Tag: 2019 News

The United States Attorney’s Office for the Central District of California collected over $317 million in criminal, civil and forfeiture actions in Fiscal Year 2018.

Last year’s collections also include over $235 million worth of assets forfeited to the United States for crimes committed both here and abroad, And $21.2 million was secured through civil enforcement matters in which prosecutors recovered federal funds lost primarily through fraud or other misconduct.

Additionally, the office’s Civil Division worked with other U.S. Attorney’s Offices and colleagues in Washington to collect an additional $162.2 million in civil cases that were pursued in conjunction with these other Justice Department components, a figure that includes a $65 million settlement with Prime Healthcare Services and its chief executive officer to resolve allegations of Medicare fraud.

Prime Healthcare Services, Inc.; Prime Healthcare Foundation, Inc.; Prime Healthcare Management, Inc.; and Prime’s Founder and chief executive officer, Dr. Prem Reddy, agreed to pay the United States the $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had (a practice known as “up-coding”).

Prime Healthcare Services and the not-for-profit Prime Healthcare Foundation constitute one of the largest hospital systems in the nation, with 45 acute-care hospitals located in 14 states. It is headquartered in Ontario, California,

The 10 California hospital defendants owned by Prime Healthcare Services are parties to the settlement agreement: Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center and Centinela Hospital Medical Center. Four other hospital defendants owned by Prime Healthcare Foundation are also parties to the settlement agreement: Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital and Encino Hospital Medical Center. Prime Healthcare Management, a subsidiary of Prime Healthcare Services, provides management, consulting and support services to hospitals owned and operated by Prime.

“We are focused on securing restitution for crime victims, recovering taxpayer money obtained by fraud, and stripping criminals of their ill-gotten gains,” said United States Attorney Nick Hanna. “The hundreds of millions of dollars we recovered in 2018 stand as a tribute to the tenacity and hard work of our prosecutors and staff.”

The United States Attorney’s Office for the Central District of California is based in Los Angeles and has branch offices in Santa Ana and Riverside. Currently, approximately 275 Assistant United States Attorneys serve about 20 million people who reside in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.

The “Medical” Marijuana industry is at the doorsteps of the Workers’ Compensation industry. However, according to a report in the Los Angeles Times, political corruption is abundant in an industry that transacts business in green dollar cash. One might wonder if any of that green cash might help push the workers’ compensation political doors open to the pot merchants.

California is awash in cannabis cash from inside and out of the state, partly because pot remains an illegal drug under federal law, so banks won’t accept cash from the businesses. The state’s black market for cannabis was estimated to be worth $3.7 billion last year – more than four times the size of the legal market, according to the firm New Frontier Data.

In the more than two years since California voters approved the licensed growing and sale of recreational marijuana, the state has seen a half-dozen government corruption cases as black-market operators try to game the system, through bribery and other means.

Proposition 64, approved in 2016, allowed the state to license businesses to grow and sell pot but required the firms to also get approval from the cities and counties, most of which have outlawed pot operations. Proposition 64 also outlawed the transportation of cannabis out of the state, which was an issue in the Siskiyou County indictments against Chi Yang and his sister, Gaosheng Laitinen.

Yang allegedly approached Jon Lopey, the sheriff in his county office in Yreka in the summer of 2017, and initially suggested the $1 million could go to a foundation headed by Lopey. Lopey notified the FBI.

At one of the subsequent meetings Laitinen allegedly sought assurances about what their payments would buy: “Are we talking about protection from being raided?” she asked the sheriff, according to a DEA agent’s affidavit attached to the criminal charging document. The pair allegedly paid Lopey $10,500, including four $500 cash bonuses, before they were arrested, according to court records.

That case is just one of several that have involved cannabis sellers and growers allegedly bribing or trying to bribe government officials, or public officials acting illegally to get rich from marijuana.

Last year, Jermaine Wright, then the mayor pro tem of Adelanto, was charged with agreeing to accept a bribe to fast-track a marijuana business. Wright’s trial is scheduled for August. In May, FBI agents served search warrants at the home of Rich Kerr, who was mayor of Adelanto at the time, as well as at City Hall and a marijuana retailer.

Also in May, Humboldt County building inspector Patrick Mctigue was arrested and charged with accepting $100,000 in bribes from marijuana businesses seeking expedited help on county permits, according to the Humboldt County Sheriff’s Office.

Last March, a federal jury reached guilty verdicts to bribery and extortion charges against Michael Kimbrew, who was a field representative to then-Rep. Janice Hahn when he accepted cash from an undercover FBI agent while pledging his “undying support” to protect a marijuana dispensary that the city of Compton was trying to close.

This March, developer Dorian Gray was held to answer by a judge in a preliminary hearing on charges of offering bribes to then-Oakland City Council President Larry Reid and Assistant City Administrator Greg Minor, according to court records. Gray allegedly offered the councilman cash to help obtain a cannabis dispensary permit, and Reid reported the offer to authorities. Gray is charged with offering Minor, who oversees marijuana permitting for Oakland, a free trip to Spain.

Not all of the recent cases involve elected officials. Los Angeles County Sheriff’s Deputy Marc Antrim pleaded guilty two weeks ago to federal charges stemming from his arrest for robbing a warehouse of a half-ton of marijuana in October.

California was the first state to legalize the sale of marijuana for medical use two decades ago. The former mayor of the city of Cudahy was sentenced to one year in federal prison in 2013 for taking cash bribes in exchange for supporting the opening of a “medical marijuana” store in the city.

The head of the city’s code enforcement division and a city councilman were also convicted of taking part in the corruption scheme.

Law enforcement agencies are currently investigating possible corruption in other Southern California cities, according to Ed Muramoto, a private attorney for medical pot dispensaries that have complained about cities locking them out of competition for permits.

Sam Clauder, the former congressional aide and San Bernardino County Democratic Party official pleaded guilty in 2017 to charges in Texas of possessing 130 pounds of cannabis that he was transporting back east from California.

Two brothers who owned a West Los Angeles pharmacy and were convicted of illegally selling prescription opioids and other narcotics to black market customers across the United States were sentenced late Wednesday, with each man being ordered to serve 121 months in federal prison.

Berry Kabov, 48, and his brother Dalibor “Dabo” Kabov, 35, both residents of Brentwood, were sentenced by United States District Judge Dolly M. Gee. The Kabov brothers operated Global Compounding Pharmacy, a pharmacy that was located in West Los Angeles.

Following a three-week jury trial in early 2017, the brothers were convicted of illegally selling the opioid narcotics oxycodone, hydromorphone and hydrocodone. The wide-ranging conspiracy, which also illegally imported anabolic steroids, resulted in the Kabov brothers earning more than $3 million and cheating the Internal Revenue Service by failing to report $1.5 million on their federal tax returns.

Prosecutors argued in court documents that the Kabovs orchestrated a “years-long scheme to exploit the nation’s epidemic-level addiction to powerful prescription opioids,” and that the brothers “rose from mail-order drug dealers – sending drug parcels to Ohio for cash – to owners of a Los Angeles pharmacy that sold millions of dollars of oxycodone, hydromorphone, and hydrocodone on the black market.”

The Kabov brothers used Global Compounding to sell bulk quantities of oxycodone to customers across the country. During the investigation, authorities seized shipments containing thousands of oxycodone pills sent by the Kabov brothers to customers in and around Columbus, Ohio. These customers in turn made cash deposits into Kabov-controlled bank accounts or simply shipped bulk cash to the brothers in Southern California.

The evidence also included recorded calls between Berry Kabov and a cooperating informant, during which Berry Kabov described oxycodone pills as “gold” selling for as much as “50 bucks a pill” in areas like New York. Berry Kabov offered to ship as many as 4,000 oxycodone pills per week to the informant, bragging that “we have a thing that we can move easy.”

After drug wholesalers cut off Global Compounding, the Kabovs began manufacturing their own opioid pills after obtaining a $20,000 pill press from China and acquiring enough bulk powder to make 100,000 maximum-strength pills. “In total, from the wholesale orders and on-site manufacturing, the Kabovs disseminated over 300,000 pills of opiates to the black market during the conspiracy, which accounts only for what they sold after opening Global Compounding,” prosecutors wrote in their sentencing brief.

To conceal the black market drug sales that brought them approximately $3 million, the Kabovs conspired with a doctor to create fraudulent prescriptions in the names of identity theft victims. The Kabovs also reported false information to California authorities making it appear that drugs had been dispensed to those identity theft victims. Prosecutors said in court documents that planting that fraudulent information “ma[de] the victims falsely appear to be narcotic addicts,” thus putting them at risk of being denied necessary treatment from a legitimate physician checking their prescription histories. Global Compounding also failed to report sales of 98,000 pills of opiates to California authorities who track prescription drug sales.

As part of the scheme, the brothers also used the names of other identity theft victims – members of a longshoremen labor union’s health insurance plan – to submit fraudulent claims that generated another $2.6 million from the plan, prosecutors said in court papers. In October 2017, the owner of a Long Beach “medi-spa” involved in the fraud scheme, Erica Carey, pleaded guilty to a federal wire fraud charge and admitted conspiring with the Kabovs in exchange for more than $300,000 in kickbacks.

The investigation into the Kabov brothers and Global Compounding was conducted by the Drug Enforcement Administration, IRS Criminal Investigation, the United States Postal Inspection Service, the Los Angeles Police Department, and the California Board of Pharmacy.

The case is being prosecuted by Assistant United States Attorney Benjamin R. Barron of the Organized Crime Drug Enforcement Task Force, and Assistant United States Attorney Matthew O’Brien of the Environmental and Community Safety Crimes Section.

Public records reflect that Bruce E. Fishman, M.D. was first licensed in California as a physician and Surgeon in 1983. His license was revoked in 1987 based upon his federal conviction of conspiracy to distribute controlled substances. In June, 1990, he was granted a probationary license and in 1994 his certificate was reinstated without restriction.

He was the AME in the landmark Almaraz-Guzman decision in 2009, that paved the way for deviations from a strict interpretation of the AMA Guides.

However, in April, 2018, the DIR issued him a Notice of Provider Suspension from participation in the Workers Compensation system.  Fishman pursued his right to request a hearing of that action.

He is also the defendant in a 2018 Qui Tam action brought by Plaintiffs State of California, the Counties of Los Angeles, Kern, San Bernardino, Ventura, Santa Barbara, the Cities of Los Angeles and Bakersfield, the School Districts of Los Angeles, McFarland, Visalia and Kern, the Health Care District of Tehachapi, ex al. Med-Legal Associates, Inc. and CLCI, Inc., alleging, among other things, a violation of the California Insurance Fraud Prevention Act – Insurance Code § 1871.7

He is also involved in litigation against his former Lien Collection and Med-Legal management company which is the subject of an opinion this month by the California Court of Appeal in the unpublished case of Med-Legal Associates, Inc. v. Fishman.

In 2008, Fishman entered into a relationship with Green Lien Collections, Inc., a company owned by Patrick Nazemi, which provided billing, collection, and enforcement services to medical providers in the workers’ compensation field. In 2011, Nazemi formed Med-Legal Associates, Inc. “with the intent to provide management services to med-legal providers.”

Paragraph 2.d of the Management Services Agreement provides that MLA would assist Fishman in arranging for advertising and marketing services, and that Fishman is responsible for paying the actual cost and expense of all advertising services. The Agreement also contains an arbitration provision.

Dr. Fishman became dissatisfied with MLA’s services, specifically finding that the medical transcribers, physician assistants, and medical researchers were inadequate and underqualified. As a result, Dr. Fishman spent additional, uncompensated time completing work that he expected MLA’s personnel to complete. Moreover, the advertising services were inadequate.

Perhaps more toxic was the fact that the personal relationship between Dr. Fishman and Mr. Nazemi began to erode.Fishman testified that Mr. Nazemi attempted to extort him by threatening to expose an old felony conviction.

in 1983, Dr. Fishman had been convicted of a federal felony related to the practice of medicine during his medical residency in Michigan and had served a federal prison sentence. As a result, Dr. Fishman’s medical license had been revoked in both California and Michigan. Although California ultimately restored Dr. Fishman’s medical license in 1990, Michigan never did.

A consequence of the felony conviction was that Dr. Fishman did not complete his residency in orthopedic surgery and did not obtain board certification in the field of orthopedic surgery. Instead, Dr. Fishman is board-certified by the American Board of Preventive Medicine (Occupational Medicine) and carries the initials ‘F.I.C.S[.],’ which stand for Fellow of the International College of Surgeons.

On July 20, 2015, MLA filed with JAMS a petition for arbitration against Fishman for breach of contract and fraud. According to MLA, Dr. Fishman’s failure to disclose the felony conviction prior to entering into the MSA was fraud. Had MLA known that Dr. Fishman was not a board certified orthopedic surgeon, it would never have entered into the MSA or introduced Dr. Fishman to its business contacts. Fishman filed a cross-claim for breach of contract and intentional infliction of emotional distress.

According to the arbitrator, the parties were contentious throughout the arbitration process. The arbitrator found that MLA failed to prove all requisite elements of its breach of contract and fraud claims, and that MLA breached the MSA by not providing Fishman with adequate staffing and promotional services, as required by the MSA.The arbitrator awarded Fishman $113,400. As the prevailing party, Fishman was entitled to attorney fees and costs. He claimed over $1.2 million in attorney fees and $128,000 in costs. Ultimately, the arbitrator awarded Fishman one-third of what was requested in attorney fees: $418,257.

Acrimonious litigation continued up to the Court of Appeal which affirmed the arbitrators award in the unpublished case of Med-Legal Associates, Inc. v. Fishman. Following the appeal Fishman was awarded attorney fees and costs on appeal.

Maria Morales filed two claims against her employer. The first was a claim for injury to the left thumb, knees, back, headaches, internal body system, psyche, neck, and “multiples” on September 9, 2000 (ADJ2160716). The second claim was for injury to the internal system, neck, back, knees, upper extremities, psyche, and urinary system through July 31, 2001 (ADJ634371).

On June 13, 2016, the parties entered into a compromise and release in the amount of $118,000.00. Both of applicant’s claims were described in Paragraph One (1 ), but the internal system was not listed as a body part, condition or system being settled in ADJ634371. Below Paragraph Ten (10) of the C&R, the parties drew a star and handwrote, “[r]esolves all liability/claims against American Home Assurance Company/AIG for Lifestyle Furnishings.”

Approximately 26 days later, applicant notified defendant that she did not believe that the compromise and release resolved the claimed injury to her internal system.

On May 22, 2017, the matter proceeded to trial on the issue of whether the compromise and release barred applicant’s claim of injury to her internal system.

The WCJ found that the “Compromise and Release Agreement entered into on June 13, 2016 by AIG Property and Casualty (AIG) resolves applicant’s internal claim of injury in addition to all other claims of injury resolved by that agreement” and that the “claims filed against AIG were fully resolved by the Order Approving Compromise and Release dated June 13, 2016.”

The WCAB granted reconsideration, and reversed, finding that applicant’s claim of internal injury was not resolved as part of the June 13, 2016 Compromise and Release in the panel decision of Morales v. Universal Furniture, AIG.

The parties must clearly identify each injury and list the corresponding body parts in Paragraph One (1) because that section requires that the parties state “with specificity the date(s) of injury(ies) and what part(s) of body, conditions or systems are being settled.” (C&R, Paragraph One (1), p. 3, emphasis added.) Further Paragraph One (1) also states that “[b]ody parts, conditions and systems may not be incorporated by reference to medical reports.” (Id. at pp. 3, 4, 5, emphasis in original.) Paragraph One (1)· allows the parties to clearly identify the settlement of multiple injuries with corresponding body parts by requiring that the parties list the case number, the type of injury, the date of injury and the settled body parts. (Id.)

Therefore, if parties wish to settle multiple injuries to the same body part, the parties must list that body part under the description of each injury, and the parties may not settle multiple injuries to one body part by listing the body part under the description of one injury but not another.

In Jefferson v. Dept. of Youth Authority (2002) 28 Cal.4th 299 [67 Cal.Comp.Cases 727], the Supreme Court held that a general release in a workers’ compensation case will bar other potential claims against the employer that exist at the time of execution of the release unless the employee knows about the claim and expressly excepts it from the release. (Id. at p. 310.) However, approximately six years after the Supreme Court decided that case, the compromise and release form was revised to prevent overbroad releases and thus further the legislative intent of protecting workers who might agree to unfortunate compromises because of economic pressure or lack of competent advice.

The release in Paragraph Two (2) of that form states in relevant part, Upon approval of this compromise agreement . . . and payment in accordance with the provisions hereof, the employee releases and forever discharges the above named employer(s) and insurance carrier(s) from all claims and causes of action, whether now known or ascertained or which may hereafter arise or develop as a result of the above-referenced injury(ies) …

This release does not bar applicant’s claimed internal injury because it is limited to the settlement described in Paragraph One (1), and as discussed above, that paragraph did not settle the claimed internal injury.