Comp Providers Named in Latest Federal Bust

Tuesday, July 18, 2017 | 0

Federal prosecutors filed additional charges accusing a Los Angeles radiologist of paying referral fees for patients to defraud California workers’ compensation carriers as part of the latest fraud takedown.

The U.S. Department of Justice on Thursday announced its “largest-ever health care fraud enforcement action,” in which 412 people were charged with participating in schemes that generated $1.3 billion in false billings.

Most of the charges are for defrauding federal programs including Medicare and the military health care program Tricare. But at least two defendants were hit with additional charges accusing them of defrauding California comp carriers by participating in an illegal referral scheme.

A superseding indictment filed July 11 with the U.S. District Court for Southern California accuses Dr. Ronald Grusd and Gonzalo Paredes of paying marketers and a chiropractor for patient referrals. Parades was an administrator at Grusd’s California Imaging Network Medical Group, according to court papers.

Grusd and Parades both pleaded not guilty to charges filed in 2015 accusing them of paying kickbacks to a San Diego chiropractor identified in court papers as “Dr. A.” The superseding indictment says Grusd and Parades identified the recipient of the payments as Steven Rigler, a chiropractor in San Diego.

Grusd and Parades are scheduled to be arraigned on the latest charges July 27.

The indictment, which adds additional counts including money laundering and health care fraud to the counts of mail fraud and honest services fraud, alleges Parades and Grusd agreed to pay $150 to $180 for each patient needing a magnetic resonance imaging scan that Rigler referred from his clinic in Calexico. They also allegedly agreed to pay $280 to $350 for each patient needing nerve conduction tests, and $50 per shockwave treatment.

The indictment also claims the patients Rigler referred to Grusd were recruited through a capping scheme that has attracted the attention of federal prosecutors as well as the Orange County District Attorney’s Office.

Rigler was indicted and pleaded guilty in November 2015 to charges that he paid $3,000 a month to Carlos Arguello and Fermin Iglesias in exchange for patient referrals. His plea agreement is not available through the court’s website.

Arguello and Iglesias were charged in 2014 with referring patients to Rigler under an agreement in which Rigler would refer those same patients to other providers for ancillary procedures. Arguello and Iglesias allegedly set a quota for the value of services Rigler was expected to prescribe for each injured worker they sent to him through their company Providence Scheduling.

Iglesias pleaded guilty to a single count of conspiracy to defraud and deprive patients of the right to their doctors’ honest services. He is scheduled to be sentenced July 31.

Arguello pleaded guilty in August 2016 to a single federal count of conspiracy to commit mail and wire fraud, and is scheduled to be sentenced Aug. 8.

However, the Orange County District Attorney’s Office in June filed separate charges against Arguello, accusing him of masterminding a capping scheme that involved Providence Scheduling as well as Centro Legal Internacional.

Orange County District Attorney Tony Rackauckas said during a press conference that Arguello and Edgar Gonzalez set up a call center in El Salvador, and advertised the phone number on flyers and business cards distributed in predominantly Hispanic neighborhoods.

When people called the number, they were set up with attorneys and providers who were allegedly paying Arguello and Gonzalez referral fees. In addition to Arguello and Gonzalez, Rackauckas charged 10 applicants’ attorneys with participating in the alleged capping ring in what he said was “phase one” of an investigation into Arguello’s referral network.

Federal prosecutors for the Southern District of California also filed charges July 11 accusing John Workman of fraud relating to $16.9 million in shockwave treatments that were provided as a result of bribes.

Court papers allege Workman received $13,139.66 for a patient of “Dr. H’s clinic in Corona, knowing and intending that defendant would pay Dr. H part of that money as a kickback for referring the patient to Foremost for shockwave treatment.”

Charging papers don’t provide additional information about Dr. H or the alleged scheme involving Workman and Foremost.

Fernando Valdes and attorney Lee Mathis own Foremost, according to an indictment a federal grand jury handed down in 2014. The indictment accuses Mathis and Valdes of paying San Diego chiropractor George Reese $100 for each patient he referred to Foremost Shockwave Solutions in Los Angeles. The kickbacks were allegedly disguised as rent, lease and marketing agreements.

According to the indictment, Mathis and Valdes generated billed California comp carriers more than $22 million for shockwave treatments as a result of the alleged scheme.

The 2014 indictment identifies “Dr. B,” “Dr. C” and “Dr. D,” but no Dr. H and no one with an office in Corona.

Reese pleaded guilty in June 2016 to a single count of conspiracy to commit honest services mail fraud. He started serving a 366-day prison sentence on June 19.

Valdes cut a deal with federal prosecutors July 13, according to court records. Although the plea agreement is sealed, a docket entry notes that the court accepted his guilty plea on one count of conspiracy to commit honest services mail fraud and health care fraud last week.

Mathis has pleaded not guilty.

Meanwhile, federal prosecutors in California’s Central District said they filed charges against two people for allegedly using compound drugs to defraud Medicare and federal workers’ compensation programs.

Prosecutors say they charged Jamen O. Griffith and Damon Glover with steering prescriptions to Valley View Drugs Inc. in La Mirada. Griffith and Glover allegedly owned Western Medical Solutions, a marketing company that paid marketers to generate prescriptions for compound drugs that were filled by Valley View.

The U.S. District Attorney’s Office for Southern California said in a statement that “health insurers” reimbursed Valley View more than $13 million for prescriptions generated by Western Medical Solutions. And the federal prosecutors said Valley View paid WMS about $7.6 million for the prescription referrals.

The charging papers against Griffith and Glover are still sealed, according to court records.

At the same time, prosecutors say James Chen pleaded guilty on June 19 to charges that he billed Tricare $62 million for fraudulent compound drug prescriptions for which he paid illegal referral fees.

Chen owned Clevis Management, which operated Haeoyou Pharmacy in Palmdale and City of Commerce.

Charging papers accusing Chen of health care fraud claim he entered into agreements with Trestles RX to fill prescriptions in exchange for kickbacks.

John Garbino, president of Trestles RX, pleaded guilty on June 26 to receiving illegal payments in exchange for arranging compound drug prescriptions. He pleaded guilty to receiving $926,563 in kickbacks for prescriptions that were paid for by Tricare, Medicare and the federal Office of Workers’ Compensation Programs.

He is scheduled to be sentenced Dec. 4.