Many Liens Dismissed July 1 Held by Convicted or Indicted Providers

Friday, September 1, 2017 | 0

A big chunk of the 292,000 liens, with a combined value of $2.7 billion, that were dismissed by the California Division of Workers' Compensation in July were held by indicted or convicted medical providers, records show.

WorkCompCentral’s review of the DWC’s database of dismissed liens found at least 5% of liens dismissed by operation of law — 13,924 — because the declaration required by Senate Bill 1160 was not submitted by July 1 were filed by providers accused or convicted of the types of crimes that would trigger a special lien consolidation hearing under Assembly Bill 1244.

Dismissed liens filed by convicted or criminally charged providers accounted for more than 6% of the total claimed value for all dismissed liens. The dismissed liens demanded more than $170.8 million in payments.

Dr. Hootan Melamed, who pleaded not guilty to charges in a June 2016 federal grand jury indictment accusing him of conspiring with marketers to pay kickbacks to doctors who recommended certain goods and services, walked away from the largest number of liens by not filing the declarations required by SB 1160. The indictment alleged Melamed, among other things, paid kickbacks to providers who prescribed compound creams.

The DWC’s database that shows 5,746 liens filed by New Age Pharmaceuticals, and another 292 filed by Concierge Compounding Pharmaceuticals, were dismissed on July 1. The total claimed value for the liens filed by the two companies owned by Melamed was $77.5 million.

Companies affiliated with Dr. Munir Uwaydah, who was indicted by an Orange County grand jury in 2015 for allegedly masterminding a $150 million workers’ compensation fraud scheme to pay attorneys and marketers for client referrals, lost liens with a total claimed value of $75.8 million on July 1.

Uwaydah was the majority owner of the now-closed Frontline Medical Associates clinic in San Fernando, which specialized in treating injured workers on a lien basis. The Orange County grand jury alleges Uwaydah, who reportedly fled the country after becoming a person of interest in the 2008 murder of Juliana Redding, used Frontline to generate nearly $150 million in bills sent to work comp carriers for surgeries, prescription drugs, scans and office visits that were based on falsified medical reports.

The DWC dismissed 283 liens filed by Frontline with a total claimed value of $30.2 million.

The division also dismissed another 808 liens filed by Uwaydah’s Firstline Health. The Firstline liens demanded an additional $45.6 million.

Dr. Ronald Grusd, a Los Angeles radiologist accused of paying marketers to persuade a doctor to refer work comp patients for services provided by his medical corporation, walked away from 4,910 liens with a total claimed value of $29.7 million by not filing declarations required by SB 1160.

A federal indictment alleges Grusd offered bribes to Alexander Martinez and Ruben Martinez to get a chiropractor identified only as “Dr. A” to refer patients to California Imaging Network.

Alexander Martinez and Ruben Martinez both worked as a marketer for “Dr. A,” according to court documents. Both pleaded guilty to a single charge of conspiracy to commit honest services mail fraud in May 2016 and are scheduled to be sentenced Dec. 11.

Grusd, meanwhile, is asking the U.S. District Court for Southern California to dismiss the charges against him for allegedly vindictive prosecution. He says in court filings that federal prosecutors filed a 45-count superseding indictment against him after he refused to accept a plea deal relating to the eight-count indictment filed in November 2015.

Pacific Hospital of Long Beach, which was at the center of an illegal referral scheme that generated an estimated $500 million in work comp billings, didn’t file a declaration for 410 liens with a total claimed value of $20.3 million, according to the DWC’s database of dismissed liens.

Former owner Michael D. Drobot pleaded guilty in February 2014 to one count of conspiracy to defraud a federal health care program and one count of paying kickbacks to doctors who referred patients to Pacific Hospital. Drobot was scheduled to appear at a sentencing hearing on Sept. 8, but court documents show that hearing was converted to a status conference Wednesday. Related documents, including a stipulation to continue sentencing, were filed under seal and are not available to the public.

Drobot is asking the Los Angeles County Superior Court to order the DWC to vacate an order suspending him from participating in the work comp system, effective April 28, on the grounds that the mandatory suspension for convicted providers in AB 1244 does not apply to executives.

Pacific Hospital, meanwhile, is asking the Los Angeles court to direct the DWC to vacate an order consolidating all its liens because Drobot was not a service provider. The hospital also argues that it was denied the opportunity to present evidence that Drobot was not an owner from August 2005 to October 2010, and liens arising from services during that period should not be consolidated.

Drobot’s son, Michael R. Drobot, pleaded guilty in 2016 to federal conspiracy and kickback charges. He was accused of helping solicit doctors to accept kickbacks for referring patients to Pacific Hospital. He was also accused of paying doctors a cut of the reimbursement for drugs dispensed by his California Pharmacy Management and Industrial Pharmacy Management.

The DWC database shows Industrial Pharmacy Management failed to file a declaration on 604 liens with a total claimed value of $2.8 million.

Dr. Philip Sobol, an orthopedic surgeon in Los Angeles who pleaded guilty in November 2015 to a federal conspiracy charge and admitted to accepting kickbacks for referring patients to Pacific Hospital, left on the table liens with a total claimed value of nearly $3 million.

The DWC on July 1 dismissed 752 liens filed by Sobol Orthopedic Medical Group.

It’s not clear if any of the dismissed liens were among the 6,000 liens the DWC stayed with a total claimed value of more than $42.7 million when Sobol was suspended in May. The DWC held its first hearing to review Sobol’s consolidated liens on Aug. 16.

Chiropractor Steven Rigler, who was accused of paying a monthly fee to Providence Scheduling for patient referrals and pleaded guilty in February 2015 to a conspiracy charge, didn’t file a declaration for 145 liens with a total claimed value of just over $2 million.

Dr. Randy Rosen, who is accused of receiving $600,000 in kickbacks from Landmark Medical Management to prescribe compounds, didn’t file a declaration for 343 liens demanding payment of $3.4 million.

The DWC on July 1 dismissed four liens filed by Landmark with a total claimed value of just under $4,000.

The WCIRB last year projected up to $250 million in savings as a result of the lien declaration requirement in SB 1160 as well as the provision in AB 1244 creating a presumption that liens filed by convicted providers are tainted. The WCIRB did not respond to questions about whether the number of liens the DWC dismissed in July changes its initial estimates.

Regardless of the savings, Mark Sektnan, president of the California Association of Insurance Companies, said the dismissals should clear out some clutter in the system.

“We think the actions by DWC show the laws that the Legislature enacted to reduce the backlog of liens are working,” he said.