Category: Daily News

Beverly Hills anesthesiologist Randy Rosen MD has been accused of insurance fraud in several criminal and civil proceedings over the last several years. The accusations included involvement with the California workers’ compensation system and later schemes targeting sober living homes. He has now entered a guilty plea in Orange County Superior Court along with his co-defendant Liza Vismanos the owner of the Wellness Wave surgical center in Beverly Hills and the Lotus Labs medical laboratory in Los Alamitos.

The Orange County District Attorney filed criminal charges against him (Case 16CF1363) on May 20, 2016, alleging that he “entered into an agreement with Kareem Ahmed and his companies: Physicians’ Funding Solutions, LLC, Med-Rx and Healthcare Finance Management to distribute transdermal compound creams which were manufactured by Curt’s Compounding Pharmacy in Orange County to workers compensation patients treated by Dr. Rosen.” And that he received “kickbacks” under the guise of selling accounts receivables.

As part of the Workers’ Compensation scheme, Dr. Rosen was charged with twenty-four counts of Withholding Material Facts on Insurance Claims and seventeen counts of Creating Documents for Purposes of Submitting False or Fraudulent Insurance Claims. Vismanos was charged with twenty-four counts of Withholding Material Facts on Insurance Claims. The couple was also charged with the aggravated white collar crime enhancement for losses exceeding $100,000 and $500,000. Dr. Rosen is charged with a crime-bail-crime enhancement pursuant to Penal Code Section 12022.1(b) for committing additional crimes while released on bail on his previous and still active insurance fraud case in People v. Randy Scott Rosen (Case No. 16CF1363).

And in Orange County criminal case 20CF1682, he and his co-defendant Liza Vismanos were arrested June 30, 2020 by the Orange County District Attorney’s on a combined 144 counts including money laundering, submitting fraudulent insurance claims and withholding material facts on insurance claims.

According to court documents related to his bail motion, “In approximately June 2017, Rosen/Vismanos entered into a fraud scheme specifically targeting patients from addiction recovery rehabs to bill their private medical insurance carriers primarily for two types of procedures; a non-FDA approved Naltrexone implant and Cortisone injections,”

“Per Rosen’s records he performed these procedures in as little as one-minute increments with as many as 72 procedures per day. Additionally, Rosen collected blood and urine from his patients, which was processed at Lotus Labs at a cost of approximately $4,000 per day after the procedure with no known medical necessity.” Investigators alleged 18 insurance companies were billed from June 2017 to May 2019 $661,940,464 and the two received $51,060,523.

The two were also accused of using two “body-broker” groups that would “sell Rosen patients in exchange for a kickback of the insurance proceeds.” The “marketers” would – often pay the patients (oftentimes $500 to $2,000 per procedure) to incentivize them into returning to Rosen for multiple procedures,” the bail motion alleges.

Rosen, was also involved in a civil federal lawsuit ( 8:13-cv-00956-AG-CW) filed by the State Compensation Insurance Fund involving a workers’ compensation fraud scheme at the infamous Pacific Hospital of Long Beach. State Fund’s proposed Third Amended Complaint asserted claims directly against, Dr. Faustino Bernadett, Jeffrey Catanzarite, Dr. Gerald Alexander, Dr. Jack Akmakjian, Dr. Ian Armstrong, Michael Barri, Dr. Mitchell Cohen, Alan Ivar, Edward Komberg, Dr. Randy Rosen, Dr. Lokesh Tantuwaya, Dr. Jacob Tauber, Dr. Assad Moheimani, and Jason Bernard, as well as entities associated with these individuals.

If one were to write a treatise on methods to perpetrate medical fraud, the 221 page Complaint filed by SCIF would be a good guide. Topics include “Lack of Licenses, Corporate Practice of Medicine, and Payment of Illegal Referral Fees” on the part of the Administrative Defendants, Individual Defendants and Provider Defendants, “Overbilling and Pricing Manipulation” on the part of the Pharmacy Defendants and some Provider Defendants, “Billing State Fund for Treatments and Services That Were the Product of Illegal Kickbacks and Referral Fees, Fraudulent Scheme to Overbill Services By Unbundling/Upcoding, Including Unbundling and Overbilling, Fraudulent Scheme re: Nurse Billing; Autologous Transfusion Billing; Duplicate Radiology Billing, Double-Billing of Prescriptions”, and more.

According to the federal docket in the SCIF civil case, SCIF and Rosen reported a settlement of the case between them in July 2016. The terms of the settlement were not disclosed.

And the Orange County District attorney just announced this month that Rosen pleaded guilty to several counts of submitting fraudulent insurance claims with an aggravated white collar crime enhancement, while scores of other charges were dismissed. He faces 10 years behind bars, but will get credit for the two years he has already served as the cases progressed through the justice system.

Vismanos pleaded guilty on Friday to insurance fraud and had dozens of charges dismissed. She will face home confinement.

“This is the largest prison sentence for a provider in a California workers’ compensation insurance fraud,” said Orange County District Attorney Todd Spitzer in a prepared statement. “Dr. Rosen used vulnerable sober living patients who were desperately trying to battle their demons as an ATM machine to make a buck. He didn’t care about his patients; he only cared about making as much money as possible.”

Rosen’s California medical license is shown as currently “Renewed & Current.” However, as a result of the 2020 charges filed against him, he stipulated to an administrative order prohibiting him from practicing medicine until he criminal case was “fully and completely concluded.”

Azizulah “Aziz” Kamali and his medical corporation, Aziz Kamali, M.D. Inc., have agreed to pay $1,963,953 to resolve allegations that they violated the False Claims Act by submitting millions of dollars of false claims to Medicare for surgically implanted neurostimulators and paying kickbacks to sales marketers, U.S. Attorney Phillip A. Talbert announced today.

Dr. Azizulah Kamali is an internal and geriatric medicine physician practicing on 1947 N California Street, in Stockton California. As part of his practice, Kamali offers “auricular electro-acupuncture” using a battery-operated device that provides intermittent electrical stimulation to the inside of a patient’s ear.

According to the settlement, Kamali and his medical corporation admitted that they submitted claims to Medicare for surgically implanted neurostimulator devices even though they did not perform surgery or implant neurostimulators.

Dr. Kamali and Kamali Inc. admitted that they instead taped a disposable electroacupuncture device called “Stivax” to their patients’ ears. Stivax devices do not require surgical implantation and are not reimbursable by Medicare. The government alleges that this conduct violated the False Claims Act.

Stivax is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device provides intermittent stimulation by electrical pulses. It is a single-use, battery-powered device designed to be worn for several days until its battery runs out, at which time the device is thrown away.

Medicare does not reimburse for acupuncture or for acupuncture devices such as Stivax, nor does Medicare reimburse for it as a neurostimulator or as implantation of neurostimulator electrodes.

Other brand names for this device include P-Stim, NeuroStim, ANSiStim, E-Pulse, and NSS-2 Bridge.

Dr. Kamali and his medical corporation also admitted that they paid a marketing company a percentage of the reimbursements they received from Medicare for billing implantable neurostimulators, in return for the marketing company arranging for and recommending that patients order Stivax from them. The United States alleges that this conduct violated the Anti-Kickback Statute and the False Claims Act.

In addition to paying the civil settlement, Dr. Kamali and Kamali Inc. have agreed to enter into an Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG). The Integrity Agreement requires that Dr. Kamali and Kamali Inc. implement specific compliance measures, including training on applicable health care fraud laws and contracting with an Independent Review Organization that will conduct third-party audits of the medical necessity of their Medicare claims.

In October 2020, unrelated disciplinary charges were filed against Kamali by the Medical Board of California involving “Negligent Acts” while treating two patients for pain. The charges were resolved in August 2021 by a Stipulated Settlement and Disciplinary Order.

Over the last several years, there have been several enforcement actions against practitioners who fraudulently billed for these devices. In 2019 Ron Sisco, a Pennsylvania chiropractor resolved claims pay paying nearly $100,000. In 2021 Kevin Cooper M.D., a Mississippi physician and his family medical practice, Cooper Family Medical Center, agreed to pay $375,000 to resolve allegations over billing for the P-Stim device.And there are more examples.

According to an article published by Medpage Today “Providers across the country have been billing more frequently for neurostimulator implantation, a surgical procedure for patients with chronic pain. The problem is, they may not actually be doing it.”

“The federal government has litigated at least 15 false claims cases involving auricular electroacupuncture devices within the last few years, across states including Pennsylvania, Texas, Tennessee, and Georgia. Eight of the cases have been resolved in the Eastern District of Pennsylvania, according to the DOJ.”

Providers were urged to bill CPT code 63650 for P-Stim procedures, which describes a percutaneously implanted neurostimulator, however no surgical procedure was involved.

“Suspense day” at the California Legislature on Thursday saw several key bills killed while others moved ahead on the path to passage. Both the Assembly and Senate ran through more than 820 bills in anticipation of the end of the legislative year on Aug. 31. Any bill passed through Appropriations from the suspense file must survive a full Assembly vote and another Senate vote before heading to the Governor for signing.

According to the Report by Consumer Watchdog, AB 2370 (Levine) would have required all state agencies to retain public records for a minimum of two years. The bill had previously passed through the Assembly and through Senate Judicary with overwhelming bipartisan support, and without a single No vote.

State agencies currently have no minimum time requirement to keep records, placing the public’s right to access those records at risk, said Consumer Watchdog.

AB 2370 was supported by California News Publishers Association, Californians Aware, Consumer Watchdog, First Amendment Coalition, and Oakland Privacy.

The bill arose from the government corruption scandal involving the Department of Insurance and the workers’ compensation insurer Applied Underwriters.

A second bill prompted by the scandal, AB 1783 (Levine) to require “consultants” influencing administrative actions of state agencies to register as lobbyists, was passed by the committee and now moves to the Senate Floor.

California’s landmark Public Records Act reflects the principle that government transparency is essential in a democracy. Yet, there is no minimum retention period for such records that applies to state agencies. As a result, records may be deleted or destroyed before the public or journalists are able to access them.

AB 2370 would have applied to state agencies the same minimum two-year retention period for public records that is already in place for California counties and cities.

Just this year the Department of Insurance adopted a record deletion policy that would have automatically deleted agency email after 180 days unless individual staff manually archived each email.

The email deletion policy, which was pulled back in the wake of media attention, was developed following statewide news coverage of the pay-to-play scandal involving Applied Underwriters and cloaked campaign donations to Insurance Commissioner Lara’s 2022 re-election campaign.

Failure to retain public records is a problem that reaches beyond the Department of Insurance.  For example:

– – As recently reported, the chief administrative officer of a state agency testified that she routinely shredded scoring worksheets that she no longer considered “relevant,” even though they were central to a contract bidding dispute.
– – CalPERS began automatically deleting email older that 60 days in 2011 after a different government scandal.
– – In 2016, CalTRANS’s 120-day auto delete email policy was determined to constitute spoilation of evidence.
– – The California Environmental Protection Agency currently considers emails transmitting “informal information” to be “transitory,” and are deleted after 90 days.
– – The Medical Board destroys “physician licensing files . . . . not necessary to establish qualifications for licensure” upon the time the physician’s license is issued.
– – The DMV destroys records regarding a driver’s failure to establish insurance coverage following an accident after just 30 days.
– – The Department of Forestry destroys records regarding hazardous material (Hazmat) property upon expiration of the relevant contract regardless of the time period, and records of fire safety inspections after one year.

It is common in Worker’s Compensation litigation to have orders issued by a WCJ after a request made in writing, or at a conference hearing after an oral request. It is also common that there is nothing officially offered and received into evidence to support such an order. And at times there is little documentation or record of what was said by the parties, since there is no court reporter at conferences. The informality of the administrative system is common place.

However a recent panel decision points out the need for practitioners to carefully insure that there be a stipulation as to the facts in support of any order, or evidence offered and received to support procedural or other orders.

In the case of Bryne Miller v Pelican Bay State Prison – ADJ13793096 (June 2022) a WCAB panel granted a Petition for Removal and Rescinded an Order that changed the venue of the case, and returned the matter to the WCJ to receive evidence to support his Order.

The Panel summarized this information from the WCJs Report and Recommendation on Petition for Removal (p. 2).

– – Applicant sustained an industrial injury while employed at Pelican State Prison in Crescent City, CA; located in Del Norte County. The closest DWC office is Eureka.
– – Applicant, through counsel, Jim Rademacher, caused to be filed an Application for Adjudication of Claim (Application) on October 29, 2020.
– – The application selected SBA (Santa Barbara) as venue based upon the “County of principle place of business of employee’s attorney.”
– – The application reflected applicant’s “street address” to be in Brookings, Oregon.
– – The application lists the employer as Pelican State Prison in Crescent city, CA.
– – Lastly, the application provides applicant counsel’s office is located in Westlake Village, CA.
– – SCIF objected and filed a petition for change of venue. A notice of intent to grant the change of venue was issued. Applicant attorney filed an objection to the notice of intent and a status conference was held by the PWCJ on January 19, 2022.
– – At the conclusion of the hearing and written on the Minutes of Hearing are the words, “Case transferred to Eureka IT IS SO ORDERED” and the signature of Scott J. Seiden.
– – A formal order changing venue to Eureka was issued on February 4, 2022 and served on the parties. Applicant filed a petition for removal from that order.

However, except for the information contained in the WCJs Report and Recommendation on Petition for Removal (p. 2) the panel wrote “A review of the record in EAMS reveals no Minutes of Hearing/Summary of Evidence showing what, if any, evidence was admitted at the January 19, 2022 hearing; what, if any,testimony was presented; or otherwise revealing the reasons or grounds for the Order.”

In discussing this record, the WCAB panel went on to write “We observe that a decision by the WCJ “must be based on admitted evidence in the record” (Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473, 478 (Appeals Board en banc)), and must be supported by substantial evidence. (§§ 5903, 5952, subd. (d);         Lamb v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 274 [39 Cal.Comp.Cases 310]; Garza v. Workmen’s Comp. Appeals Bd. (1970) 3 Cal.3d 312 [35 Cal.Comp.Cases 500]; LeVesque v. Workers’ Comp. Appeals Bd. (1970) 1 Cal.3d 627 [35 Cal.Comp.Cases 16].) As required by section 5313 and explained in Hamilton, “the WCJ is charged with the responsibility of referring to the evidence in the opinion on decision, and of clearly designating the evidence that forms the basis of the decision.” (Hamilton, supra, at p. 475.)”

“Here, the record shows that the WCJ adjudicated the transfer of venue issue at the January 19, 2022 status conference. (Report, p. 2.) In adjudicating the issue without a hearing, however, the WCJ failed to make a record of the evidence presented by the parties, leaving us unable to evaluate the merits of the Petition. Therefore, we will rescind the Order and return the matter to the trial level for development of the record as to the issue of whether venue should be transferred to the Eureka District Office and other related issues, as appropriate.”

This case clearly illustrates the consequences for workers’ compensation litigators who do not meticulously support their case with a record of evidence that is offered, received or rejected and then this process well documented in any record of an order or decision. Any rejection by a WCJ to evidence that is offered should be followed by a detailed oral “offer of proof” to describe the evidence, explain the purpose of introducing the evidence, state the grounds for admissibility, and sufficiently inform an appellant tribunal of the consequences of excluding the evidence.

After an 11 week trial, a federal judge in San Francisco ruled that Walgreens “substantially contributed” to San Francisco’s opioid crisis by ignoring red flags and continuing to fill prescriptions for drugs. U.S. District Judge Charles Breyer wrote in a 112-page August 10 ruling that the “evidence at trial established that from 2006 to 2020, Walgreens pharmacies in San Francisco dispensed hundreds of thousands of red flag opioid prescriptions without performing adequate due diligence,“

This case is part of a nationwide multidistrict litigation stemming from the ongoing opioid epidemic. Cities, counties, and states across the country have filed claims against manufacturers, distributors, and dispensers of prescription opioids. While the facts of each case vary, the claims center on the contention that each defendant has contributed to the opioid epidemic that has engulfed the country.

In this case, the People of the State of California, acting through the San Francisco City Attorney, filed claims against dozens of defendants related to the opioid epidemic in San Francisco. By the time of trial, only four defendants remained.

The Court held a bench trial from April 25, 2022 to June 27, 2022. Closing argument was held from July 12 to July 13, 2022. By the close of trial, Walgreens was the sole remaining defendant. The other three defendants settled their claims. At trial, the issue was a single public nuisance claim against Walgreens.

The evidence showed that San Francisco has been battling an opioid epidemic, defined by high rates of opioid abuse and addiction throughout the city, for over two decades. The number of people in the city abusing opioids has substantially accelerated in recent years. Since 2016, opioid overdoses have been the leading cause of death among the homeless in San Francisco. In 2019, the last year of available data, an estimated 40,958 city residents out of a total population of approximately 865,000 suffered opioid addiction. That same year, approximately 1,939 people in San Francisco overdosed on opioids, an average of 5.3 opioid overdoses per day.

And the evidence showed that prescription opioids have been at the heart of San Francisco’s ongoing opioid epidemic, which has unfolded in three different waves. The first wave started in the late 1990s and early 2000s when opioid manufacturers began to aggressively promote opioids as safe and effective for treating a broad range of medical conditions.

The second wave began in the early 2010s, when medical professionals began to reduce opioid prescribing based on the recognition that opioids are not a safe and effective form of treatment for many medical conditions. In the second wave, many people who were addicted to prescription opioids but no longer readily able to obtain them from doctors shifted to heroin use.

The third wave started around 2015, when inexpensive and highly potent fentanyl became widely available across a city already struggling with opioid addiction.

The opinion noted that “Walgreens is the largest retail pharmacy chain in San Francisco. Between 2006 and 2020, Walgreens distributed and dispensed over one hundred million prescription opioid pills in the city.” The Controlled Substances Act (“CSA”) regulations require distributors to implement and maintain a system for identifying suspicious orders of opioids. Suspicious orders of opioids must be halted and reported to the DEA.

Fulfilling this duty requires Walgreens pharmacies to resolve “red flags” associated with a prescription before dispensing it. Red flags are well-established warning signs that raise questions about the legitimacy of a prescription.

The evidence at trial established that Walgreens violated this regulatory duty for several years. It did not maintain an effective system for identifying suspicious orders. It shipped thousands of suspicious orders to its pharmacies without investigation.

Judge Breyer wrote “Tens of thousands of these prescriptions were written by doctors with suspect prescribing patterns. The evidence showed that Walgreens did not provide its pharmacists with sufficient time, staffing, or resources to perform due diligence on these prescriptions. Pharmacists experienced constant pressure to fill prescriptions as quickly as possible, and a shortage of resources to review them before dispensing.”

In 2012, the DEA shut down one of Walgreens’ three controlled substance distribution centers because the distribution center’s failure to monitor for suspicious opioid orders posed an imminent threat of harm to public health and safety.

The court concluded that “As a result of Walgreens’ fifteen-year failure to perform adequate due diligence, Plaintiff proved that it is more likely than not that Walgreens pharmacies dispensed large volumes of medically illegitimate opioid prescriptions that were diverted for illicit use and that substantially contributed to the opioid epidemic in San Francisco.“

A subsequent trial will determine the extent to which Walgreens must abate the public nuisance that it helped to create.