Southern California health fraud schemes: Laguna Beach psychiatrist and six Orange County residents arrested

On Wednesday, prosecutors said that a Laguna Beach psychiatrist and six other Orange County residents have been accused for their role in Southern California health fraud schemes. The schemes bilked government insurance programs of over $125 million.

The US attorney’s office said that overall 22 defendants have been facing federal charges in Santa Ana and Los Angeles under a countrywide sweep that include 301 people accused of wrongly billing $900 million.

The take down has been described as the largest in US history by authorities, both in the case of number of arrests done and the financial scope of the fraud.

The defendants from Orange County have been accused of crimes, involving billing Medicare for occupational therapy that wasn’t provided ever, submission of wrong patient reports for compensation of state workers and paying kickbacks for costly prescriptions billed to TRICARE, the insurance plan of military.

In a statement, Deirdre Fike, assistant director in charge of the FBI’s Los Angeles field office, said, “Those who commit fraud targeting health care funding get rich on the backs of American taxpayers who watch their premiums go up”.

Nearly all the cases in Southern California have arisen from a compounding pharmacy scheme that targets TRICARE. Personalized medications are formulated by compounding pharmacies, but as per prosecutors those included prepared formulas focused on the highest possible profit, not utmost efficiency.

Doctors allegedly received kickbacks for prescribing medications that had reimbursements of around $15,000. In many cases, patients didn’t require the medicine or never had come in contact with the prescribing doctor. In some cases, marketers offered illegally obtained information on beneficiaries to pharmacies and thereafter prescriptions were mailed to them every month.

“In all, 22 defendants face federal charges in Santa Ana and Los Angeles as part of a nationwide sweep involving 301 people accused of falsely billing $900 million, the U.S. attorney’s office said. Authorities described the takedown as the largest in U.S. history, both in the number of those arrested and the financial scope of the fraud,” according to a news report published by OC Register.

“Those who commit fraud targeting health care funding get rich on the backs of American taxpayers who watch their premiums go up,” Deirdre Fike, assistant director in charge of the FBI’s Los Angeles field office, said in a statement.

Most of the Southern California cases stemmed from a compounding pharmacy scheme targeting TRICARE. Compounding pharmacies formulate personalized medicines, but prosecutors said those involved prepared formulas aimed at the highest possible profit, not maximum effectiveness.

According to a report in Nbc News by Pete Williams, ” Federal authorities said Wednesday that roughly 300 people in more than half the states have been charged in the largest crackdown to date on health care fraud. Those arrested account for more than $900 million in false billings to Medicare and Medicaid, according to the Departments of Justice and Health and Human Services.”

Among those arrested are 60 licensed medical professionals, including 30 doctors, officials said. The billings were for treatments or services deemed medically unnecessary — or for services that were never provided at all, including home care, medical equipment, and phony prescriptions.

The five are accused of funneling more than $38 million worth of reimbursements on the $86 million in bills through several New York shell companies that purported to provide consulting, marketing and advertising services but were actually intended to hide the money from the IRS and avoid taxes. Among those charged were a licensed occupational therapist and a licensed physical therapist.

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