Authorities criminally charged 26 doctors, pharmacists and business owners in connection with an alleged $40 million fraudulent medical billing and kickback operation that may have had 13,000 patients receive unneeded or wrong treatment, the Orange County District Attorney’s Office and the state Department of Insurance announced Thursday.
All of the defendants were charged with multiple felony counts, including conspiracy to commit medical insurance fraud, according to the state insurance department.
Investigators said a Beverly Hills couple — Christopher King, 38, and Tanya Moreland King, 37 — masterminded a “complex insurance fraud scheme” in which doctors and pharmacists were recruited to participate, according to a joint statement from the two agencies. The Kings own Monarch Medical Group Inc., King Medical Management Inc. and One Source Laboratories Inc., authorities said.
Doctors were paid to order tests or write prescriptions for products that were either medically worthless or unnecessary, according to authorities.
About “13,000 patients statewide got a treatment they didn’t need or did not get the treatment they were supposed to get” as a result of the of the alleged fraud, said Nancy Kincaid, a spokeswoman for the state Department of Insurance.
“It’s illegal for medical professionals to accept payment or some (other) sort of inducement in exchange for prescribing some sort of medical treatment,” Kincaid said. “They know that. They learn about that in medical school. These are doctors who betrayed their patients for cash. This is nothing but greed.”
Pharmacists Charles Bonner, 56, and Mervyn Miller, 66, both of Irvine, who own Steven’s Pharmacy in Costa Mesa, are accused of selling more than $1 million in creams that were not FDA approved and had no known medical effectiveness, Orange County District Attorney Tony Rackauckas said.
Of the $40 million billed to insurance companies, the Kings allegedly took in about $23 million in profit, Rackauckas said.
The alleged scheme had three parts:
— The “snake oil scam,” in which Bonner allegedly manufactured and sold “compound transdermal creams” to the Kings for $15 to $40 a tube, Rackauckas said. The prescriptions, which authorities said were medically worthless, were then billed to workers’ compensation insurance companies for $250 to $700 a tube;
— The “medication kickback scam,” in which the Kings allegedly purchased oral pain medications from companies in Orange and Costa Mesa, repackaged them and billed insurance companies without disclosing the wholesale cost;
— The “bogus urine test scam,” in which doctors allegedly ordered unnecessary urine tests, Rackauckas said. The tests were supposedly ordered to verify that patients covered in workers’ compensation claims were taking the medication prescribed to them, Rackauckas said.
After the samples were tested they would be referred to Pacific Toxicology Laboratory for more tests with the lab getting $60 for each test while billing the insurance companies hundreds of dollars a patient, Rackauckas said.
Doctors participating in the alleged scams collected about $2.1 million in kickbacks, Rackauckas said.
Rackauckas noted that Tanya King could serve up to 117 years in prison if convicted at trial. The two pharmacists, Bonner and Miller, could face up to 28 years in prison and the 21 doctors and a physician’s assistant could face up to 25 years in prison if convicted at trial.
Rackauckas and Jones emphasized how medical insurance fraud drives up the cost of medical care.
“They affect the health of our economy and our bodies,” Rackauckas said.
“The clear message that we want to send today is if you’re committing these types of fraud… we’re going to come after you,” Jones said.
The other defendants in the case are:
— Dr. Jerome Robson, 68, of Modesto;
— Dr. Eric Schmidt, 63, of Santa Rosa;
— Dr. Chris Chen, 55, of Pleasanton;
— Dr. Duke Ahn, 49, of Los Alamitos;
— Dr. Robert E. Caton, 65, of Modesto;
— Dr. Eduardo T. Lin I, 55, of Pleasanton;
— Dr. Ismael Silva Jr., 63, of Newport Coast;
— Dr. Ismael Geli Silva, 38, of Huntington Beach;
— Dr. Paul A. Stanton, 54, of Victorville;
— Dr. John Casey Jr., 65, of Modesto;
— Dr. Jonathan Cohen, 57, of Modesto;
— Dr. Mohamed Ibrahim, 40, of Danville;
— Dr. William Pistel, 53, of Modesto;
— Dr. Kourosh Shamlou, 49, of Newport Coast;
— Dr. Mannie Joel, 67, of Pleasanton;
— Dr. Parvez Fatteh, 46, of Pleasanton;
— Dr. Robert Fenton, 68, of Ranchos Palos Verdes;
— Dr. Michael Henry, 61, of Granite Bay;
— Dr. Howard Oliver, 70, of Long Beach;
— Rafael Chavez, a physician’s assistant, 53, of Apple Valley and;
— Dr. Paul Kaplan, 76, of Folsom.
Most of the defendants are expected to surrender to authorities by the end of Thursday, Kincaid said.
Both Insurance Commissioner Dave Jones and Rackauckas discussed how complicated the alleged scheme was and how difficult it can be to investigate. Rackauckas told City News Service that some medical insurance fraud cases his office has taken on dragged on for several years, including a current one dating back to 2008.
“They’re very complex with a lot of issues, and the attorneys tend to be very higher level civil attorneys who make a lot of motions and create an awful lot of paperwork,” Rackauckas said. “We know going in it’s going to be hard.”
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