Former UCSD Professor's Tech Company That Applied for Government Grants and Contracts Admits and Pleads Guilty to Wire Fraud, Agrees to Forfeit $180,000. False Statements in Government Applications Carry Exposure. Owner Gets "Deferred Prosecution Agreement."

False statements in any documents submitted to the government for payment can result in fraud charges. During the 1990s, government qui tam and criminal contracting fraud cases were common. We are seeing an increased number of companies being investigated for government contract fraud. These are usually handled by the Office of Inspector General (OIG) 

In an unusual case involving government grants and contracts, Dr. Homayoun Karimabadi, a former research professor at the University of California, San Diego (“UCSD”) and the Chief Executive Officer for SciberQuest, Inc., was charged in federal court last week with fraudulently obtaining government grants and contracts.

Dr. Karimabadi and SciberQuest, Inc., the corporation run by Dr. Karimabadi, both waived indictment and were arraigned on an information charging them with felony wire fraud and criminal forfeiture.  SciberQuest entered a guilty plea before U.S. Magistrate Judge Karen S. Crawford. Additionally, Dr. Karimabadi and SciberQuest jointly agreed to forfeit $180,000 as money that was improperly received as a result of the alleged fraud, in addition to a fine that will be imposed on the corporation at sentencing. 

In a favorable resolution for Dr. Karimabadi, he is scheduled to enter into a "deferred prosecution agreement" on January 15, 2016 at 8:30 a.m. before Judge Gonzalo P. Curiel. A deferred prosecution agreement is an agreement between a criminal defendant and the United States Attorney’s Office where the defendant admits to the facts constituting a criminal offense, but the United States agrees to suspend the entry of judgment for a period of time and agrees to dismiss the charges if, during that period, the defendant complies with certain conditions set forth in the agreement.These are not easy to obtain and show that either there were weaknesses in the government's case against Dr. Karimabadi or that fairness supported this result.  

Los Angeles Nightclub Owner and Sacramento Construction Company Owner Arrested for Workers' Compensation Insurance Fraud, EDD Payroll Tax Fraud. Get Compliant and Seek Professional Advice When Faced With Audits.

On January 8, 2016, two criminal cases were filed against individual company owners for workers' compensation insurance fraud and payroll tax evasion in Los Angeles and Sacramento. 

These are not related cases but show the the Department of Insurance’s effort to pursue more workers’ compensation premium fraud and tax evasion cases for misclassifying employees as independent contractors or paying employees cash under the table. The State views this as its efforts to combat the underground economy.

In the Sacramento case, William Huffman (owner of Capitol City Contractors) was charged with  nine felony counts of workers' compensation insurance fraud and tax evasion. The Sacramento County District Attorney's Office is prosecuting this case and contends that losses total $187,707. The State contends that Mr. Huffman allegedly underreported $755,899 in payroll to avoid paying workers' compensation premiums for dozens of employees.

How did this case arise? An insurer notified the Department of Insurance of suspected fraud. A forensic audit of the company's bank records was conducted and it is contended that detectives discovered evidence that Mr. Huffman was paying employees under the table and classifying some payroll checks as expenses for supplies and materials.

Attorney Commentary: We have helped numerous companies during the audit stages of workers’ compensation or EDD audits given the potential for criminal charges. During these audits, there are things that can be done to prevent the cases from being perceived as criminal intent to defraud cases. Compliance and immediate business changes can also help avoiding criminal charges. False documentation, false statements and other facts can cause problems. Companies often handle these audits on their own without detached counsel to advise them on how to proceed when there are sensitive issues and potential past non-compliance.

Non-Physician Owner of Three Los Angeles Medical Clinics Sentenced to 78 Months in Federal Prison for Medicare Fraud. Long Sentences Are The New Norm for Health Care Fraud.

The former owner and operator of three medical clinics located in Los Angeles, Hovik Simitian, 48, was sentenced on January 4, 2016 to 78 months in prison for his role in alleged submission of more than $4.5 million in fraudulent claims to Medicare. He is not a physician and under California law it is not legal for him to own or control the medical clinics. This was a high sentence given that it was a plea but is indicative of the government's position in demanding long sentences in these federal cases.  

The sentence was after Mr. Simitian pleaded guilty to one count of conspiracy to commit health care fraud on Aug. 18, 2015, and was sentenced by U.S. District Court Judge Beverly Reid O’Connell of the Central District of California, who also ordered Simitian to pay over $1.6 million in restitution to Medicare.

Mr. Simitian allegedly owned and operated Columbia Medical Group Inc., Life Care Medical Clinic and Safe Health Medical Clinic, three medical clinics in Los Angeles.  In connection with his guilty plea, Mr. Simitian admitted that from approximately February 2010 through June 2014, he and his co-defendant Anahit Shatvoryan paid illegal cash kickbacks to patient recruiters who brought Medicare beneficiaries to the clinics.  

Dallas-Based Home Health Company Owners and Nurses Charged for Roles in Alleged Medicare Fraud for Home Health Over 8 Year Period

On December 22, 2015, the co-owners of a home health company in Dallas and two nurse employees were charged in an indictment for their alleged participation in a health care fraud case involving alleged fraudulent claims for home health services. 

The government alleges that the billing at issue was $13.4 million to Medicare and Medicaid. It is also alleged that there were some payments to recruiters and that some of the services were performed were medically unnecessary. 

Patience Okoroji and Usani Ewah are alleged to co-own Timely Home Health Services Inc. (Timely). Kingsley Nwanguma LVN and Joy Ogwuegbu RN are alleged to have worked for Timely. Each of these four individuals of Texas were each charged with one count of conspiracy to commit health care fraud and each were charged with three or more counts of health care fraud. An Indictment is not evidence and all persons charged are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

The indictment alleges that from approximately January 2007 to September 2015, the defendants conspired to defraud Medicare by causing the submission and concealment of false and fraudulent claims for home health services in the amount of $13,434,550.  

According to the allegations, Okoroji and Ewah would in some cases pay recruiters, including Nwanguma, to recruit beneficiaries for home health services, regardless of whether the beneficiaries needed home health care.  The government contends that Okoroji, Ewah and Ogwuegbu allegedly prepared or caused to be prepared fraudulent Medicare documents that made it appear that the beneficiaries qualified for home health services.  These documents were used by doctors to certify Medicare beneficiaries for home health care.  

Attorney Commentary - Ethnic Community Issue: This is the latest case involving immigrants (naturalized citizens) involved in home health care fraud with hundreds of investigations in Dallas alone since 2012. Other cities such as Los Angeles, New York, Miami, and Detroit involve a high percentage of ethnic communities.

Santa Barbara Doctor Sentenced After Trial to over 25 Years in Federal Prison for Writing Prescriptions for Schedule II Narcotics

The war on prescription drug abuse and the physicians who were prescribing to pain management patients continues. Long sentences are being handed out and the most recent case is no exception. 

On December 7, 2015, a Santa Barbara-area physician Julio Gabriel Diaz who wrote numerous prescriptions for Schedule II drugs was sentenced to a very long sentence of 327 months (essentially a life sentence) in federal prison by United States District Judge Cormac J. Carney. The sentence will be appealed according to his appointed attorney.

Former physician Diaz was found guilty by a jury after a 2½-week trial in August of 79 counts of distribution of a controlled substance. The government produced evidence at trial that the prescriptions were outside of the usual course of professional practice and without a legitimate medical purpose. Dr. Diaz was not charged with any patient deaths but evidenced was introduced that many patients were drug addicts and some died from drug overdoses.

Dr. Diaz was profiled, along with other physicians, in a Los Angeles Times profile on physicians overprescribing narcotics. The prosecutions of these physicians became politicized. Dr. Diaz was arrested in 2012 with the Medical Board action against his license after his arrest. 

Four Home Healthcare Workers in Missouri Charged with Defrauding Medicaid - In Home Supportive Services Fraud

State programs pay home health care workers (IHSS in California) to take care of the non-medical needs of elderly and/or disabled patients who qualify for SSI. These services are performed at the patients' own homes since it is much less expensive than placing these patients in assisted living or nursing homes. 

This can be a great program. However, the concern about fraud threatens it. In addition, the individual providers are being targeted. These are not large companies but individuals who are often low paid workers. This article is to remind those providers to be careful and not to submit documents with false billing or entries on them regardless of the temptation. In California, it is considered Medi-Cal fraud.

Let's be clear. States are aggressively going after fraudulent billing in the home setting. California usually brings charges in state court but we can expect federal charges as well. Missouri just charged four individuals in federal court for billing for services not provided in November 2015, and they are expected to be sentenced in early 2016 following guilty pleas.