Three employees of an Inland Empire physicians group that contracted with the state to perform services for people with workers compensation insurance claims pleaded not guilty Thursday to defrauding the system in a $123 million scam that involved filling exorbitantly priced prescriptions that were not required to treat patients.

In January, indictments was handed down naming Kenneth Amodeo, 60, of Agoura Hills, Rosa Bernal, 46, of Covina, Edgar Lozano, 52, of Porter Ranch, and Hector Sandoval, 54, of Sherman Oaks as co-conspirators.

They were associated with Rancho Cucamonga-based Blue Oak Medical Group, which came under investigation in March 2017, culminating in evidence being presented to a grand jury in Riverside over a six-week period, after which they were all indicted on charges of conspiracy, healthcare fraud, money laundering and sentence-enhancing white collar crime allegations.

Amodeo, Lozano and Sandoval were arraigned before Riverside County Superior Court Judge Bambi Moyer, who scheduled a trial-setting conference for Jan. 31 at the Riverside Hall of Justice.

Bernal pleaded guilty Tuesday to two counts of healthcare fraud, and in exchange for her admissions, prosecutors dropped 11 related felonies. Moyer sentenced the defendant to four years mandatory supervision.

Amodeo is free on $800,000 bail, while Lozano is out on a $750,000 bond.

Sandoval is being held on $2 million bail at the Smith Correctional Facility in Banning.

Investigators from the Orange, Riverside and San Bernardino County district attorney’s offices, along with the California Pharmacy Board, compiled evidence against the defendants.

They ultimately deciding to anchor the prosecution in Riverside County, where a number of workers comp claimants handled by Blue Oak Medical Group resided, according to D.A.’s office spokesman John Hall.

He alleged the conspirators operated several “sham clinics” that processed thousands of patients, most of whom were prescribed “the same high-priced cocktail of unnecessary medications, regardless of their condition.”

Prosecutors said pharmacies managed by several of the conspirators produced the medications, for which the state was billed — even though the prescriptions were seldom, if ever, dispensed to the patients.

According to the prosecution, the defendants allegedly laundered their ill-gotten gains through various shell companies, disbursing funds to their cohorts in California, the Middle East and Europe.

Amodeo was the pharmacist allegedly directing the fraudulent operation, along with several others, according to prosecutors.

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