Category: Daily News

The operators of seven sham Southern California “pop-up” medical clinics were among 12 defendants taken into custody this week on federal drug trafficking charges that allege they diverted at least 2 million prescription pills – including oxycodone and other addictive and dangerous narcotics – to the black market.

Two indictments returned by a federal grand jury alleges that members of the conspiracy profited from illicit prescriptions that were issued without any legitimate medical purpose through a series of clinics that periodically opened and closed in a “nomadic” style.

Those arrested include Minas Matosyan, an Encino man also known as “Maserati Mike,” who is charged with leading the scheme. He owned six of the seven sham clinics, which were, at times, located in the Westlake District, North Hollywood and the city of Orange.

The indictments and search warrants describe how Matosyan would “rent out recruited doctors to sham clinics.” Matosyan allegedly supplied corrupt doctors in exchange for kickbacks derived from proceeds generated when the other sham clinics created fraudulent prescriptions or submitted fraudulent bills to health care programs.

In one example described in the court documents, Matosyan provided a corrupt doctor to a clinic owner in exchange for $120,000. When the clinic failed to pay the money and suggested instead that Matosyan “take back” the corrupt doctor, Matosyan demanded his money and said, “Doctors are like underwear to me. I don’t take back used things.”

The conspirators also allegedly stole the identities of doctors who refused to participate in the scheme. In an intercepted telephone conversation described in court documents, Matosyan offered a doctor a deal to “sit home making $20,000 a month doing nothing.” When the doctor refused the offer, the conspirators nevertheless created prescription pads in the doctor’s name and allegedly began selling fraudulent prescriptions for oxycodone without the doctor’s knowledge or consent.

The indictment also charges Matosyan and others – including Glendale-based criminal defense attorney Fred Minassian – with obstruction of justice for allegedly creating fraudulent medical records in an effort to deter the investigation. After a load of Vicodin was seized from one of the conspiracy’s major customers, Matosyan allegedly oversaw the creation of fake medical paperwork in an effort to make it appear the drugs had been legitimately prescribed. The indictment describes intercepted conversations in which Minassian strategized on how to deceive law enforcement, which included a plan to bribe a doctor to lie to authorities.

The 12 defendants arrested are:

– Minas Matosyan, 36, of Encino, who is accused of leading the scheme by recruiting corrupt doctors, overseeing the theft of other doctors’ identities, and negotiating the sale of fraudulent prescriptions and narcotic pills;
– Armen Simonyan, 52, of Burbank, who allegedly managed the operations at some of the fraudulent clinics;
– Grisha Sayadyan, 66, of Burbank, who allegedly managed the operations at various clinics and sold oxycodone and Vicodin pills directly to black market customers;
– Sabrina Guberman, 45, of Encino, who, while working at the sham clinics, allegedly lied to pharmacies seeking to verify the fraudulent narcotic prescriptions, which included creating and sending fake medical paperwork;
– Frederick Manning Jr., 47, of Santa Ana, allegedly one of the major drug customers of the clinics, who is charged with agreeing to purchase as many as 1,000 pills per week of narcotics from Matosyan;
– Fred Minassian, 50, of Glendale, the criminal defense attorney who allegedly spearheaded the scheme to lie to law enforcement by making it falsely appear that Vicodin seized from Freddie Manning Jr. had been legitimately prescribed by a doctor;
– Ralph Manning, 49, of North Hills (no relation to Frederick Manning Jr.), who is charged with being one of the principal couriers Matosyan used to deliver fraudulent prescriptions and “bulk quantities” of narcotic pills;
– Hayk Matosyan, 30, of Granada Hills, Matosyan’s brother, who allegedly filled fraudulent narcotic prescriptions at pharmacies and sold the resulting narcotics pills to black-market customers.
– Marisa Montenegro, 54, of West Hills, who allegedly filled fraudulent prescriptions;
– Elizabeth Gurumdzhyan, 25, of Hollywood, who allegedly filled fraudulent prescriptions;
– Anait Guyumzhyan, 27, of Hollywood, who allegedly filled prescriptions for oxycodone and returned the drugs to Matosyan-operated clinics in exchange for cash payment; and
– James Wilson, 54, of Venice, who alone is charged in the second indictment with illegally selling oxycodone prescriptions out of a Long Beach clinic that he controlled.

Authorities are continuing to seek two defendants named in the main indictment. Those fugitives are: Gary Henderson, 62, of Lancaster, who allegedly purchased fraudulent oxycodone prescriptions from Matosyan; and an unidentified conspirator known only by the name “Cindy.”

The Centers for Medicare & Medicaid Services (CMS) issued an updated Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide on July 31st. There are several important changes.

This guide was written to help readers understand the process used by the Centers for Medicare & Medicaid Services (CMS) for approving proposed Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) amounts and to serve as a reference for those choosing to submit such amounts to CMS for approval. Submitters may include injured workers themselves, their attorneys, Workers’ Compensation Medicare Set-Aside Arrangement (MSA) agents or consultants, or claimants’ other appointed representatives.

Under the provisions of the new Guide, CMS has expanded the criteria for submission of a WCMSA re-review, which is the closest thing it has to an “appeal” of a prior CMS MSA valuation.

Effective 07/31/2017, submitters can submit a re-review request where CMS has provided an approved amount, but settlement has not occurred and the medical care that supported the approved amount has changed substantially. The clarifications also address situations where certain states rely on Utilization Review processes to justify proposed WCMSA amounts.

Re-review functions as the only “appeal” type process to the amount CMS requires to approve a submitted WCMCA with a settlement.

Previously there were two Re-Review options (1 and 2 noted below). Now, CMS adds a third option referred to as the “Amended Review”.

– Option 1: You believe CMS’ determination contains obvious mistakes
– Option 2: You believe you have additional evidence, not previously considered by CMS, which was available prior to the submission date of the original proposal which warrants a change in the CMS’ determination.
– Amended Review: You believe projected care has changed so much the new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

CMS specifies only one Amended Review is permitted per case and another re-review cannot be requested if a request for an Amended Review is denied. The following criteria have to be met for a case to be eligible for an Amended Review:

– The case must have been originally submitted between one and four years from the current date and cannot have a previous request for an Amended Review
– Must result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount

CMS has also noted as part of the re-review request, you may change from brand-named medications to generic medications and drug types. However, this change cannot be the sole reason for your re-review request. You must include additional changes (such as changes in dosage and/or frequency, additional medications, or medications no longer taken) to qualify for a re-review request.

Carriers and Third Party Administrators now have an opportunity to evaluate open cases to verify if any would fit the criteria for an Amended Review if medical circumstances have changed since CMS submission. The new criteria may provide a chance to settle the case where previously it was not possible.

According to a new California Workers’ Compensation Institute (CWCI) study, more than 30 percent of the prescription drugs currently dispensed to injured workers in California will be classified as “Exempt Drugs” and will no longer require authorization prior to dispensing under conditions outlined in the Workers’ Compensation Prescription Drug Formulary regulations proposed by the state.

The California Division of Workers’ Compensation is putting the final touches on the regulations governing the new formulary mandated by 2015 legislation (AB 1124), which is now scheduled to take effect January 1.

The intent of the formulary is twofold: 1) to improve the quality of care by assuring that the drugs provided to injured workers meet evidence-based medicine standards; and 2) to reduce delays and frictional costs associated with disputes over requests for pharmaceuticals. The regulations proposed by the state and recently modified following public hearings, include a Formulary Drug List based on the American College of Occupational and Environmental Medicine’s (ACOEM) pharmaceutical formulary.

To analyze the impact of the Formulary on current prescribing patterns and the workers’ comp medical dispute resolution process, CWCI researchers modeled 650,000 prescriptions and other proprietary databases against the terms of the proposed regulations and found:

– Nearly 1/3 (31 percent) of the prescription drugs dispensed to California injured workers in 2016 are on the proposed Exempt Drug list and could be dispensed without pre-authorization;
– The Formulary should reduce pharmaceutical disputes and the associated costs and delays as 22.5 percent of the drug requests that now go through utilization review and 21.4 percent of those that go through independent medical review involve drugs that are on the proposed Exempt drug list;
– The Formulary exempts 15 “Special-Fill” drugs (allowing a 4-day supply following an injury if prescribed or dispensed at the first medical visit within 7 days) and 14 “Perioperative” drugs that can be dispensed 4 days prior to surgery and up to 4 days after surgery. Together these drugs account for 2.6 percent of all workers’ compensation prescriptions.

According to the authors, the findings that the proposed Formulary will help assure that drugs provided to injured workers meet evidence-based medicine standards while reducing disputes over prescription drug requests show that the current regulations represent a major step toward achieving the legislative intent of AB 1124.

At the same time, the Formulary opens the door for additional controls that could be used to address the high cost of workers’ compensation pharmaceuticals.

CWCI has issued its analysis in a Spotlight Report, “California’s Workers’ Compensation Formulary Part 2: A Review of the July 2017 Proposed Formulary Drug List of Exempt and Non-Exempt Drugs,” which is available to CWCI members and subscribers in the Research section of the Institute’s website (www.cwci.org). Others may purchase the report from the CWCI Store.

Celgene Corp., a manufacturer of pharmaceuticals, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration The settlement with Celgene Corp. was announced by federal prosecutors in Los Angeles.

Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.

The lawsuit also said the company ran afoul of anti-kickback statutes by coordinating with charities. They claim that the company donated hundreds of millions of dollars to charities like the Patient Access Network (PAN) Foundation and the Chronic Disease Fund (CDF) “as part of a core business scheme to gain billions” from government health programs. The charities assist patients with accessing expensive blood cancer medications like Celgene’s Revlimid by helping them afford their drug co-pays. Companies aren’t supposed to know exactly how their donated money is being spent and are barred from giving money directly to patients covered by Medicare prescription drug plans.

A Celgene spokesperson told Fortune in an emailed statement. “[The government] has issued guidance related to donations by medical innovators to charitable patient assistance programs. Celgene complies with that guidance with respect to its donations to patient assistance programs.” The two charities mentioned in the case are not named as co-defendants.

And Celgene is not the first to be scrutinized over similar practices. Amid a maelstrom of criticism against biopharmaceutical companies for high drug costs and price hikes, major industry players have pointed to patient assistance programs, arguing that people who need the treatments would never have to pay the full list price. Valeant Pharmaceuticals is also being investigated for its drug pricing and patient assistance programs, and biotechs Gilead and Biogen have received similar federal subpoenas regarding patient assistance charities.

Pursuant to the settlement, which was finalized in July, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.

The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The company denied wrongdoing and said it settled to avoid uncertainty, distraction and expensive litigation.

Citing a market capitalization of $67 billion, and stock appreciation of 107%, Celgene was Forbes Magazine’s number 2 ranked drug company of 2013. Based on these numbers one could argue that this settlement is a minor cost of doing business.

In a federal lawsuit initially brought by thirteen plaintiffs in May 2015, lead plaintiff Etopia Evans, widow of the late Minnesota Vikings and Baltimore Ravens player Charles “Chuck” Evans, filed a federal class action against 32 NFL teams. The case was transferred from Maryland to Northern California in March 2016.

The players claimed NFL teams conspired since at least 1964 to have trainers and team doctors dole out unprescribed pills and injections, sometimes mixing them in “dangerous cocktails,” to get players back into games without warning them of the long-term side effects.

U.S. District Judge William Alsup previously dismissed most claims, including conspiracy claims, against all 32 NFL teams, leaving only claims of intentional misconduct against the Green Bay Packers, Denver Broncos and Los Angeles Chargers, three of the original 32 teams named in the case.

The two remaining of the thirteen original plaintiffs, Alphonso Carreker and Reggie Walker, argued their claims fell within a narrow “intentional harm” exception to workers compensation exclusivity laws in California, Colorado and Wisconsin.

In a final blow to the case, the federal judge in the Northern District of California rejected their arguments and struck down what remained of the case.

In a summary judgment ruling Judge Alsup found retired football players could only seek relief through workers’ compensation, because their claims against three NFL teams did not fall within narrow exceptions to the well recognized exclusive remedy limits to employer civil liability and that the plaintiffs failed to present facts showing the NFL teams intended to harm players in an egregious manner.

With respect to the California team, the court found that the “fraudulent-concealment exception is an extremely limited one. E.g., Jensen v. Amgen, Inc., 105 Cal. App. 4th 1322, 1326-27 (2003). To recover under the exception, Walker must prove that (1) the Chargers knew of his work-related injury, (2) the Chargers concealed that knowledge from him, and (3) the injury was aggravated as a result of such concealment. The exception does not apply if Walker was aware of the injury at all times.”

“In short, it is not enough, as plaintiffs suggest, to insist that the Chargers engaged in some type of fraudulent concealment. Counsel’s muddling of plaintiffs’ own theories concerning the specific alleged misconduct at issue does not substitute for actually satisfying each and every element of the fraudulent-concealment exception to exclusivity. To lose the protection of workers’ compensation exclusivity, the Chargers must have concealed knowledge of Walker’s underlying work-related injury from him and aggravated said injury as a result. On this point, plaintiffs have not shown any genuine dispute of material fact in their favor.”

“This order recognizes, as have California courts, that workers’ compensation exclusivity may bar claims that reveal egregious employer misconduct,” Alsup wrote. “But the mere culpability of such misconduct, without more, is not a basis for keeping in court a claim properly subject to the exclusive remedy provisions of workers’ compensation laws.”

Similar findings were made with respect to the Colorado and Wisconsin exclusive remedy law that governs the Denver Broncos and Green Bay Packers.