Radiologist Strikes Back With Allegations of Vindictive Prosecution

Tuesday, August 1, 2017 | 1

A Southern California radiologist says a grand jury indictment accusing him of paying fees for referrals should be thrown out for vindictive prosecution and the appearance of vindictiveness.

Sharon Appelbaum

The U.S. Attorney’s Office in November 2015 filed indictments against eight people accused of bilking work comp carriers in California out of $25 million as part of a kickback and referral scheme. An eight-count indictment filed at the time alleged Los Angeles radiologist Dr. Ronald Grusd paid kickbacks to a San Diego chiropractor who referred patients to Grusd’s California Imaging Network Medical Group.

A superseding 45-count indictment filed July 11 accuses Grusd of paying marketers and a chiropractor for referring patients to California Imaging Network.

Grusd’s attorney, Sharon Appelbaum, on Monday filed a motion to dismiss the superseding indictment for vindictiveness. She said prosecutors ratcheted up the pressure on her client after he refused to accept a plea deal and the court agreed to continue the case until October over the objection of the U.S. Attorney’s Office.

“This superseding indictment was sought after a failed plea bargain attempt, after learning of the advice of counsel defense the defendants’ planned to use at trial, and after the defendants won their motion for a continuance past the date of Aug. 1, 2017,” the motion says. “The indictment was filed three months before trial by the government, knowing at that time that defense counsel would be engaged in trial for part of those three months.”

The U.S. Attorney’s Office for the Southern District of California didn’t return calls for comment Monday.

The 2015 indictment alleged Grusd and Gonzalo Paredes, an administrator at California Imaging Network, deprived injured workers of the honest services of their physicians by paying kickbacks. Those state law violations were refiled to allege violations of the federal Travel Act with additional allegations that the defendants made phone calls and sent text messages and emails to execute the alleged conspiracy, which the grand jury said resulted in at least $1 million in fraudulent claims.

“The superseding indictment alleges there was a conspiracy to commit honest services mail fraud, but under a different theory, and now alleges that there were conspiracies to commit honest services wire fraud; and conspiracies to commit the classic theory of mail fraud, wire fraud and health care fraud,” the motion to dismiss says. “It also increases the monetary amount of the alleged fraud to $20.3 million.”

Appelbaum said she attempted to discuss possible plea deals in February. She said the negotiations were thwarted in part because of the need to negotiate with both federal prosecutors and the San Diego County District Attorney’s Office.

Grusd is also accused of paying kickbacks to a chiropractor identified as “Dr. A” in an indictment filed with the San Diego County Superior Court.

According to Appelbaum, federal prosecutors sent a proposed agreement on March 28 that identified charges Grusd would have to plead to and possible sentences, but that did not include actual or estimated restitution.

Appelbaum says the U.S. Attorney’s Office deferred to county prosecutors on the question of restitution. And she says she was not able to talk to county prosecutors before the March 31 deadline to accept the plea deal expired. Therefore, she says, her client “did not knowingly, intelligently or voluntarily reject the government’s offer.”

The U.S. Supreme Court in Bordenkircher v. Hayes held there is no element of punishment or retaliation in plea bargaining so long as the accused is free to accept or reject a deal.

Those conditions weren’t met with the “amorphous plea offer” offered to Grusd, she says. Exact charges he would have to plead to were not explained until the end of March, and restitution was never agreed upon before the offer expired.

“This was an inherently unequal bargaining position, since the parameters of the plea were never properly and fully laid out by the government,” Appelbaum argues. “This re-entry into the grand jury appears to be retaliatory for the exercise of the known right for a continuance and to have a jury trial.”

Furthermore, Appelbaum said she discussed the possibility of raising an “advice of counsel” defense as part of the plea negotiations. This argument holds that a defendant who relies on the advice of an attorney can’t be convicted of crimes that involve willful and unlawful intent.

She alleges that the U.S. Attorney’s Office returned to the grand jury to obtain the superseding indictment based on additional theories and victims to thwart an advice-of- counsel defense.

Appelbaum said a presumption of vindictiveness attaches when additional charges are based on the same conduct that was the subject of the original indictment. She said that is exactly the case with the superseding indictment against Grusd.

The superseding indictment alleges that insurance companies, rather than patients, were the victim of the scheme. But Appelbaum said the new indictment is based on the same evidence that was provided to the grand jury for the original indictment, but using a different theory, for which the defense is not prepared.

“The new indictment seems to be a smarter indictment involving charges that could have been brought back in November 2015, since none of the dates of the alleged conduct extend beyond September 2015,” she writes.

She also said prosecutors should have known losses associated with the scheme in 2015 further evidences vindictiveness. The superseding indictment alleges more than $20 million in losses, while the 2015 indictment alleged losses of more than $1 million.

“One can only assume it involves alleged losses to the alleged insurer victims, but as all parties know those claims were never paid and those allegations may only be attempted at best,” the motion to dismiss says. “Springing such a monetary change from the $1 million previously stated in the original indictment is an extreme change shortly before trial.”

She said the last-minute change to the alleged losses “gives the appearance of vindictiveness at the very least.”

As more evidence of the alleged vindictiveness of prosecutors, she says the U.S. Attorney’s Office is now trying to take Grusd’s house.

The superseding indictment includes a new forfeiture allegation seeking to seize a home on Mulholland Drive in Los Angeles.

Appelbaum said the new forfeiture allegation “is an extreme change where tracing of funds needs to be scrutinized for the sufficiency of this allegation and certainly appears as if the government is punishing defendant Grusd for the exercise of his rights, since no new discovery has been turned over justifying this sudden addition,” the motion says.

The court will hold a hearing on the motion to dismiss on Aug. 9.