Category: Daily News

Operation Backlash, has been an extensive FBI-led undercover investigation that revealed a widespread workers’ compensation kickback scheme, including attorneys, doctors and medical providers who referred patients for health services in exchange for money.

Operation Backlash was first announced in November 2015 when the initial round of federal indictments was handed down. San Diego chiropractor Steven J. Rigler and San Diego workers’ compensation attorney Sean O’Keefe previously pleaded guilty to federal charges.

“When law enforcement became aware of the scam, we began following the trail of dirty money and it took us in many different directions,” San Diego District Attorney Bonnie Dumanis said. “The circle of criminal conduct continues to widen with today’s charges, and we expect additional indictments and arrests in the future.”

As alleged in one of the indictments, Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was allegedly a sham.

Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.

Trial in the case pending against Grusd was set for June 6, 2017. On March 31, 2017, Defendants Grusd, California Imaging Network Medical Group, and Willows Consulting Company rejected a plea offer in this case.

On April 7, his attorneys moved for a continuance, claiming that they did not have sufficient time to prepare his defense. Last December they say they were provided with digital discovery documents by the prosecutors which were placed on a 2 terabyte drive that can hold millions of documents and recordings. Prosecutors responded objecting to a trial continuance beyond August. No ruling has been made, thus the Grusd case remains in process with an unknown trial date.

The U.S. Attorney’s Office also announced federal indictments against additional defendants. They include patient recruiters, Fermin Iglesias, Carlos Arguello, Miguel Morales and four corporations. The corporations are Providence Scheduling, Inc., Medex Solutions, Inc., Prime Holdings International, Inc. and Meridian Medical Resources, Inc., doing business as Meridian Rehab Care.

The three federal defendants are accused of recruiting individuals to file workers’ compensation claims resulting from an on-the-job injury. The defendants then directed these patients to specific chiropractors who, in exchange for dozens of new workers’ compensation patients each month, agreed to meet a quota set by the defendants for referrals of the new patients for ancillary goods and services such as MRIs and durable medical equipment from specific providers.

According to the indictment, Providence Scheduling oversaw the scheduling of applicants recruited by defendant Arguello and others, and their assignment to a primary treating physician, which included chiropractors. Defendants Iglesias and Arguello decided which physicians were eligible to receive applicants from defendant Providence Scheduling.

Prosecutors claim the purpose of the conspiracy was to fraudulently obtain money from insurers by submitting claims for ancillary procedures and DME that were secured through a pattern of bribes and kickbacks in the form of an illegal cross-referral scheme in exchange for the referral of patients to particular providers of ancillary procedures.

Near the end of March, 2017, Providence Scheduling entered into a Plea Agreement to plead guilty. The Agreement has been filed with the federal court, but remains sealed until processed through a Magistrate Judge review and then to final disposition by the federal judge in charge of the case.

A medical doctor who fled the United States nearly 15 years ago and faked his own death to avoid prosecution in a healthcare fraud case was sentenced to 29 months in federal prison for fleeing justice.

Tigran Svadjian, 58, a naturalized U.S. citizen originally from Armenia who was residing in Newport Beach prior to fleeing the country in September 2002, was sentenced late this afternoon by United States District Judge Michael W. Fitzgerald.

Svadjian pleaded guilty in November to one count of unlawful flight to avoid prosecution.

In a case filed in 2002 in United States District Court in Sacramento, Svadjian, who operated medical clinics in Los Angeles and Fresno, had agreed to plead guilty in a $2.4 million scheme to defraud Medi-Cal by submitting bills for tests that had not been performed, in many cases because the “patients” were dead. After being ordered to appear in federal court in the Eastern District of California for an arraignment in that case, he fled to Russia, leaving behind his wife and son.

On October 24, 2002, the United States Embassy in Moscow received notification that Svadjian had died of pneumonia and that his body had been cremated. Relying on this false information, the Embassy then issued a report documenting the death, and Svadjian’s defense counsel submitted that report to federal prosecutors.

When he pleaded guilty, Svadjian admitted that he paid a Russian police officer in 2002 to submit an official report about his death to the United States Embassy. Soon after, Svadjian obtained a fraudulent Russian passport in a different name and relocated to Hurghada, Egypt, where he occasionally worked as a scuba instructor.

In January 2013, after lengthy and unsuccessful attempts to locate Svadjian or to obtain further confirmation of his death, prosecutors in the Eastern District of California dismissed the healthcare fraud case.

Svadjian was taken into custody by Egyptian authorities on August 1 – nearly 14 years after he fled the United States. Svadjian had been deported to Egypt by Ukrainian authorities after they determined he was travelling on a fraudulent Lithuanian passport. Egyptian authorities discovered in his residence an old United States passport with his true name.

Svadjian “did not simply flee from prosecution,” prosecutors wrote in a sentencing memorandum filed with the court. “Instead, defendant planned and implemented a sophisticated, fraudulent scheme that involved bribing foreign officials, using false statements to mislead U.S. State Department officials into creating a false death certificate, and submitting that false certificate to federal prosecutors. Defendant then hid from U.S. authorities through the use of false identities for approximately 15 years. He abandoned his wife, son, and parents, and started a whole new life without them because he did not want to spend time in prison.”

The Justice Department has joined a California whistleblower’s lawsuit that accuses insurance giant UnitedHealth Group of fraud in its popular Medicare Advantage health plans.

Justice officials filed legal papers to intervene in the suit, first brought by whistleblower James Swoben in 2009, on Friday in federal court in Los Angeles. On Monday, they sought a court order to combine Swoben’s case with that of another whistleblower.

According to the report by Salon.com, Swoben has accused the insurer of “gaming” the Medicare Advantage payment system by “making patients look sicker than they are,” said his attorney, William K. Hanagami. Hanagami said the combined cases could prove to be among the “larger frauds” ever against Medicare, with damages that he speculates could top $1 billion.

UnitedHealth spokesman Matt Burns denied any wrongdoing by the company. “We are honored to serve millions of seniors through Medicare Advantage, proud of the access to quality health care we provided, and confident we complied with program rules,” he wrote in an email.

Medicare Advantage is a popular alternative to traditional Medicare. The privately run health plans have enrolled more than 18 million elderly and people with disabilities – about a third of those eligible for Medicare – at a cost to taxpayers of more than $150 billion a year.

Although the plans generally enjoy strong support in Congress, they have been the target of at least a half-dozen whistleblower lawsuits alleging patterns of overbilling and fraud. In most of the prior cases, Justice Department officials have decided not to intervene, which often limits the financial recovery by the government and also by whistleblowers, who can be awarded a portion of recovered funds. A decision to intervene means that the Justice Department is taking over investigating the case, greatly raising the stakes.

“This is a very big development and sends a strong signal that the Trump administration is very serious when it comes to fighting fraud in the health care arena,” said Patrick Burns, associate director of Taxpayers Against Fraud in Washington, a nonprofit supported by whistleblowers and their lawyers. Burns said the “winners here are going to be American taxpayers.”

“This is not one company engaged in episodic bad behavior, but a lucrative business plan that appears to be national in scope,” Burns said.

On Monday, the government said it wants to consolidate the Swoben case with another whistleblower action filed in 2011 by former UnitedHealth executive Benjamin Poehling and unsealed in March by a federal judge. Poehling also has alleged that the insurer generated hundreds of millions of dollars or more in overpayments.

When Congress created the current Medicare Advantage program in 2003, it expected to pay higher rates for sicker patients than for people in good health using a formula called a risk score.

But overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity found that these improper payments have cost taxpayers tens of billions of dollars.

“If the goal of fraud is to artificially increase risk scores and you do that wholesale, that results in some rather significant dollars,” Hanagami said.

David Lipschutz, senior policy attorney for the Center for Medicare Advocacy, a nonprofit offering legal assistance and other resources for those eligible for Medicare, said his group is “deeply concerned by ongoing improper payments” to Medicare Advantage health plans.

The two whistleblower complaints allege that UnitedHealth has had a practice of asking the government to reimburse it for underpayments, but did not report claims for which it had received too much money, despite knowing some these claims had inflated risk scores.

The Justice Department has said it also is investigating risk-score payments to other Medicare Advantage insurers, but has not said whether it plans to take action against any of them.

Mallinckrodt Pharmaceuticals, based in Staines-upon-Thames, England, with its U.S. headquarters in St. Louis, Missouri, produces specialty pharmaceutical products, including generic drugs and imaging agents. Key generic specialty products include Hydrocodone API and tablets and Oxycodone API and tablets

As of 1988, Mallinckrodt was the only company in the US that is allowed to receive cocaine, which it has used to make cocaine hydrochloride, a prescription drug used in hospitals as a local anesthetic by eye and ear, nose and throat doctors.

To combat an escalating opioid epidemic, the Drug Enforcement Administration trained its sights in 2011 on Mallinckrodt Pharmaceuticals. It was the first time the DEA had targeted a manufacturer of opioids for alleged violations of laws designed to prevent diversion of legal narcotics to the black market. And it would become the largest prescription-drug case the agency has pursued.

Ultimately, the DEA and federal prosecutors would contend that the company ignored its responsibility to report suspicious orders as 500 million of its pills ended up in Florida between 2008 and 2012 – 66 percent of all oxycodone sold in the state. Government investigators alleged in internal documents that the company’s lack of due diligence could have resulted in nearly 44,000 federal violations and exposed it to $2.3 billion in fines, according to confidential government records and emails obtained by The Washington Post.

But six years later, after four investigations that spanned five states, the Washington Post reports that the government has taken no legal action against Mallinckrodt. Instead, the company has reached a tentative settlement with federal prosecutors, according to sources familiar with the discussions. Under the proposal, which remains confidential, Mallinckrodt would agree to pay a $35 million fine and admit no wrongdoing.

“Mallinckrodt’s response was that ­‘everyone knew what was going on in Florida but they had no duty to report it,” according to an internal summary of the case prepared by federal prosecutors and obtained by The Post.

The case shows how difficult it is for the government to hold a drug manufacturer responsible for the damage done by its product. DEA investigators appalled by rising overdose deaths said they worked for years to build the biggest case of their careers only to watch it falter on uncertain legal territory and in the face of stiff resistance from the company.

The drug company said that the agreement in principle is subject to additional review and approval by the U.S. Justice Department and U.S. Drug Enforcement Administration and will not have a material effect on Mallinckrodt’s financial condition. In a statement, a Mallinckrodt spokesman said the company has worked hard to fight drug diversion.

The U.S. attorney’s office in Detroit, which is handling the case, issued a statement. “Our office works diligently to use all the legal tools available to us to hold corporations responsible for their actions,” acting U.S. attorney Daniel Lemisch said. “This is particularly true in a highly regulated industry such as the manufacture of opioids. As this case is still in settlement negotiations, we cannot comment on the specifics of the matter.”

According to a 2016 Workers’ Compensation Benchmarking Study survey, national claims leaders rank psychosocial issues as the number one barrier to successful claim outcomes.

A new white paper shows how claims advocacy principles at The Hartford, CNA, Nationwide, and Albertsons Companies are taming the effects of psychosocial issues and coaching injured workers to recovery and claim resolution. In order to understand these findings, it is important to take a brief look at what “psychosocial” is and, perhaps more importantly, what it is not.

The Hartford’s medical director, Dr. Marcos Iglesias, says that the “psych” part does not mean psychiatric issues, such as schizophrenia, personality disorders, or major depressive disorders. Instead, he points out, “we are talking about behavioral issues, the way we think, feel, and act.  An example is fear of physical movement as it may worsen one’s impairment or cause pain, or fear of judgment by coworkers.”

The Hartford’s text mining has found the presence of “fear” in claim notes was more predictive of poor outcomes than a lumbar fusion surgery. Similar findings were recently cited by both Lockton and the Workers’ Compensation Research Institute (WCRI) which independently report that workers who express fear are at greater risk of poor outcomes.

There is no shortage of studies demonstrating the dramatic impact of psychosocial roadblocks and just how hard they are to manage. Lockton’s study directly links worker fears with high litigation rates. Another from the Journal of Occupational and Environmental Medicine found that injured workers with emotional distress, such as pain catastrophizing and activity avoidance, were seven times less likely than those in the low-risk group to return to work within three months.

Other conditions, behaviors, and predicaments include obesity, hard feelings about coworkers, troubled home life, the lack of temporary modified work assignments, limited English proficiency, and – most commonly noted – poor coping skills. Additionally, being out of work can lead to problems such as increased smoking, alcohol abuse, illicit drug use, and risky sexual behavior. Suicide rates have been observed to increase by a factor of six.

The national medical director for Albertson Companies uses a modified Linton tool for screening injured workers for psychosocial comorbidities. Approximately nine percent of screened workers receive specialist intervention, which is usually performed by a network of psychologists who provide health coaching consistent with cognitive behavioral therapy principles. This intervention method is short in duration and focuses on active problem-solving with the patient.

Albertson’s medical director cautions that, with the long-tail nature of workers’ compensation claims, it will take three or four years before the strategy’s impact can be effectively measured in claim outcomes, but she is optimistic. Her tentative estimate is duration of disability and medical spending will decline by 20 percent.

When peeling back the psychosocial onion, one can see how adversarial, compliance, and task-driven claim styles are 1) ill-suited for addressing fears, beliefs, perceptions, and poor coping skills and 2) less likely to effectively address these roadblocks due to the disruption they pose to workflows and task timelines.

This short report – “How to Overcome Psychosocial Roadblocks: Claims Advocacy’s Biggest Opportunity” – examines key best practices, skill sets, and training approaches organizations are using to screen for, intervene in, and effectively address psychosocial factors. Rooted in advocacy, these strategies treat the injured worker as a whole person to proactively resolve non-medical barriers to timely recovery.