Operation Backlash, has been an extensive FBI-led undercover investigation that revealed a widespread workers’ compensation kickback scheme, including attorneys, doctors and medical providers who referred patients for health services in exchange for money.
Operation Backlash was first announced in November 2015 when the initial round of federal indictments was handed down. San Diego chiropractor Steven J. Rigler and San Diego workers’ compensation attorney Sean O’Keefe previously pleaded guilty to federal charges.
“When law enforcement became aware of the scam, we began following the trail of dirty money and it took us in many different directions,” San Diego District Attorney Bonnie Dumanis said. “The circle of criminal conduct continues to widen with today’s charges, and we expect additional indictments and arrests in the future.”
As alleged in one of the indictments, Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was allegedly a sham.
Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.
Trial in the case pending against Grusd was set for June 6, 2017. On March 31, 2017, Defendants Grusd, California Imaging Network Medical Group, and Willows Consulting Company rejected a plea offer in this case.
On April 7, his attorneys moved for a continuance, claiming that they did not have sufficient time to prepare his defense. Last December they say they were provided with digital discovery documents by the prosecutors which were placed on a 2 terabyte drive that can hold millions of documents and recordings. Prosecutors responded objecting to a trial continuance beyond August. No ruling has been made, thus the Grusd case remains in process with an unknown trial date.
The U.S. Attorney’s Office also announced federal indictments against additional defendants. They include patient recruiters, Fermin Iglesias, Carlos Arguello, Miguel Morales and four corporations. The corporations are Providence Scheduling, Inc., Medex Solutions, Inc., Prime Holdings International, Inc. and Meridian Medical Resources, Inc., doing business as Meridian Rehab Care.
The three federal defendants are accused of recruiting individuals to file workers’ compensation claims resulting from an on-the-job injury. The defendants then directed these patients to specific chiropractors who, in exchange for dozens of new workers’ compensation patients each month, agreed to meet a quota set by the defendants for referrals of the new patients for ancillary goods and services such as MRIs and durable medical equipment from specific providers.
According to the indictment, Providence Scheduling oversaw the scheduling of applicants recruited by defendant Arguello and others, and their assignment to a primary treating physician, which included chiropractors. Defendants Iglesias and Arguello decided which physicians were eligible to receive applicants from defendant Providence Scheduling.
Prosecutors claim the purpose of the conspiracy was to fraudulently obtain money from insurers by submitting claims for ancillary procedures and DME that were secured through a pattern of bribes and kickbacks in the form of an illegal cross-referral scheme in exchange for the referral of patients to particular providers of ancillary procedures.
Near the end of March, 2017, Providence Scheduling entered into a Plea Agreement to plead guilty. The Agreement has been filed with the federal court, but remains sealed until processed through a Magistrate Judge review and then to final disposition by the federal judge in charge of the case.