Seven Central Valley doctors accused in $40 Million kickback scheme
April 20, 2017
• 13,000 patients affected in statewide workers' comp fraud
• “Played with patients' lives, buying and selling them for profit”
Five doctors from Modesto, one from Granite Bay and one from Folsom are among 26 doctors, pharmacists and business owners charged in a $40 million kickback scheme, according to California Insurance Commissioner Dave Jones and Orange County District Attorney Tony Rackauckas.
The five Modesto doctors are identified by the state as Jonathan Cohen, 57; John Casey Jr., 65; Robert E. Caton, 65; Jerome Robson, 68; and William Pistel, 53. The other two from the Central Valley are identified as Michael Henry, 61, Granite Bay, and Paul Kaplan, 76, of Folsom.
Tanya Moreland King, 37, and her husband Christopher King, 38, both of Beverly Hills, own medical billing and medical management companies Monarch Medical Group, Inc., King Medical Management Inc. and One Source Laboratoires Inc., the Department of Insurance says.
The pair is accused of masterminding a complex insurance fraud scheme of recruiting doctors and pharmacists to prescribe unnecessary treatment for workers' compensation insurance patients.
Irvine pharmacists Charles Bonner, 56, and Mervyn Miller, 66, both owners of Steven's Pharmacy, are accused of conspiring with Christopher and Tanya King by selling more than $1 million in compound creams that were not FDA approved nor have known medical benefits.
"The Kings and their co-conspirators played with patients' lives, buying and selling them for profit without regard to patient safety," says Mr. Jones. "Patients have the right to expect treatment decisions by health care professionals … based on medical need and not unadulterated greed. The magnitude of this alleged crime is an affront to ethical medical professionals."
From 2011 to 2015, the defendants are charged for their supposed part in the fraudulent scheme of billing for unnecessary creams, tests and treatments to maximize profits. More than 13,000 patients and at least 27 insurance carriers were victims in the scheme, the Insurance Department says.
Approximately $23.2 million was paid out to the defendants, but a total of $40 million was billed to insurers, the state says.
Circumstances of the Case
Here is how the complex scheme worked, according to the California Department of Insurance:
The Kings are accused of making oral and written agreements with doctors across the state paying them each time they prescribed a compound cream or oral medication or ordered a urine drug test. The doctors or the companies connected to them are accused of labeling the payments "marketing expenses" in an attempt to conceal the kickbacks. The Kings are accused of rewarding doctors who provided higher volume by paying for office technicians.
The Kings are accused of working with pharmacist and co-defendant Charles Bonner, owner of Stevens Pharmacy in Costa Mesa, to manufacture a variety of creams with unknown effects from Steven's Pharmacy that were not FDA approved. The Kings purchased the creams for between $15 and $40 per tube. These products were then billed to patients' workers' compensation insurance carriers for between $250 and $700 dollars per tube. Tanya King is accused of recruiting physicians to participate in this scam by paying a flat $50 rate or a share in the profits.
The Kings are accused of purchasing repackaged oral pain medications from two companies: NuCare Pharmaceuticals in Orange and A-S Medication Solutions in Costa Mesa. Using their company Monarch Medical Group as a cover, the Kings are accused of repackaging meds sent directly to the physicians involved in the scam. The state says that as the doctors dispensed the medication, the bar code on the packaging was scanned, notifying the Kings.
The Kings are accused of billing workers' compensation insurance carriers without disclosing the wholesale cost or the fact they had purchased the medication on behalf of the physicians who ultimately prescribed it. Once the Kings received the payment, they are accused of splitting the profits with the prescribing physician based upon a pre-arranged agreement.
The Kings are accused of providing technical staff to participating physician's offices through their company One Source Labs. The doctors are accused of ordering unnecessary urine tests, under the guise of verifying patients on workers' compensation insurance were taking their medications as prescribed. The urine samples were then tested by One Source Lab technicians or the doctors' staff and billed to the insurance company on behalf of the physicians by King Medical Management. The results were then referred to Pacific Toxicology Laboratory for additional testing, regardless of results. Through their company One Source Labs, the Kings are accused of paying Pacific Toxicology a flat rate of $60 per test and billing the insurance carriers hundreds of dollars per patient.