Culminating investigations by a host of state and federal law enforcement agencies, federal prosecutors have brought 13 criminal cases that charge a total of 22 California defendants in health care fraud schemes. Several medical professionals were charged as part of the sweep, including five physicians, a psychiatrist, one pharmacist and an occupational therapist. The cases allege various schemes that led to more than $161 million in fraudulent bills being submitted to publicly funded health care programs such as Medicare and TRICARE.
The cases filed in federal court in Los Angeles and Santa Ana are part of a nationwide sweep announced in Washington by Attorney General Loretta Lynch, who said criminal and civil charges have been filed against 301 individuals across the nation who allegedly participated in health care fraud schemes involving approximately $900 million in false billings. The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department’s Medicare Fraud Strike Force.
The cases filed in the Southland involve actual losses of more than $125 million, with the bulk of those losses associated with five cases related to schemes involving compounding pharmacies. In schemes orchestrated by marketers (sometimes called “cappers”), compounding pharmacies were provided with large numbers of prescriptions, generally for pain medications, that carried huge reimbursements, often more than $15,000 for each prescription. The prescriptions were written by doctors who received kickbacks from marketers or from “telemedicine” websites that had little or no contact with patients. The prescriptions were written for “patients” who, in many cases, did not want the prescriptions, had never met the prescribing doctors or had no idea why they were receiving the medications. In many cases, the beneficiary information was being used without the knowledge of the “patients” until the prescriptions showed up at their homes.
In one case, John Garbino, a marketer who resides in Dana Point, was charged with receiving illegal kickbacks after referring prescriptions to compounding pharmacies that filled the prescriptions. One Palmdale pharmacy allegedly received more than $46 million in only six months. Another pharmacy in Corona received nearly $6 million over the same six-month period. Garbino allegedly received illegal kickbacks of as much as 65 percent for referring prescriptions to the compounding pharmacies. The criminal complaint against Garbino alleges that one of the pharmacies dramatically increased its claims “for filling compounded medications prescriptions that had been specially formulated to achieve the highest possible reimbursement rates rather than the greatest medical efficacy.”
In another scheme, the Florida-based operator of a “telemedicine” website was charged with health care fraud for allegedly misusing the identity and medical credentials of a physician to submit prescriptions to a compounding pharmacy. The criminal complaint in this case alleges that two local pharmacies received more than $6.5 million in payments in 2015.
In a third case, the owner of a La Mirada pharmacy, two marketers and a doctor were indicted on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy, Valley View Drugs, more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers.
In other cases a doctor who had offices in Temecula and Mira Loma allegedly submitted nearly $12 million in fraudulent bills to Medicare for unnecessary “vein ablation” surgery. U.S. Atty. Eileen M. Decker said the physician named in the federal charges was Dr. Donald Woo Lee. The 50-year-old physician is accused of performing unnecessary vein procedures on patients even when they had no signs of varicose veins. Another doctor was charged for helping the owner of a Granada Hills medical clinic, who recruited Medicare patients with promises of free equipment and used their beneficiary information to bill for services that simply were never provided.
The other California doctors charged are David Michael Jensen, 65, of Whittier; Kain Kumar, 52, of Encino; Sang Kim, 67, of Porter Ranch and Samuel Albert, 81, of Laguna Beach.
Dr. David Michael Jensen, owner a La Mirada pharmacy Valley View Drugs Inc., was indicted along with two marketers on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers, according to the indictment.
Anthony J. Orlando, acting special agent in charge of the Internal Revenue Service’s criminal investigation unit, said in one scheme the proceeds were laundered using a carwash, a plumbing business and an escrow company.
Another case announced today charges three defendants in a scheme to defraud the health benefit plans established for members of the International Longshore and Warehouse Union and Federal Express employees. Participants in the scheme allegedly paid beneficiaries of those plans to undergo unnecessary sleep and nerve conduction velocity studies that were then billed to the plans. The defendants operated facilities in Sherman Oaks and San Pedro, where the testing was conducted as part of the fraud scheme that submitted at least $16 million in bills to the union and FedEx health plans. The defendants in this case also face money laundering charges.
Most of the 22 defendants named in the cases were arrested on Monday and Tuesday. Several defendants self-surrendered after learning of the federal charges. A separate announcement details all 13 cases and the defendants charged in those cases.
The cases announced this week in Los Angeles are the result of investigations conducted by the United States Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; the Federal Bureau of Investigation; the Office of Personnel Management, Office of Inspector General; the Veterans Administration, Office of the Inspector General; the Department of Labor, Employee Benefits Security Administration; the California Department of Insurance, Fraud Division; the United States Postal Service, Office of the Inspector General; Amtrak’s Office of the Inspector General; the California Board of Pharmacy; IRS Criminal Investigation; and the California Department of Justice.