Category: Daily News

A former doctor and his company were found guilty by a federal jury of scheming to defraud private insurance companies and the Tricare health care program for military service members by fraudulently submitting an estimated $355 million in claims related to the 1-800-GET-THIN Lap-Band surgery business.

Julian Omidi, 53, of West Hollywood, and an Omidi-controlled Beverly Hills-based company, Surgery Center Management LLC (SCM), were found guilty of 28 counts of wire fraud and three counts of mail fraud. Omidi also was found guilty of two counts of making false statements relating to health care matters, one count of aggravated identity theft and two counts of money laundering. Omidi and SCM were found guilty of one count of conspiracy to commit money laundering.

According to evidence presented at his three-month trial, Omidi, a physician whose license was revoked in 2009, controlled, in part, the GET THIN network of entities, including SCM, that focused on the promotion and performance of Lap-Band weight-loss surgeries. Omidi established procedures requiring prospective Lap-Band patients – even those with insurance plans he knew would never cover Lap-Band surgery – to have at least one sleep study, and employees were incentivized with commissions to make sure the studies occurred.

Omidi used the sleep studies to find a reason – the “co-morbidity” of obstructive sleep apnea – that GET THIN would use to convince the patient’s insurance company to pre-approve the Lap-Band procedure.

After patients underwent sleep studies – irrespective of whether any doctor had ever determined the study was medically necessary – GET THIN employees, acting at Omidi’s direction, often falsified the results. Omidi then used the falsified sleep study results in support of GET THIN’s pre-authorization requests for Lap-Band surgery.

Relying on the false sleep studies – as well as other false information, including patients’ weights – insurance companies authorized payment for some of the proposed Lap-Band surgeries. GET THIN received an estimated $41 million for the Lap-Band procedures.

Even if the insurance company did not authorize the surgery, GET THIN still was able to submit bills for approximately $15,000 for each sleep study, receiving an estimated $27 million in payments for these claims. The insurance payments were deposited into bank accounts associated with the GET THIN entities.

The victim health care benefit programs include Tricare, Anthem Blue Cross, UnitedHealthcare, Aetna, Health Net, Operating Engineers Health and Welfare Trust Fund, and others.

Prosecutors estimate Omidi’s total fraudulent billings at approximately $355 million.

United States District Judge Dolly M. Gee has scheduled an April 6, 2022 sentencing hearing, at which time Omidi will face a statutory maximum sentence of 20 years in federal prison for each of the mail fraud, wire fraud, and money laundering counts, as well as a mandatory consecutive two-year sentence for aggravated identity theft.

In 2014, the government seized more than $110 million in funds and securities from accounts held by individuals and entities involved in the criminal scheme, including Omidi. The government is seeking forfeiture of some or all those funds in the criminal case, and intends to pursue civil forfeiture of some or all of the assets.

The criminal case against corporate defendant Independent Medical Services Inc., another company controlled in part by Omidi, has been severed from this litigation and stayed. Co-defendant Dr. Mirali Zarrabi, 59, of Beverly Hills, was acquitted of all charges.

The U.S. Food and Drug Administration, Office of Criminal Investigations; the FBI; the Defense Criminal Investigative Service; IRS Criminal Investigation; and the California Department of Insurance investigated this matter.

Assistant United States Attorneys Kristen A. Williams, Ali Moghaddas, David H. Chao of the Major Frauds Section, David C. Lachman of the General Crimes Section, and James E. Dochterman of the Asset Forfeiture Section are prosecuting this case.

The U.S. Supreme Court will hear a case involving a San Fernando Valley business that could impact the Private Attorney General Act, a law that went into effect in 2004 and which allows employees of a business to sue over labor law violations even if they were not impacted by the violations. At issue in the case is the validity in California of employer-employee arbitration agreements.

In the underlying case of Moriana v Viking River Cruises Inc. a company in Woodland Hills, Angie Moriana sued her former employer Viking River Cruises, Inc. seeking recovery of civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).

Viking moved to compel Moriana’s claims into arbitration. The trial court denied Viking’s motion and the 2nd district Court of Appeal affirmed in the unpublished opinion which will now be reviewed by the U.S. Supreme Court.

Viking argued that the United States Supreme Court’s decision in Epic Systems Corp. v. Lewis (2018) overruled the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, in which the California Supreme Court held “that an employee’s right to bring a PAGA action is unwaivable,” and that “where . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”

Epic Systems Corp. v. Lewis was one of three cases consolidated by the United States Supreme Court in 2017 that raised the issue of the Federal Arbitration Act’s preemptive effect over private employment arbitration agreements prohibiting class and collective actions.

Numerous California Courts of Appeal have rejected the contention that Iskanian is no longer good law in the wake of Epic. On federal questions, intermediate appellate courts in California must follow the decisions of the California Supreme Court, unless the United States Supreme Court has decided the same question differently. Thus the 2nd District Court of Appeal rejected Viking’s arguments on forcing the case to arbitration, and followed Iskanian instead of Epic Systems.

The cruise line argued in its petition to the U.S. Supreme Court “whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.” And that the California Supreme Court was wrong in the 2014 Iskanian case.

In an email to the members of the California Business and Industrial Alliance, the group’s founder and president, Tom Manzo, said that the implications of a Supreme Court decision in Viking’s favor cannot be understated.

“If PAGA cases are subject to arbitration, it offers a clear pathway for employers to obtain relief from frivolous PAGA lawsuits,” wrote Manzo, who started the group, based in Sunland, in 2017 to specifically oppose the state law.

“In advance of the Supreme Court’s oral arguments next spring, we plan to submit a comprehensive amicus brief marshaling all of the data, stories and arguments that you – our members – have helped support these past few years,” Manzo wrote in the email.

According to its website “The California Business and Industrial Alliance (CABIA) is the only trade group exclusively focused on fixing the Private Attorneys General Act (PAGA).” Now that the U.S. Supreme Court has agreed to resolve the dispute between state and federal law, it is likely that CIABA will indeed achieve its mission.

The California Department of Industrial Relations maintains an online database on PAGA notices filed.

Voice of OC is a 501(c)(3) nonprofit news source that has a focus on life in Orange County. One of its current projects is requesting information from the county regarding the worker’s compensation claim costs for COVID claims filed by county employees. They just published an update summarizing current workers’ compensation COVID claims frequency and costs.

Orange County sheriff staff are getting hit with COVID-19 illnesses at a much higher rate than other large county departments, and are by far the largest share of pandemic-related worker’s compensation costs the county has paid so far, according to county data obtained through a records request by Voice of OC.

Sheriff staff, who had the lowest self-reported vaccination rate – at 16% – among county employees as of the latest available data from August, are around 20% of the county government workforce. Yet they account for nearly half of the county worker’s compensation claims for COVID illnesses – $1.4 million of the $3 million total, and about 950 of the roughly 2,000 claims so far – according to county data provided this week.

Voice of OC followed up two weeks ago to request updated vaccination rate data, but the county has not provided it yet.

The next biggest department for COVID worker’s comp costs is the Social Services Agency, which has more employees than the Sheriff’s Department, but half as many Covid-related claims and costs. Many Social Services Agency employees work directly with the public and some visit houses to conduct wellness checks on children and seniors.

The high sheriff’s figures, which have privately drawn concern from county leaders, have prompted questions about what’s driving the department’s higher COVID rates and what can be done to better protect workers.

Sheriff officials didn’t have answers to questions Wednesday about whether it’s related to lower vaccination rates, the indoor work environment at jails – or both – and whether managers have analyzed the data to better protect workers’ health. Department spokeswoman Carrie Braun said she’d have a response after getting further clarification from county officials about the worker’s compensation data.

In a statement, she noted that both sworn and non-sworn sheriff staff have been serving in-person throughout the COVID-19 pandemic. “They have worked tirelessly to provide for the safety of Orange County residents both in the jail and on the streets. Unlike other types of jobs, law enforcement is not a public service that can be provided remotely,” Braun wrote.

“The Department has implemented COVID-19 safety measures consistent with guidelines provided by public health officials for the health and safety of our 3,800 employees.”

The sheriff’s deputies’ union’s president didn’t respond to a phone message for comment. The union previously pushed back against a state mandate requiring jailhouse deputies to be vaccinated.

No OC sheriff staff are reported to have died from COVID-19, though law enforcement officers in neighboring counties have died from the virus.

Among the County of Orange workplaces with active COVID outbreaks this summer were the Sheriff’s Department central jail and headquarters complex in Santa Ana, according to county data.

The latest-available vaccination data showed the Sheriff’s Department had the lowest self-reported vaccination rate among county departments, as outbreaks continued hitting county workplaces in August. At the time, just 16% of sheriff staff self-attested to being vaccinated, compared with 75% of Board of Supervisors staff and about 68% percent of the general population who were eligible for shots at the time, according to county data.

Since June, county data shows sheriff staff have filed an additional 264 Covid-related worker’s comp claims, totaling $367,000. In contrast, staff at the county Health Care Agency – which has about 80% as many employees as the Sheriff’s Department – filed just 15 new claims during the same period, totaling about $500 altogether, according to the county data.

Gilead Sciences, Bristol-Myers Squibb, Janssen Pharmaceuticals and a group of consumers who accused the companies of conspiring to keep certain HIV therapy drugs off the market and at high prices have reached a $10 million class action settlement.

Lead plaintiff Peter Staley filed the class action lawsuit against Gilead in August 2019. He claimed the company’s inflated drug costs priced more than 400,000 people in the US out of their necessary HIV medications.

Gilead allegedly held a monopoly on HIV drug patents, the company has been able to charge high premiums for these medications. The class action also claimed that Gilead has violated state and federal laws by allegedly scheming with other drug manufacturers to prevent them from creating generic versions of these drugs, even after the patents on them expired.

And the federal court approved the $10 million settlement between the companies and end-payor plaintiffs, which claimed the pharmaceutical companies engaged in anti-competitive practices that kept less expensive generic HIV drugs from being available to the class members.

The Gilead HIV Drug Class Action Settlement is Staley, et al. v. Gilead Sciences Inc., et al., Case No. 3:19-cv-02573-EMC, in the US District Court for the Northern District of California.

Of that $10 million, $1.25 million will go to consumer members of the proposed Class of Evotaz purchasers. Plaintiffs will also receive up to $200,000 for providing notice to potential other class members, a sum of which Bristol-Myers has agreed to pay half.

The deal also includes “significant injunctive relief” which will prevent Bristol-Myers from continuing its alleged practice, along with Gilead Sciences, of withholding the generic product Evotaz from the market. Without this injunction, Bristol-Meyers’ agreement with Gilead Sciences would have kept the drug inaccessible until ​​at least September 2029.

The settlement was negotiated in “good faith” and at “arm’s length,” as is required, and “secures an excellent result for the Class.” However, the document maintains Bristol-Myers’ displeasure with the complaints’ characterizations of Bristol-Myers’ conduct and its collaboration with Gilead Sciences.

One of the Capitol’s most enduring conflicts pits personal injury attorneys and their allies in consumer advocacy groups against corporate interests and their insurers. The two factions clash incessantly over what events are deemed wrongful acts (torts), who can sue over those acts and what monetary damages can be awarded.

Dubbed “tort wars,” the conflict has raged for decades in the Legislature, in the courts and occasionally via ballot measures, each side depicting itself as the good guys and the other as rapaciously evil. Millions of dollars are spent each year on lobbyists, media strategists, political campaign advisors and other tools of the political trade.

CalMatters Reports that the intensity of the war varies from year to year, and 2022 is shaping up as one its hotter periods as the factions propose dueling ballot measures. One would effectively undo a 1975 law that limits damages for “pain and suffering” in medical malpractice cases, while another would place a new limit on the fees that personal injury attorneys can claim.

The controversial 1975 law, entitled the Medical Injury Compensation Reform Act (MICRA) and signed by Jerry Brown during his first year as governor, limits non-economic damages for medical malpractice to $250,000. Its passage was not only a big win for medical providers and their insurers but the opening salvo of the war.

MIRCA also ended workers’ compensation subrogation recoveries in California medical malpractice cases.

The attorneys not only have tried – very unsuccessfully so far – to repeal or modify MICRA while business groups and insurers have not only attempted to blunt the attorneys’ expansive ambition but to carry the MICRA model of damage limits into other potential injury cases.

According to the CalMatters article, in 1987, 12 years after MICRA was enacted, the speaker of the state Assembly, Willie Brown, mediated extensive negotiations between the warring factions on a truce, culminating in the infamous “napkin deal” worked out in Frank Fat’s restaurant near the Capitol with Brown hopping from table to table.

Quickly ratified by the Legislature, it gave lobbyists for every interest involved something to take back to their clients, including a slight modification of MICRA and new protections for the tobacco industry from lawsuits by smokers for cancer and other illnesses.

The napkin deal truce lasted for a few years, but tort wars resumed in the 1990s and have been waged ever since on specific issues, including several unsuccessful efforts to change MICRA. One subset of the conflict, involving roughly the same interests, has been perennial jousting over workers’ compensation, the employer-financed, multi-billion-dollar system that covers job-related injuries and illnesses.

A ballot measure that would indirectly but effectively repeal MICRA is already qualified for the 2022 ballot even though the anti-MICRA coalition has failed repeatedly in the past to undo what the Legislature and Jerry Brown wrought 46 years ago.

Meanwhile, the Civil Justice Association of California, an umbrella organization of business and insurance interests, has unveiled its own initiative measure that would limit lawyers’ contingency fees in personal injury cases to 20% of monetary judgments, sharply lower than the traditional one-third or more. The goal, obviously, is to make attorneys less willing to take on cases.