Category: Daily News

Three men were convicted last Friday in Orange County Superior Court of defrauding over $70 million from workers’ compensation insurance companies in an overbilling scheme.

Jeffrey Edward Campau, 42, and Landen Alan Mirallegro, 41, both from Yorba Linda were convicted of 24 counts of Medical insurance fraud, 24 counts of manufacturing documents in support of a fraudulent claim, 7 counts of referral of clients for compensation.Abraham Khorshad, 65, of Beverly Hills was convicted of 3 counts of medical insurance fraud. All three are subject to sentencing enhancements for aggravated white collar crime over $500,000.

In 2005, Campau, Mirallegro, and Khorshad formed a durable medical equipment (DME) company named Aspen Medical Resources, LLC (Aspen) and National Marketing LLC dba National DME (National).

Between 2005 and 2013, the defendants rented out a DME machine similar in function to an ice pack or heating pad, which provided both hot and cold modalities to alleviate inflammation and/or pain for patients.

The three defendants fraudulently overbilled insurance carriers for this DME by renting out of one machine as two separate hot and cold machines, which were valued at less than $500, for as much as $15,500 to $18,000 per patient.

Campau, Mirallegro, and Khorshad, through their companies Aspen and National, submitted $70 million dollars worth of claims for these hot/cold units to the State Compensation Insurance Fund, Liberty Mutual, AIG (Chartis), Zenith Insurance, Birkshire Hathaway Homestead Companies, County of Orange, County of San Bernardino, County of Riverside, American Claims Management, First Comp Insurance, CNA Insurance, Comp West Insurance, Employers Insurance, Farmers Insurance, State Farm Insurance, Fireman’s Fund, Tristar (City of Los Angeles), Gallagher Basset, Republic Indemnity, Sentry, and Travelers Insurance. They were paid in excess of $10 million dollars for these claims.

If a claim was not paid, the defendants filed a lien at the Workers’ Compensation Appeals Board and aggressively collecting on these fraudulent claims.

The defendants were informed by various workers’ compensation insurance carriers that Aspen was billing for the units incorrectly, but continued to bill the same way and aggressively defended their fraudulent claims, making it more cost-effective for the insurance carriers to pay the fraudulent claims than fight them.

Insurance companies contacted OCDA and the California Department of Insurance, who jointly investigated this case. OCDA seized all assets of the companies, which are now under receivership.

For all remaining victims, charged and uncharged, the defendants also voluntarily agreed to relinquish their ownership interest and agreed to dismiss all remaining liens, valued at $139,752,925.77,for named and unnamed victims, at the Workers’ Compensation Appeals Board for the following entities: Aspen Medical Resources, National Marketing dba National DME, Elite Diagnostic and Regional Imaging Center. They were ordered not collect on or sell to third parties all healthcare claims submitted to workers’ compensation carriers, charged or uncharged, for the above-mentioned entities, the value of which collectively exceeded $47 million dollars.

Senior Deputy District Attorney Shaddi Kamiabipour of the Insurance Fraud Unit prosecuted this case.

A Pleasanton man has been charged with insurance fraud in connection with a medical clinic he allegedly owned illegally, San Mateo County prosecutors said Tuesday. Matthew Skinner, 47, is accused of owning Pacific Occupational Health Clinic at 3 S. Linden Ave. in South San Francisco, which is now closed.

Prosecutors said he was not allowed to own the clinic because he is not a doctor and doctors are required to own at least 51 percent of a medical practice. Prosecutors said the law exists so laypersons are not supervising
and influencing the care of doctors.

“Mr. Skinner asserts his innocence to the charges and looks forward to answering the allegations in court,” Skinner’s attorney Ted Cassman said. “He took great pride in the excellent service that his clinics provided over the years, and he was always committed to patients’ health.”

Skinner allegedly holds no medical license and his mother Paula Skinner allegedly holds only a physical therapist’s license. People who have a medical license considered lower than a doctor’s can own only up to 49 percent of a medical practice, according to prosecutors.

Pacific Occupational Health Clinic, which handled worker’s compensation claims, allegedly illegally employed doctors, prosecutors said. Also, Skinner allegedly took X-rays of patients occasionally, which he was not licensed to do, and allegedly gave instructions to doctors to maximize profits, prosecutors said.

Five insurance companies were alleged victims in the scheme. Those companies were billed a total of $15,226,487.55 between 2010 and 2016 and Pacific Occupational Health Clinic received $4,555,567.28 from the companies. Skinner had been in jail on nearly $12 million bail, but on Monday his bail was reduced to $3 million. He is scheduled to be back in court on Wednesday when he is expected to enter a plea.

In the case of the California Workers’ Compensation Interpreters Association et al. v. Workers’ Compensation Appeals Board of the State of California the petition for writ of mandate was denied yesterday by the Court of Appeal. The case was filed pursuant to California Labor Code § 5955 challenging the declaration under penalty of perjury provisions of SB1160, part of the new lien law.

Section 8 of SB 1160 amended Labor Code 4903.05 to require all medical treatment and med-legal lien claimants to file a mandated lien declaration under penalty of perjury that the claimant satisfies at least one of seven new lien claimant requirements. The lawsuit challenged the seventh which required that the lien claimant: “G) Is a certified interpreter rendering services during a medical-legal examination, a copy service providing medical-legal services, or has an expense allowed as a lien under rules adopted by the administrative director. “

The Interpreters argue that they do not “neatly” fit into any of the seven categories, and that section (G), the only one that mentions interpreters, is limited to interpretations during medical-legal events, but nothing is said about interpreting during treatment events. This they say will limit “thousands” of lien claimants from collecting liens since they cannot sign the declaration “without the risk of filing a false declaration.”

The Court of Appeal denied the petition in a terse docket entry that essentially concluded the case was premature since it assumed events in the future that had not yet happened at the WCAB.

The denial said: “Assuming that petitioners possess the requisite beneficial interest (Code Civ. Proc., § 1086), they have not demonstrated that the ordinary lien claims process does not provide an adequate remedy at law. (Phelan v. Superior Court (1950) 35 Cal.2d 363, 366 [“it has long been established as a general rule that the writ will not be issued if another such remedy was available to the petitioner. [Citations.] The burden, of course, is on the petitioner to show that he did not have such a remedy.”]; see Longval v. Workers’ Comp. Appeals Bd. (1996) 51 Cal.App.4th 792, 799-802 [considering due process claim on review of decision of Workers’ Compensation Appeals Board].)”

“Moreover, petitioners have not shown they will suffer irreparable harm absent immediate writ review. (Los Angeles Gay & Lesbian Center v. Superior Court (2011) 194 Cal.App.4th 288, 299-300 [“Conditions prerequisite to the issuance of a writ are a showing there is no adequate remedy at law . . . and the petitioner will suffer an irreparable injury if the writ is not granted. [Citation.]”].) Requiring petitioners to present their claims to the agency in the first instance does not constitute irreparable harm. (See Ordway v. Superior Court (1988) 198 Cal.App.3d 98, 101, fn. 1 [“A trial does not generally meet the definition of ‘irreparable injury, ‘ being at most an irreparable inconvenience.”], disapproved on other grounds, Knight v. Jewett (1992) 3 Cal.4th 296, 301-315.) Finally, petitioners have not demonstrated that their facial constitutional challenges to Labor Code section 4903.05, subdivision (c) are ripe for review. (Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 170-174; see Building Industry Assn. of Bay Area v. City of San Ramon (2016) 4 Cal.App.5th 62, 90 [“Because [facial challenges] often rest on speculation, they may lead to interpreting statutes prematurely, on the basis of a barebones record.”].) “

“They have yet to present any specific lien claim to the agency for adjudication, and therefore the possible disposition of such claims is a matter of conjecture. (See PG & E Corp. v. Public Utilities Com. (2004) 118 Cal.App.4th 1174, 1217 [“Because the PUC has yet to apply its interpretation of the first priority condition to a concrete set of facts, the dispute petitioners would like this court to resolve is abstract.”].)”

“Because petitioners’ claims depend, at least in substantial part, on speculative future events, they are not appropriate for immediate judicial resolution. (Pacific Legal Foundation v. California Coastal Com., supra, 33 Cal.3d at p. 173 [agency guidelines might inhibit property owners from planning improvements to their land, but “the hardship inherent in further delay is not imminent or significant enough to compel an immediate resolution of the merits of plaintiffs’ claims”]; Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582-1583 [courts will decline to adjudicate dispute if they are asked to speculate on the resolution of hypothetical situations]; see also Concerned Citizens Coalition of Stockton v. City of Stockton (2005) 128 Cal.App.4th 70, 83 [writ petition ordinarily will not be granted to reach issues the trial court has not yet addressed, since such issues are not ripe for appellate court review].) “

“We therefore decline to exercise our discretion to entertain writ review of petitioners’ challenges. (See Landau v. Superior Court (1998) 81 Cal.App.4th 191, 201 [“an appellate court retains discretion to summarily deny extraordinary writ petitions on grounds related to the apparent merits of the action as well as upon grounds related to the formal or procedural sufficiency of the petition”].) The parties’ requests for judicial notice are denied as moot.”

It remains to be seen if this was their final or the first in a series of efforts to pursue this theory in response to SB 1160.

Policies that limit or regulate interactions between doctors and pharmaceutical company representatives may affect what drugs are prescribed to patients, according to a new study published in the JAMA and reported by Reuters Health.

Drugs promoted by pharmaceutical representatives – known as detailed drugs – lost market share after hospitals enacted such policies, while drugs that weren’t detailed gained market share, researchers found. The study’s lead author said the findings suggest institutions and organizations can play a role in relationships between doctors and the drug industry.

In an issue of JAMA devoted to conflicts of interest, Ian Larkin, of the University of California, Los Angeles Anderson School of Management. and colleagues point out that since the start of the 21st century, industry and academic institutions have adopted policies to regulate doctor interactions with drug representatives.

Research examining the effect of those policies typically looked at only one medical specialty and produced mixed results, they add.

For the new study, the researchers examined several sets of data collected between 2006 and 2012 from academic medical centers in California, Illinois, Massachusetts, Pennsylvania and New York.

Overall, the researchers had data on more than 15 million prescriptions written by 2,126 doctors at 19 medical centers. All of the medical centers had adopted policies that restrict interactions between doctors and drug representatives.

All the drugs had at least 2,000 assigned pharmaceutical company salespeople during the study period. They also had a market share of more than 25 percent, but less than 75 percent. The researchers found 87 of the 262 drugs were detailed during the study period.

Ten to 36 months before the policies were adopted, detailed drugs had a market share of about 19 percent, compared to about a 14 percent market share for non-detailed drugs.

Twelve to 36 months after the policies were implemented the market share of detailed drugs fell by about 2 percentage points while the market share of non-detailed drugs rose about 1 percentage point.

The reduction in market share for detailed drugs from before and after the policies were adopted represents about a 9 percent difference. Six of the eight drug types had significant changes in market share over the study period.

Similarly, nine of the medical centers had significant changes in prescriptions of detailed drugs. Centers that were most likely to see a change were those that regulated gifts to doctors, restricted drug representatives’ access to the facility and enforced the policies.

“Our findings suggest that the organizational level can and does make an important difference,” said Larkin.

In an editorial, Colette DeJong and Dr. Adams Dudley of the University of California, San Francisco Center for Healthcare Value outlined some benefits and risks tied to interactions between doctors and drug representatives.

“Detailing” visits from drug representatives are one way to educate doctors about new drugs and treatments they would need to learn of elsewhere, they write. But, those visits are linked to increased use of brand name and costly drugs even when less expensive generic treatments are available.

“There are feasible alternatives to industry detailing for keeping physicians informed about drugs, but those approaches are largely untested in the United States,” they write. “It has never been more important for physicians to come together to consider these alternatives, generate evidence about their effectiveness, and move the health care system toward solutions that lower costs for patients and minimize (conflicts of interests).”

The million dollar question is whether drug detailing and restrictions on detailing are affecting patient outcomes, Larkin said.”I think it’s a really important question,” he said.

Quest Diagnostics Inc. has agreed to pay $6 million to resolve a lawsuit by the United States alleging that Berkeley HeartLab Inc., of Alameda, California, violated the False Claims Act by paying kickbacks to physicians and patients to induce the use of Berkeley for blood testing services and by charging for medically unnecessary tests. Quest, which is headquartered in Madison, New Jersey, acquired Berkeley in 2011, and ended the conduct that gave rise to the settlement.

Physicians refer their patients to independent laboratories like Berkeley to conduct tests on blood samples. According to the government’s complaint, Berkeley paid kickbacks to referring physicians disguised as “process and handling” fees. The complaint also alleged that Berkeley paid kickbacks to patients by routinely waiving copayments owed by certain patients who were legally required to pay for part of their tests. Allegedly, Berkeley paid the kickbacks to induce both the physicians and patients who received them to choose Berkeley over other laboratories. The government’s complaint further alleged that these illegal practices resulted in medically unnecessary cardiovascular tests being charged to federal healthcare programs.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient. The Anti-Kickback Statute also prohibits routinely waiving patient copayments to ensure that patients are appropriately incentivized to refuse unnecessary tests.

The lawsuit was initially filed by Dr. Michael Mayes under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The act permits the United States to intervene in and take over a whistleblower suit. The United States partially intervened in this and two related actions on March 31, 2015, and is continuing to pursue claims against the remaining defendants: Latonya Mallory, the former CEO of Health Diagnostics Laboratory Inc., and marketing company BlueWave Healthcare Consultants Inc. and its owners, Floyd Calhoun Dent III and Robert Bradford Johnson. Dr. Mayes’ share of the settlement with Quest has not been determined.

On April 9, 2015, the United States announced settlements with two other laboratories – Health Diagnostics Laboratory Inc. of Richmond, Virginia, and Singulex Inc., of Alameda, California – for engaging in conduct similar to that resolved in the settlement with Quest.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices for the District of South Carolina and the District of Columbia, FBI’s Columbia Field Office and the FBI Healthcare Fraud Unit Major Provider Response Team (MPRT), HHS-OIG, the U.S. Office of Personnel Management’s Office of Inspector General, and the Department of Defense’s Office of Inspector General Defense Criminal Investigative Service.

The cases is captioned United States ex rel. Mayes v. Berkeley HeartLab Inc., et al., Case No. 9:11-CV-01593-RMG (D.S.C.). The claims settled by these agreements and asserted against these companies and individuals are allegations only, and there has been no determination of liability.