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Sanjoy Banerjee M.D.provided billings and doctor’s reports concerned medical services to workers’ compensation patients through three entities that Banerjee owned and operated from a single location in Wildomar California: (1) Sanjoy Banerjee, M.D., Inc., doing business as Pacific Pain Care Consultants (PPCC); (2) Kensington Diagnostics, LLC (Kensington); and (3) Rochester Imperial Surgical Center, LLC (Rochester).

Banerjee presented billings totaling $157,797.01 to Berkshire Hathaway Homestate Companies payable pursuant to the state’s workers’ compensation system, through Kensington and Rochester, for services that Banerjee provided to patients between 2014 and 2016. BHHC paid less than 10 percent of the $157,797.01 amount billed.

Each doctor’s report included the following attestation near the end of the report: “I have not violated Labor Code section 139.3, and the contents of this report and bill are . . . true and correct to the best of my knowledge. This statement is made under penalty of perjury.”

Banerjee was charged with two counts of insurance fraud and three counts of perjury. The charges are based on Banerjee’s alleged violations of Labor Code section 139.3(a), which prohibits physician self referrals to entities where the physician owns a specified financial interest.

According to a BHHC investigator who testified as the only witness at his preliminary hearing, Banerjee was obligated to disclose his financial interests in Kensington and Rochester to BHHC, and BHHC had no business records indicating that Banerjee had made this disclosure.

The superior court denied Banerjee’s motion to dismiss the information as unsupported by reasonable or probable and set a trial on the merits. The Court of Appeal granted his petitions for a writ of prohibition and dismissed the perjury charges, but rejected the petition to the fraud charges (for overbilling) in the published case of Banerjee v. Superior Court.

To date, no published court decision has interpreted Labor Code sections 139.3 or 139.31. The statutes were enacted in 1993 as part of Assembly Bill No. 110, part of a comprehensive package of legislation that reformed the state’s workers’ compensation laws. It was intended to reduce costs and strengthen conflict of interest rules in the workers’ compensation system.

Section 139.3(a) makes it unlawful for a physician to refer a person for specified services “if the physician or his or her immediate family has a financial interes with the person or in, the entity that receives the referral.” A violation of section 139.3(a) is a misdemeanor.

Section 139.31(e) provides: “The prohibition of section 139.3 shall not apply to any service for a specific patient that is performed within, or goods that are that are supplied by, a physician’s office, or the office of a group practice. . . .”  The Court’s interpretation of section 139.31(e) means that the physician’s office exception applies to Banerjee’s financially interested “self-referrals” to his two other legal entities since they are both located in his same Widomar office. Since his alleged violations of section 139.3(a) was the only basis to support the perjury charges, the perjury charges must be dismissed.

The record also supports a strong suspicion that Kensington and Rochester were sham entities, and that Banerjee formed Kensington and Rochester with the specific intent to defraud BHHC through his Kensington and Rochester billings. The Kensington and Rochester billings gave the appearance that the entities were not part of Banerjee’s medical practice but were stand alone, diagnostic testing and surgical centers, operating independently of any physician’s office.

Even though the evidence does not show that Banerjee violated section 139.3(a), the evidence supports a strong suspicion that Banerjee specifically intended to present false and fraudulent claims for health care benefits, in violation of Penal Code section 550, subdivision (a)(6), by billing the workers’ compensation insurer substantially higher amounts through his two other legal entities, between 2014 and 2016, than he previously and customarily billed the insurer for the same services he formerly rendered through his professional corporation and his former group practice.

Thus, the Court granted the writ as to the perjury charges but denied it as to the insurance fraud charges.