Lien Claimants Tell Court They Can't Challenge Stays Even When Mistakes Are Made

Friday, September 15, 2017 | 0

Michael A. Rudolph may be an example of having the wrong name at the wrong time.

Judge George H. Wu

The Newport Beach surgeon has a nearly identical name to a pharmacist who is accused of receiving kickbacks in a compound drug scheme. The Division of Workers' Compensation has placed a stay on more than 1,000 liens he has filed for treating injured workers without any apparent indication he is accused of a crime.

Dr. Rudolph was one of 10 people who filed declarations with the U.S. District Court for Central California on Tuesday, saying they have no way to challenge liens that may have been inappropriately stayed. That due-process challenge goes to the heart of a lawsuit that lien holders filed against the division.

“No judge has made an order with respect to me, so there is no order for which I can request reconsideration, and there is no way for me to file a petition for removal,” Rudolph wrote in his declaration. “I have no remedy, no way to address what appears to be an administrative shutout of all my liens from the workers’ compensation system. Quite simply, there is no process that I can pursue, no form that I can file and no court that I can avail myself of within the workers’ compensation system.”

A group of lien claimants sued the DWC, charging that it has denied them due process because there is no way to challenge liens that are stayed because of suspected fraud. Declarations filed by Rudolph and the others attempt to refute the state's argument that the automatic lien stays don't deprive providers of due process because there are ways to challenge a hold on any particular lien. 

U.S. District Court Judge George H. Wu said, in a tenative decision issued in July, that if the state can't establish that lien claimants have an opportunity to argue that a stay is inappropriate, he "would be inclined to grant plaintiffs’ injunction on procedural due process grounds."

Wu is the same judge who in 2013 granted an temporary injunction in a case challenging the lien activation fee created by Senate Bill 863 that wasn't lifted until the case was dismissed in 2015.

WorkCompCentral could find no record of criminal charges against Rudolph, and he is not named on the Department of Industrial Relations' list of indicted providers.

There is a “Michael Rudolph” on the DIR’s list. But the man on the department’s list is the pharmacist Michael J. Rudolph.

Michael J. Rudolph is accused of accepting more than $1 million in kickbacks to manufacture compound creams that Kareem Ahmed, the president and chief executive of Landmark Medical Management, allegedly bribed physicians to prescribe to injured workers.

According to the EAMS database, the DWC stayed 192 liens filed under the name “Michael Rudolph.” Another 24 liens filed by Rudolph’s company, “Healthcare Pharmacy” in Tustin, are marked as stayed or dismissed for failure to file a declaration of eligibility by July 1.

But EAMS also indicates that more than 1,000 liens filed under the name “Michael Rudolph MD” have also been stayed. The DWC's action appears to be an effort to enforce the statutes created by Senate Bill 1160 that require an automatic stay on “any lien filed by or on behalf of a physician or provider of medical treatment services” upon the filing of certain types of criminal charges.

But some of the providers who filed declarations this week take offense the DWC has also placed a stay on liens filed by companies that are affiliated with indicted providers.

Other declarations complain of discrepancies among the list of criminally charged providers whose liens have been stayed that is posted to the DIR's website; liens that are designated as stayed on the Division of Workers’ Compensation’s Electronic Adjudication Management System; and liens that are flagged as stayed on a broader list sent to administrative law judges that includes not just the names of indicted providers but also related business entities.

In one declaration, Scott Schoenkopf, managing director of Liening Edge, says he’s been unable to pursue payment on liens filed by a provider against whom criminal charges were dropped in March.

A Los Angeles County grand jury in 2015 indicted Dr. David Johnson on charges that he submitted false bills to Zenith Insurance Co. in an alleged referral scheme involving Frontline Medical Associates. The grand jury indicted 15 people altogether, including Dr. Munir Uwaydah, the majority owner of Frontline. He is accused of masterminding a scheme to pay up to $10,000 a month to attorneys for client referrals.

The Los Angeles County District Attorney’s Office in March voluntarily dismissed the indictment and refiled criminal charges against most of the original defendants. A transcript of court proceedings shows that county prosecutors did not refile against Johnson because of the failing health of the 82-year-old surgeon.

Johnson is no longer identified as an indicted provider on the DIR’s list, but Schoenkopf said in his declaration that liens filed by Johnson’s Firstline Health remain stayed. According to EAMS, at least 198 liens filed under the name of “Firstline Health Inc.” were still stayed as of Thursday.

“Liening Edge has sent hearing representatives to pursue the liens of Firstline Health,” Schoenkopf writes. “Both before and after all the charges against Dr. Johnson were dismissed, the (workers’ compensation administrative law judges) have consistently ruled that the liens are stayed.”

Schoenkopf filed minutes from 12 proceedings between April and July in which administrative judges all noted that the liens filed by Firstline Health were still stayed.

He says he reached out to DWC Associate Chief Judge Mark Fudem, who reportedly said in a June 13 email filed as an exhibit. “It is my understanding that even if Dr. Johnson’s indictment is dismissed, Firstline is identified with several criminally charged providers.”

Schoenkopf asked for clarification about what Fudem meant when he said the company was “identified with” other indicted providers and how that decision was made. He says the associate chief judge did not respond.

He also said he sent a letter to Acting Administrative Director George Parisotto but received no response.

“In short, there is no process available to Firstline to challenge the ‘stay’ against its hundreds of liens representing its provision of medical services over a period of many years to injured workers,” Schoenkopf says. “Given that the charges against Dr. Johnson have already been dismissed and the liens remain stayed, it appears that the stay is indefinite in duration and is, in effect, both a complete denial and an effective dismissal of those liens.”

California Secretary of State records indicate Johnson was the chief executive of Firstline in January 2015, but a 2017 filing lists Rosa Bernal as the chief executive. The Center for Investigative Reporting in 2015 said Uwaydah is the owner of Firstline Health, which it describes as a successor to Frontline Medical Associates.

In another declaration, hearing representative Chris Pinkernell also reported problems when appearing on Firstline lien claims.

Pinkernell says Santa Ana Administrative Law Judge Robin Leviton “regularly and consistently precluded lien claimants from signing in or appearing in any cases in which their liens are designated as stayed under Labor Code Section 4615.”

Pinkernell says he appeared at the Santa Ana district office for a hearing in May, but his name was ordered crossed out on the sign-in sheet, and Leviton said there would be no appearance noted or taken for Firstline Health.

But Pinkernell also reports difficulty collecting liens for “First Choice,” which he says is not identified as an indicted provider on the DIR’s public list.

Peter Yeh, co-chief operating officer of lien collection firm QBC, also filed a declaration saying liens filed by First Choice Healthcare Medical Group have been stayed without any notice and without a court ruling finding that an indicted or charged provider is an owner or alter ego of the company.

California Secretary of State records identify Dr. Homayoun Saeid as the owner and president of First Choice Healthcare Medical Group in Los Angeles. WorkCompCentral could find no record of criminal charges or disciplinary action taken against Saeid.

However, the Orange County District Attorney’s Office, in a 2014 press release announcing the filing of charges in the Landmark Medical case, identified Dr. Craig Chanin as one of the defendants. In the press release, prosecutors said “First Choice Healthcare Medical Group and Chanin are accused of receiving over $770,000” in kickbacks to dispense and prescribe compound creams to comp patients.

According to the U.S. Centers for Medicare and Medicaid Services’ registry of National Provider Identifiers, First Choice Healthcare Medical Group is located at 2010 Wilshire Blvd., Suite 900, in Los Angeles.

A Google search for “Dr. Craig Chanin” turns up addresses including the one on Wilshire. However, according to the CMS registry, Chanin’s practice is located at 1930 Wilshire Blvd. in Suite 301.

If the First Choice Healthcare Medical Group liens are stayed because of the charges against Chanin, Yeh said in his declaration that it has not been explained to him. He also submitted minutes from hearings and hearing reports that he says show the liens are stayed.

“It is unclear from these documents whose criminal charges must be resolved for these matters to come off of ‘stay’ status,” Yeh wrote. “There does not appear to be a meaningful way to access the courts or the DIR to explain why the stay should not be imposed.”

The next hearing in the case, captioned Vanguard Medical Management Billing Inc. et al v. Christine Baker et al, is Sept. 28.

CORRECTION: Liening Edge is a lien litigation firm. An earlier version of this story contained an inaccurate description of its services.