WCAB (En Banc) Limits Replacement QME Process. Admitting Evidence Not Listed at MSC Is Not “Harmless Error”. Court Finds United Indian Health Immune From WCAB Jurisdiction. PAGA Action Prevailing Employer May Not Recover Costs From LWDA. Ninth Circuit Upholds AB 5 Against Independent Truckers’ Challenge. SoCal Police Officer and Attorney Face $600K Comp Fraud Charges. Tulare Doctor Pleads Guilty to Distributing Misbranded COVID Drugs. Security Company Owner Sentenced for $3.4 M Premium Fraud.
Munir Uwaydah was an orthopedic surgeon well known as a treating physician in California workers’ compensation cases. He had been charged as the ringleader in one of California’s biggest health fraud schemes allegedly perpetrated by his company Frontline Medical Associates, which included unnecessary operations by an untrained assistant that scarred patients forever, according to indictments unsealed in Los Angeles County years ago. A total of 102 people testified during two separate Grand Jury proceedings.
A new civil appellate case involving Frontline (as a plaintiff) decided in May 2025 depicts Uwaydah’s absence from the United States as beginning in 2010, allegedly to evade criminal investigations, with subsequent indictments in 2015 and 2019 solidifying his fugitive status in the civil case defendants’ view. Frontline’s conflicting representations – ranging from Uwaydah choosing not to return, to being under a strict travel ban, to potential extradition for perjury in the civil case – were deemed misleading by the court, contributing to the pattern of misconduct that led to the case’s dismissal by the trial court.
This new case, Frontline Medical Associates v. Bird, Marella, Boxer, etc. (CA2/1, B336038) a May 2025 unpublished appellate case involves Frontline Medical Associates, Inc. appealing a trial court’s decision to grant terminating sanctions, resulting in the dismissal of their case against the law firm of Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, P.C., and Benjamin Gluck (collectively, Bird Marella). The dismissal was based on the trial court’s finding of Frontline’s pervasive misconduct during litigation of this case.
Frontline filed this lawsuit in July 2019, with an amended complaint in December 2021, alleging that Bird Marella, their former legal counsel, committed professional misconduct. Specifically, Frontline claimed that Bird Marella made misrepresentations to induce Frontline to pay $2,250,000 for legal services to represent Paul Turley, who operated Frontline before September 2015. Additionally, Frontline alleged that Bird Marella, which had also represented Frontline and Uwaydah, failed to adequately advise Frontline about potential conflicts of interest arising from their simultaneous representation of Turley. The complaint included causes of action for breach of fiduciary duty, fraud by intentional misrepresentation, fraud by fiduciary, conversion, common counts, and declaratory relief, seeking to address the alleged financial and ethical misconduct by Bird Marella.
Paul Turley was a chiropractor and a key figure associated with Frontline Medical Associates. His involvement with Frontline and its owner, Munir Uwaydah, placed him at the center of significant legal and criminal proceedings related to an alleged massive insurance fraud scheme that allegedly generated $150 million in fraudulent workers’ compensation claims. In September 2015, Turley was arrested as part of a Los Angeles County District Attorney’s investigation.
Over 18 months following the 2015 indictments, a judge dismissed most of the 132 counts in the initial indictments due to insufficient evidence, particularly the aggravated mayhem charges, which carried potential life sentences. In March 2017, at the prosecutors’ request, Los Angeles County Superior Court Judge Kathleen Kennedy dismissed the pending charges against 13 defendants, including Turley, except for two fugitives. Prosecutors immediately refiled new charges in three separate criminal complaints, listing 194 counts, including aggravated mayhem, money laundering, insurance fraud, and unlawful patient referrals.
Benjamin Gluck, Turley’s attorney, criticized the refiling as an attempt to restart the case after prosecutorial missteps, stating, “They want to basically say, ‘We don’t like the way this game is going so we’re turning the board over.’”
In December 2018, Paul Turley pleaded guilty to multiple charges, including conspiracy to commit insurance fraud, insurance fraud, unlawful referrals, and mayhem. As part of his plea, he confirmed in a factual statement that Frontline paid “cappers” to recruit injured workers to maximize billing, regardless of patient needs, and that services like prescriptions and surgeries were prioritized for profitability.
Returning to the civil case appeal decided this month, Uwaydah’s role was pivotal in the Frontline case against Bird Marella due to his historical control over Frontline and his status as a key witness. The defendants alleged that Frontline was essentially a “fake company” operated by Uwaydah, who had fled to Lebanon in 2010 amid criminal investigations for healthcare fraud.
Frontline claimed Uwaydah transferred his ownership interest in Frontline to Medconsult, S.A.L., a Lebanese company, in early 2022 to satisfy a debt, though this was contested as a misrepresentation. Uwaydah’s inability or unwillingness to travel to Los Angeles for trial or deposition, coupled with contradictory statements about his travel restrictions, was a significant issue. The court ordered a bench trial to determine if Uwaydah was Frontline’s alter ego, and his status as a fugitive and the ownership transfer claims were central to the defendants’ arguments for dismissal.
The trial court ultimately dismissed Frontline’s case with prejudice on October 27, 2023, granting Bird Marella’s third motion for terminating sanctions due to Frontline’s deliberate, egregious misconduct that rendered a fair trial impossible. The court cited both its inherent authority and statutory authority under Code of Civil Procedure section 2023.030 for the dismissal.
The specific conduct included misrepresentations about attorney Browne’s conflict of Interest. Frontline’s attorney, David Browne, declared on May 4, 2023, that he had to withdraw due to an unwaivable conflict of interest stemming from a contempt proceeding related to his representation of Medconsult, S.A.L., the purported owner of Frontline. On June 13, 2023, he reiterated this conflict was mandatory and unwaivable. However, evidence showed Browne continued to act as Frontline’s counsel, preparing key witnesses Paul Turley and Amber Woodley for depositions and trial in July 2023.
The court found Browne’s claims about the conflict’s severity were exaggerated to delay proceedings, constituting a fraud on the court. The court dismissed Frontline’s expert testimony defending Browne’s actions as unpersuasive, noting Browne’s post-withdrawal work contradicted his stated ethical concerns.
The court additionally found that Frontline repeatedly failed to comply with discovery obligations and court orders over several years. Itfailed to timely respond to multiple sets of interrogatories and requests for production of documents served between March 2021 and August 2022. Despite court orders to provide code-compliant responses, Frontline missed deadlines, ignored meet-and-confer efforts, and provided incomplete or evasive responses. The court imposed monetary sanctions ($3,000 and $7,500) for these failures, but Frontline’s noncompliance persisted.
Frontline obstructed depositions of its Person Most Qualified (PMQ) and other witnesses. Frontline failed to appear for PMQ depositions noticed for March and September 2022. When it produced David Livingston as PMQ in November 2022, he was unprepared, answering “I don’t know” over 500 times. A subsequent PMQ, Amber Woodley, arrived late and left early, limiting testimony. The court found these actions willful and noncompliant with court orders.
Depositions of Janek Hunt and Adib Kassir were disrupted by late arrivals, excessive breaks, refusals to answer, and early terminations. Frontline failed to produce Ali Mohsen and Mazen Helou for depositions despite court orders, further evidencing noncompliance.
The court rejected Frontline’s excuses (e.g., documents seized in raids, witnesses overseas) as insufficient, finding a “pattern of willful noncompliance” that violated numerous court orders.
Frontline initially represented that Uwaydah was its primary principal (until December 8, 2022). After the court ordered an alter ego trial, Frontline claimed in January 2023 that Uwaydah had transferred his ownership to Medconsult in early 2022 to satisfy a debt. Contradictory evidence, including a January 11, 2022 contract showing Medconsult paid $1 million for Frontline (despite its assets being worth millions and Medconsult already holding a 2005 security interest), and the lack of documentation for a $10 million arbitration award, led the court to find these representations “highly misleading, if not wholly false.” The court concluded Frontline misrepresented ownership to manipulate the use of Uwaydah’s testimony.
Frontline provided conflicting statements about Uwaydah’s ability to travel to Los Angeles. Initially, it claimed Uwaydah chose not to return due to criminal charges (July 2022), with Browne guaranteeing in January 2023 that Uwaydah could travel if he agreed to extradition. Later, Frontline asserted Uwaydah was under a travel ban in Lebanon, unable to leave legally. A Lebanese decree and Uwaydah’s extradition waiver suggesting Frontline misrepresented his status to avoid in-person testimony while seeking to use his deposition, potentially evading perjury accountability.
The court found that Frontline’s cumulative misconduct – misrepresentations, discovery abuses, and disregard for court orders – demonstrated a “mockery of the judicial process.” Previous monetary and evidentiary sanctions had failed to deter Frontline’s behavior, and the court concluded that lesser sanctions would not ensure future compliance. The pervasive, deliberate, and egregious nature of the misconduct, which prejudiced the defendants and undermined trial fairness, justified terminating sanctions.
The appellate court affirmed the trial court’s dismissal of the case, finding substantial evidence supported the trial court’s findings and no abuse of discretion in the dismissal.
Eric Benjamin “Ben” Halem, 37, of Porter Ranch, a former full-time Los Angeles Police Department officer and current LAPD reserve officer, and his brother, Jacob Halem, 32, of Tarzana, were arraigned on felony insurance fraud charges following an investigation by the California Department of Insurance. The investigation found the brothers allegedly filed a fraudulent auto insurance claim in an attempt to obtain benefits they were not entitled to receive.
The Department of Insurance began its investigation after receiving a fraud referral alleging Eric Halem falsely reported a crash involving his 2020 Bentley Continental GT, stating his brother Jacob Halem had borrowed the vehicle and was involved in a solo-collision on January 5, 2023. However, the investigation revealed that the luxury vehicle had actually been rented out through Eric Halem’s exotic car rental company, Drive LA, and crashed by the renter three days earlier.
Los Angeles Sheriff’s Department (LASD) deputies responded to the accident scene, documenting the vehicle’s damage with body-worn camera footage before it was impounded. Shortly after, Eric Halem contacted his insurance company twice to obtain proof of insurance, which he then used to release the Bentley from impound. Meanwhile, the renter filed a claim with their insurance company, but it was denied due to lack of first-party collision coverage.
Upon learning that the rental driver’s claim had been denied, Eric Halem allegedly filed a fraudulent claim with his insurance company on his personal policy, misrepresenting the accident details. He claimed that his brother, Jacob Halem, had been driving the vehicle at the time of the crash. To support their false claim, Eric and Jacob Halem submitted staged photographs of the damaged Bentley on a tow truck near the alleged accident location. These photos were intended to mislead adjusters, but the investigation discovered that the damage in the photos was identical to the damage captured in LASD’s body-worn camera footage from January 2, 2023, showing the damage was created before when the brothers claimed.
Further investigation revealed that Jacob Halem also provided a false statement to the insurance company investigator in an effort to corroborate his brother’s fraudulent claim. The total potential loss from the fraudulent claim was $229,283.
Insurance fraud impacts all Californians by driving up costs for consumers and businesses. If you suspect insurance fraud, report it to the California Department of Insurance at 800-927-4357 or visit www.insurance.ca.gov.
The National Insurance Crime Bureau assisted with the investigation and the Los Angeles County District Attorney’s Office is prosecuting this case.
As policymakers nationwide focus on the rising costs of health care, a new study from the Workers Compensation Research Institute (WCRI) reveals that hospital outpatient payments for workers’ compensation grew faster in states with fee schedules based on a percentage of hospital charges and in states without fee schedules.
“This study provides meaningful state comparisons at a time when many are considering or revising hospital fee regulations,” said Sebastian Negrusa, vice president of research at WCRI. “It offers a clear, evidence-based perspective on how different regulatory approaches influence cost growth and payment levels.”
The report, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 14th Edition, analyzes payments for common outpatient surgeries across 36 states, representing 88 percent of the nation’s workers’ compensation benefits. Covering data from 2005 to 2023, the study also compares workers’ compensation hospital payments to Medicare rates.
The following are among the major findings:
– – Faster growth in states with charge-based fee regulations and in non-fee schedule states: From 2011 to 2023, growth in outpatient payments for common surgeries reached 61–81 percent among states with charge-based fee schedules, and 55–88 percent in non-fee schedule states, substantially higher than 24 percent in the median fixed-amount fee schedule state.
– – Higher payments in states without fee schedules: Outpatient payments were 63 to 154 percent higher than the median of states with fixed-amount fee schedules. In these states, workers’ compensation paid $7,550 to $22,002 more per surgical episode than Medicare.
– – Percent-of-charge states cost more: States like Alabama and Louisiana, using percent-of-charge-based fee schedules, paid 83 to 233 percent more than states with fixed-amount fee schedules.
– – Wide variation vs. Medicare: Average workers’ compensation payments for a common group of outpatient surgeries ranged from 40 percent below Medicare in Nevada to 480 percent above in Alabama.
The report also tracks the impact of recent policy reforms. In May 2023, Florida expanded its fixed-amount fee schedule by eliminating charge-based reimbursement for unlisted procedures. This policy change led to a 6 percent decrease in hospital outpatient payments per surgical episode within the same year.
The founder and former CEO of the now-defunct Sovereign Health Group addiction treatment provider was arrested on an eight-count federal grand jury indictment alleging he submitted more than $149 million in fraudulent claims to health insurers – including for fraudulent urinalysis claims – and, in addition, paid more than $21 million in illegal kickbacks for patient referrals.
Tonmoy Sharma, 61, of Tustin, was arrested at Los Angeles International Airport and is expected to make his initial appearance and be arraigned in United States District Court in downtown Los Angeles.
Sharma is charged with four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for referrals to clinical treatment facilities.
Also arrested was co-defendant Paul Jin Sen Khor, 45, of Irvine, who worked as Sovereign’s cash management and accounts payable supervisor. Khor is charged with one count of conspiracy and one count of illegal remunerations for referrals to clinical treatment facilities. Khor was arraigned in United States District Court in Santa Ana. He pleaded not guilty and a July 29 trial date was scheduled. A federal magistrate judge ordered him released on $20,000 bond.
According to the indictment, the San Clemente-based Sovereign once was a prominent addiction treatment provider throughout Southern California and several other states. From 2014 to 2020, Sovereign billed private insurance companies for drug addicted and mentally ill patients often at high, out-of-network rates.
At Sharma’s direction, Sovereign employees aggressively pursued patients through various forms of marketing, directing the patients to contact the company at its toll-free phone number. Once patients called in to Sovereign’s call center, employees used various tactics to enroll patients into the company’s treatment facilities, including misrepresentations. One such misrepresentation was that a patient’s treatment would be paid for by a foundation funded by donations from former Sovereign patients.
In fact, the foundation was a sham organization and a ruse for Sovereign employees – at Sharma’s direction – to obtain patients’ names, dates of birth, and Social Security numbers for use in surreptitiously obtaining health insurance coverage on their behalf. In order to obtain these private health insurance plans, Sovereign employees, at Sharma’s direction, made false representations on insurance applications, claiming qualifying life events that had not happened in order to obtain new insurance outside the enrollment period and inflating or underreporting their income so the patients would qualify for Affordable Care Act government-subsidized private insurance instead of Medicaid, whose reimbursement rates were significantly lower than private insurers.
Patients generally did not know that Sovereign would enroll them into these policies or authorize Sovereign to do so. Sovereign employees at times even pretended to be the patients when calling into those insurance companies. Those insurance companies would not have covered any services under plans obtained by these fraudulent means.
Sovereign also fraudulently billed insurers more than $29 million for urinalysis tests not authorized by the purported ordering health providers. At Sharma’s direction, Sovereign submitted fraudulent claims for comprehensive urinalysis screening, including through its laboratory, Vedanta Laboratories Inc. Sovereign patients were frequently drug tested through both cup testing and comprehensive panel testing. The cup testing returned results within minutes, while the panel testing was much more comprehensive, with results taking several days to return. The comprehensive panel testing screened for dozens of different substances and, accordingly, was billed at a significantly higher rate than cup testing.
Sharma directed Sovereign employees to frequently administer cup testing and comprehensive panel testing on patients, including comprehensive panel testing up to three times a week. Sovereign submitted thousands of claims to insurance companies, including for comprehensive panel tests that purportedly were authorized by physicians when, in reality, the physicians did not authorize the tests. Sovereign also submitted numerous claims to the insurance companies, including urinalysis tests, after physicians were no longer working at Sovereign.
Finally, in addition to the patients obtained through the call center above, Sharma and Khor also procured patients for Sovereign by paying illegal kickbacks to patient brokers. To conceal the nature of these transactions, Sharma and Khor caused Sovereign to enter sham contracts that referred to the brokers’ services as “marketing hours,” a term the brokers used when sending invoices to Sovereign for payment. Sovereign paid more than $21 million in illegal kickbacks for patient referrals.
A 2017 investigative series, “Rehab Riviera,” by the Southern California News Group highlighted widespread fraud and lack of oversight in the industry, with Sovereign Health as a key example. Families and advocates have also criticized Sharma’s facilities for negligence, linking poorly run centers to patient deaths, including overdoses.
In 2022, a Los Angeles jury ordered Sharma and Sovereign Health to pay nearly $45 million to Health Net for fraudulent claims, finding that they acted with “malice, oppression, or fraud” and violated the Racketeering Influence and Corrupt Organizations Act (RICO).
Additionally, in 2008, the British General Medical Council revoked Sharma’s medical license in the UK for lying about his academic qualifications and conducting unethical drug studies. Despite this, he became CEO of Sovereign Health in 2009.
Felony charges have been filed against Ghada Kalsho Kassab M.D, a 57 year old San Diego dermatologist, for a $1.3 million Medi-Cal fraud scheme. The investigation uncovered that the dermatologist charged Medi-Cal $1,386,995 for services that were never rendered.
According to the Medical Board of California, Kassab currently holds a Physician and Surgeon license (A 114457). The physician is reportedly a 1999 graduate of the University of Baghdad College of Medicine. Kassab practices dermatology at GK Dermatology of San Diego, located at 3737 Moraga Ave, Ste A206, San Diego, CA 92117.
A complaint was filed in San Diego County Superior Court charging the dermatologist with 22 counts of healthcare insurance fraud, one count of Medi-Cal fraud, the white-collar crime enhancement, and the excessive takings enhancement.
Prosecutors alleged that the dermatologist was invoicing for as many as 233 patients on a daily basis, averaging between 60 to 70 patients per day for identical or comparable services.
Furthermore, it was found that all patients were undergoing light therapy, with the majority using non-medical lamps.
It was further alleged that the crimes committed by defendant Ghada Kassab involved a pattern of related felony conduct, and the pattern of related felony conduct involving the taking of, and resulted in the loss of more than five hundred thousand dollars ($500,000), within the meaning of Penal Code §186.11 (a)(2). This enhancement is known as the aggravated white collar crime enhancement
Pursuant to Penal Code §1170(h), prison custody time is to be served in state prison if the enhancement pursuant to Penal Code §186.11(a)(2) is imposed as part of a sentence for the offenses.
The Madera County Sheriff’s Office arrested 57-year-old Martha Gutierrez DeRomero. She is facing a felony insurance fraud charge after claiming two men stole her van with thousands of dollars’ worth of items inside – but, according to Sheriff Tyson Pogue, that was a lie.
On May 23, 2025, DeRomero reported a carjacking at knifepoint near Avenue 21 and Road 26. She claimed an unknown assailant stole her white Chevrolet panel van, which contained $60,000 worth of merchandise.
The Madera County Sheriff’s Office, led by Sheriff Tyson Pogue, investigated the incident and discovered it was a staged event orchestrated by DeRomero and her boyfriend, Alfredo Delezma, to commit insurance fraud.
The investigation revealed that the van, reported stolen, was later found by the Merced County Sheriff’s Office in a storage facility in Merced, along with the supposedly stolen merchandise. This discovery unraveled the scheme, confirming that no carjacking had occurred.
On May 28, 2025, DeRomero was arrested and booked into Madera County Jail on charges of felony insurance fraud, conspiracy, and filing a false police report. Authorities indicated that Alfredo Delezma may also face charges for his role in the conspiracy, although no further details on his status were provided in the reports.
The case was reported by multiple news outlets, including ABC30 Fresno, ABC7 Los Angeles, ABC7 Chicago, and KMPH, all citing the Madera County Sheriff’s Office.
Sheriff Pogue commended the deputies for their thorough investigation, which prevented an fraudulent insurance claim. For further information, contact the Madera County Sheriff’s Office at (559) 675-7770 or visit www.maderacounty.com/sheriff.
Edgar Osuna worked for Spectrum Security Services, Inc., from October 2011 to February 2022. During his tenure Spectrum allegedly committed Labor Code violations against Osuna and other employees. The violations against other employees purportedly continued after Osuna’s employment terminated.
In August 2023, Osuna notified the Labor and Workforce Development Agency (LWDA) of Spectrum’s alleged failure to comply with the Labor Code. After the LWDA failed to respond within the statutory period Osuna filed a representative PAGA claim based on the underlying violations identified in Osuna’s LWDA notice, and individual and class claims based on the same allegedly unlawful conduct.
Spectrum demurred to the PAGA claim. It argued the applicable one-year statute of limitations bars the claim because Osuna did not provide the LWDA with notice of the alleged Labor Code violations until 18 months after his employment ended. Spectrum also argued Osuna lacks standing to bring his PAGA claim because he was not employed during the time he sought to represent other aggrieved employees. (Citing Robinson v. Southern Counties Oil Co. (2020) 53 Cal.App.5th 476 (Robinson).) It urged the trial court to sustain the demurrer without granting leave to amend.
The trial court agreed with Spectrum’s argument and dismissed Osuna’s class claims, sent his individual claims to arbitration, and sustained Spectrum’s demurrer to his representative PAGA claim without granting leave to amend. It concluded that Osuna lacked standing to bring the PAGA claim because he did not suffer a Labor Code violation during the one-year statute of limitations period for recovering civil penalties.
The Court of Appeal reversed the portion of the order sustaining Spectrum’s demurrer to Osuna’s representative PAGA claim in the published case of Osuna v. Spectrum Security Services, Inc. CA2/6 – B338047 – (May 2025).
Before turning to the issue of representative PAGA standing, the Court of Appeal resolve the threshold issue of appealability. Spectrum contended that it should dismiss Osuna’s appeal because “an order sustaining a demurrer to [fewer] than all of the [claims in a complaint is not immediately appealable.” It also contends the “death knell” doctrine – an exception to this general rule – is inapplicable here because Osuna has not shown that the trial court’s order was “a de facto final judgment for absent plaintiffs.”
The Court of Appeal concluded “the Miranda rule applies here.” (citing Miranda v. Anderson Enterprises, Inc. (2015) 241 Cal.App.4th 196) The order dismissing the representative PAGA claim without leave to amend operates as “a de facto final judgment for absent plaintiffs” (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 759) and is appealable”
Due to the systemic underenforcement of the Labor Code, the Labor Code Private Attorneys General Act of 2004 (Labor Code,1 § 2698 et seq.; PAGA) deputizes employees to stand in the shoes of the state to pursue civil penalties on behalf of themselves and other “aggrieved employees.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 980 (Arias).) So long as they were employed by the alleged violator and personally suffered at least one Labor Code violation, aggrieved employees have standing to bring representative PAGA actions.
The Legislature recently adopted Assembly Bill No. 2288 (2023-2024 Reg. Sess.), which amended portions of Labor Code § 2699. Among other changes, Assembly Bill No. 2288 “requir[es] an aggrieved employee to have personally suffered the alleged violations within [PAGA’s] one-year statute of limitations.” (Sen. Com. on Judiciary, Rep. on Assem. Bill No. 2288 (2023-2024 Reg. Sess.) as amended June 21, 2024, pp. 15-16.) Because those amendments apply only to lawsuits filed on or after June 19, 2024, they are inapplicable here. (See Stats. 2024, ch. 44, § 1.)
If after notification the LWDA does not investigate, does not issue a citation, or fails to respond to the notice within 65 days, the employee may sue. But not every private citizen can maintain such a suit. Only an “aggrieved employee” has PAGA standing.The Labor Code defines such an employee as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” The issue here is whether Osuna meets that definition. The Court of Appeal concluded that he did.
“The words of section 2699, former subdivision (c) are clear and unambiguous: To have standing to bring a PAGA action, “[t]he plaintiff must be an aggrieved employee, that is, someone ‘who was employed by the alleged violator’ and ‘against whom one or more of the alleged violations was committed.”
Chula Vista resident and businessowner Fernando Valenzuela Ayub pleaded guilty in federal court, admitting that he conspired with others to launder millions of dollars of health care fraud proceeds and paid unlawful kickbacks.
According to his plea agreement, Valenzuela and co-conspirators owned and operated multiple durable medical equipment (DME) companies, which sold orthotics – including back, wrist, and knee braces – to Medicare beneficiaries.
Valenzuela admitted that in operating the DME companies, he and co-conspirators paid unlawful kickback payments to sham marketing companies who provided bogus prescriptions for DME. In total, Valenzuela paid $3.7 million in kickbacks.
Valenzuela admitted that he used his DME companies to submit fraudulent claims to Medicare. Once Valenzuela’s DME companies were suspended from billing Medicare, Valenzuela conspired to put DME companies in the names of nominee owners while he maintained control of the companies and the monies received from Medicare.
In total, Valenzuela billed Medicare approximately $51 million and was paid approximately $20 million, and ultimately laundered at least $14 million dollars of Medicare proceeds. As part of his guilty plea, Valenzuela agreed to forfeit $7,101,320.
Valenzuela’s sentencing is scheduled for August 15, 2025. The case is being prosecuted by Assistant U.S. Attorney Blanca Quintero of the Southern District of California.
Beckers Hospital Review just reported that in May 2025, a federal jury in the U.S. District Court for the Central District of California awarded $147 million in damages to Scottsdale, Arizona–based Innovative Health, a medical device reprocessor, in a lawsuit filed in 2019 against Johnson & Johnson’s subsidiary, Biosense Webster.
The jury found that Biosense Webster violated federal antitrust laws (Sherman Antitrust Act, Sections 1 and 2 and California Cartwright Act) by engaging in anticompetitive practices, specifically by withholding clinical support from hospitals that used reprocessed catheters instead of purchasing new ones from Biosense.
The lawsuit centered on Biosense Webster’s policy of tying access to clinical support for its CARTO 3 cardiac mapping system to the exclusive purchase of its high-density mapping and ultrasound catheters.
Innovative Health alleged that this policy, implemented after they received FDA clearance in 2016 to reprocess Biosense’s catheters, pressured hospitals to buy new devices, stifling competition and maintaining Biosense’s monopoly in the cardiac mapping catheter market.
Internal emails presented during the trial showed hospitals expressing interest in Innovative’s cost-effective reprocessed catheters but facing warnings from Biosense about discontinued support.
Biosense defended the policy, arguing it was necessary to ensure service quality and prevent competitors from “free-riding” on their clinical support infrastructure.
However, the jury sided with Innovative Health, determining that the tying arrangement and monopolistic practices were illegal.
The case was initially dismissed in 2022 but revived by the Ninth Circuit Court of Appeals in 2023, leading to the trial that began in April 2025.
Association of Medical Device Reprocessors issued the following statement: “Friday’s unanimous verdict by a federal jury in Santa Ana, California for Innovative Health against Johnson & Johnson (NYSE: JNJ) is a victory for America’s hospitals, providers, patients, and the environment. The jury found that Biosense Webster violated federal and state antitrust laws by withholding clinical support to hospitals using Innovative Health’s FDA regulated, reprocessed catheters.”
“For too long, Johnson & Johnson has used tying arrangements and other tactics to interfere with fair competition from lower-cost, FDA-regulated, reprocessed ‘single-use’ devices (SUDs),” the association’s CEO Daniel J. Vukelich said in a news release. “We hope this jury’s message will be heard loud and clear: Hospitals want to reduce costs and greenhouse gas emissions by using more reprocessed SUDs without fear of retribution by their original equipment manufacturers (OEMs).”
The verdict is seen as a significant win for reprocessors and hospitals seeking cost-effective, FDA-regulated reprocessed devices to reduce costs and environmental impact.
