One Modesto physician pleads guilty in huge fraud case; Five others await fate

Nov. 09--Five local physicians charged with participating in a $40 million fraudulent billing and kickback scheme are set for pretrial hearings in December and January.

A total of six doctors who practice in Modesto were arraigned in April 2017 on felony counts of conspiring to commit medical insurance fraud, false and fraudulent claims and insurance fraud, following a multiagency investigation led by the California Department of Insurance.

Authorities said they were among 26 doctors, pharmacists and business owners in California charged with participating in the alleged conspiracy to maximize profits from workers compensation patients. Charged with masterminding the scheme are Tanya Moreland King and her husband Christopher King of Beverly Hills, who owned Monarch Medical Group, King Medical Management and One Source Laboratories in Southern California.

Doctors John Casey, Jonathan Cohen, Mohamed Ibrahim and William Pistel of Stanislaus Orthopaedic and Sports Medicine on East Orangeburg Avenue are set for a pretrial hearing Jan. 18 in Orange County Superior Court. Another Modesto physician, Jerome Robson, has a pretrial court date Dec. 3.

Dr. Robert Caton of Modesto accepted an agreement with the prosecution in September, pleading guilty to a misdemeanor charge of false and fraudulent claims and accepting kickbacks. More than 20 felony counts and enhancements were dismissed.

A similar plea deal could be offered to the other local physicians because there's no evidence their patients were physically harmed, an Orange County prosecutor said.

Caton was sentenced to three years probation and agreed to pay $175,270 in restitution to the scammed insurance companies. He also agreed to pay $18,000 to a victim's witness emergency fund.

"He accepted responsibility and paid back the money he made from the arrangement with Mr. King," said Shaddi Kamiabipour, a senior prosecutor for the Orange County district attorney. She said the penalty was not unusual for someone whose involvement was less than others.

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The Medical Board of California, which oversees physician licenses, is notified of the conviction.

Kamiabipour said that Caton had no prior record and there was no evidence Modesto-area patients were physically injured. Before offering a plea agreement, the prosecution in this type of case considers the physicians' role in the community and how a conviction might impact health care in a smaller city, she said.

The main purpose of prosecuting the widespread case is protecting consumers and seeking restitution for the insurance carriers, not to shut down health clinics, Kamiabipour said, though tougher penalties are sought if patients were harmed. "I have cases where patients have been harmed," she noted.

Kamiabipour said restitution payments resulting from convictions are pooled and will be distributed to affected insurance carriers.

Caton's attorney did not return a message from the Modesto Bee and lawyers representing other defendants had no comment or did not respond to calls.

Modesto Attorney Kirk McAllister, representing Robson, said: "We continue to investigate the case and are vigorously defending it."

Carmen Balber, executive director of Consumer Watchdog, a nonprofit voice for taxpayers and consumers, said a five-figure fine and restitution is a low-ball sentence given the magnitude of the billing scheme.

"Thousands of patients underwent useless procedures and made millions of dollars for these doctors and that company," Balber said. "It's nearly like telling a bank robber when they are caught all you have to do is pay back the money. ... What's to stop the next doctor from participating in a scheme that puts patients at more risk?"

Balber said it's been argued for decades that fraud in the workers compensation system is rampant and that's led to consistent reductions in benefits for workers -- and higher workers comp expenses for businesses. "It's harder for employees with legitimate injury claims to get the treatment they need," she said.

In a major announcement in April 2017, authorities said the 26 defendants took part in a conspiracy to bill for unnecessary creams, urine tests and treatments in order to boost earnings from workers compensation patients. The scheme included insurance billings for more than 13,000 patients between 2011 and 2015; a total of $40 million was billed to 27 insurance carriers.

More than $23 million was paid to those involved in the conspiracy, authorities said.

According to investigators, the Kings made payments to doctors across the state every time they prescribed a compound cream and oral medications or ordered urine tests. The Kings had an arrangement with a pharmacy in Costa Mesa that made the creams, which did not have FDA approval or a known therapeutic value.

The Kings, who purchased the creams for $15 to $40 per tube, billed workers compensation insurance carriers up to $700 per tube after the creams were administered to patients. The physicians prescribing the creams were paid a $50 flat rate or a percentage of profits, authorities said.

The scam also included billings for repackaged pain medications and urine tests that were supposedly done to verify patients were taking prescribed medications, authorities said. Urine samples collected at physician offices were sent for testing at a lab owned by the Kings and insurance companies were billed for the tests.

According to the allegations, Caton and Robson each received $175,000 in illegal payments and a combined $248,000 in kickbacks was paid to Casey, Cohen, Ibrahim and Pistel of Stanislaus Orthopaedic and Sports Medicine.

Christopher King pleaded guilty to two felony counts soon after the charges were announced in April 2017. Kamiabipour said sentencing is pending his cooperation with the prosecution.

Tanya Moreland King is charged with more than 100 counts of insurance fraud, conspiracy to commit insurance fraud and referral of clients for compensation. She is scheduled for a preliminary hearing in June.

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