation of the license. 

Medical and Physician Marketing: Los Angeles Times Article On "Scrutiny Of Lap Band Enterprise Is Overdue"

On March 4, 2010, I posted an article regarding the Los Angeles Times' articles on Top Surgeons' marketing of lap bands entitled "L.A. Times Article On Lap Band Surgery Centers: What Other Legal And Consumer Issues Are Raised Here?"

The Los Angeles Times recently wrote another article on December 19, 2010 stating that "Scrutiny of Lap Band Enterprise Is Overdue." 

According to the L.A. Times, the 1-800-GET-THIN billboards which pepper the Los Angeles and Orange County freeways have caught the attention of the Los Angeles County Department of Public Health and it has asked the U.S. Food and Drug Administration to investigate the ad campaign.  Here is a link of the letter that was sent to the FDA. 


The referral to the FDA was probably made since the Medical Board does not have jurisdiction over advertising by non-physicians and there were some issues over who has jurisdiction over the surgery centers operated by non-physicians. The success of this type of marketing to patients comes with its pitfalls and level of scrutiny. 

For health care providers, this article is a reminder that they need to ensure that their advertising and referral arrangements with surgery centers and companies that advertise (on the Internet and elsewhere) comply with California and federal laws prohibiting false advertising and the giving of any consideration (money or other things of value) for the referral of a patient.

Should you have any questions regarding your own situation or this post, you can email physician attorney Tracy Green at tgreen@greenassoc.com. Green and Associates is located in downtown Los Angeles, California and focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a long-standing specialty in representing health care providers. Ms. Green is presently a member of the Board of Directors of the California Naturopathic Doctors Association. The firm website is: http://www.greenassoc.com/

L.A. Times Article On Lap Band Surgery Centers: What Other Legal & Consumer Issues Are Raised Here?

The Los Angeles Times has recently run two articles on TopSurgeons, its recent regulatory issues and the limited jurisdiction that the State of California has over freestanding ambulatory surgery centers. Free-standing surgical centers owned by a physician are exempt from licensing by the Department of Public Health.

Here is a link to the March 4, 2010 article (which links to the writer Michael Hiltzik's prior article):

Lap-band promoters' troubled history - latimes.com
(photo is from the L.A. Times article)

The L.A. Times article is trying to protect the consumer which I applaud. However, I question whether the writer understands the business well enough to give advice to the consumer or State on what needs to be done to better regulate free-standing surgery centers or companies such as TopSurgeons.

I think the real issue here is that a company is advertising aggressively directly to consumers for lap-band surgeries. The company then refers those potential lap-band patients to physicians who, in turn, perform the surgeries in centers which may be owned or affiliated with the referring company. This is what I see as the real crux of the issue - even in terms of better protecting the consumer. The surgery center accreditation is the tip of the iceberg.

So if I drive by and call the 1-800 number, is a doctor employed by TopSurgeons going to perform the surgery? No, not to my understanding. TopSurgeons is going to "refer" the case to a physician who will meet with the patient and evaluate whether he or she is a candidate and then this physician performs the surgery. This physician is under the jurisdiction of the Medical Board by the way.

Then usually other big issues will be:

(1) Who provides the financing for the patients who want these surgeries?
(2) What is the business relationship between the physician who performs the surgery and TopSurgeons?
(3) How does the surgeon decide which surgery center to use? and
(4) What is the business relationship between the referring agency TopSurgeons and the surgery center?

The purpose of laws prohibiting referral fees is to ensure that patients are referred to the best place or physician and not because someone has a business relationship with the referring business. Who do I want to be referred to? Best lap-band surgeon in L.A. or a second-rate or poorly trained one that pays fees to a company that advertises on billboards and the Internet.

Now if the best lap-band surgeons are paying for advertising - that's great but that is what the consumer needs to know. Some consumers assume that all physicians are created equal. It's like any other profession in that some are more experienced than others. Bariatric surgery is a real specialty.

What does TopSurgeons do? According to TopSurgeon's website says "TopSurgeons is a premier referral provider of surgical services on the west coast." Thus, it appears that TopSurgeons people (such as Dr. Omidi) are not performing the surgeries. They are referring the business to physicians. Now there could be an issue of whether they are in compliance with the Business & Professions Code on referrals and how those referrals are paid. In addition, they may be referring the business to physicians with the understanding that those surgeries are to be performed in TopSurgeons' centers.

The article conceded that "Robert Silverman, an attorney representing the Omidis, points out that his clients "have no involvement in the performance of weight loss surgeries themselves." However, the article does not explain what role TopSurgeons has perhaps because that information was not provided to the writer.

It is important for patients to know who owns and operates a surgery center (since those fees often greatly exceed the surgeon's operating fees). In other words, surgery centers can be where the real money is made in health care.

It is critical for patients to know whether the surgery center has its accreditation. It appears that the present surgery center referenced in the article is certified by the Joint Commission.

It is critical for patients to know who will be the anesthesiologist and what the plan is if there is a complication that requires hospitalization.

It is also important for the patient to know the physician and how he or she decides which surgery center to select. Is the surgeon picking the best free-standing surgery center? Or is the physician selecting a surgery center that refers him or her the surgeries?

For the record, I have no involvement with TopSurgeon or anyone affiliated with it and have never represented them.

If you want real protection for the consumer -- understanding the facts is important. The article gives some of the facts but does not appear to understand how the business is run. The article discusses "the people behind TopSurgeons" who according to the article "are the Omidi brothers -- Julian, whose medical license was revoked in 2009, and Michael, who was placed on three years' probation for gross negligence in 2008, according to the Medical Board of California." However, neither of those men are performing surgeries.

The article claims that "TopSurgeons attracts customers in part by pitching the lap-band to people who, according to conventional medical guidelines, shouldn't need major surgery to shed weight." The article does not mention that a physician will have to make a determination whether the patient meets the medical criteria for having lap-band surgery. This would not be up to the Omidis or TopSurgeon but to the physician performing the surgery.

For health care providers, they need to ensure that their referral arrangements with surgery centers and companies that advertise (on the Internet and elsewhere) comply with California laws prohibiting the giving of any consideration (money or other things of value) for the referral of a patient. See, for example, California Business and Profession Code Section 650.

Remember as well that payment for advertising is different than payment for referrals but legal advice is needed to determine where the line is between advertising and referral fees. By the way, the District Attorney's Office and Attorney General's Office have jurisdiction over everyone (physician or not) since violation of such laws is a misdemeanor or felony.

Should you have any questions regarding your own situation or this post, you can email physician attorney Tracy Green at tgreen@greenassoc.com. Green and Associates is located in downtown Los Angeles, California and focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers. Ms. Green is a member of the Board of Directors of the California Naturopathic Doctors Association. The firm website is: http://www.greenassoc.com/


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