Health Care & Reproductive Rights

Siskiyou County – Attorney General Edmund G. Brown Jr. announced that he has filed criminal charges against the former manager of a Mount Shasta-based medical clinic who filed “bogus claims” under Medi-Cal for medical services that were never performed.

Denise Fairhurst, 57, of Redding, was arrested Wednesday on five criminal counts of grand theft, insurance fraud and submitting false claims to the government. She is being held in Siskiyou County Jail on $1 million dollar bail. Arraignment is set for today in Siskiyou Superior Court at 3:00 p.m.

“Fairhurst ran a health clinic that was losing money and in danger of closing because of widespread financial mismanagement,” Brown said. “To keep her operation afloat, she submitted bogus claims to Medi-Cal and in the process violated California law.”

Brown’s criminal complaint, filed in Siskiyou Superior Court, contends that between January 2004 and December 2007, Fairhurst, the former manager of Alpine Healthcare Clinic, billed Medi-Cal $2.2 million for services not rendered to beneficiaries to help pay Alpine’s operations and management. In addition, Fairhurst used $33,492 of the funds to pay personal credit card bills.

The clinic’s financial problems stemmed from Fairhurst’s inability to set appropriate compensation rates for employees and physicians. For instance, a member of the maintenance staff was paid $1000 a month to work one hour a week. Other medical clinics in town lost employees to Alpine because they could not compete with its pay structure. The clinic also lost income because of an agreement she made with doctors to provide care to patients when they were admitted to a hospital.

With costs rising, Fairhurst submitted false claims to Medi-Cal. She forged Medi-Cal forms, claiming that patients had received care at the clinic, even though some patients had not been to it in years. It is estimated that two-thirds of the claims she submitted were fraudulent.

The scheme unraveled when a member of the clinic’s board of directors discovered that payment claims had been submitted for patients who had not been seen at the clinic. The board of directors hired an accounting firm to conduct an audit of the clinic’s finances. Fairhurst refused to provide any information to the firm and resigned in June 2008.

The audit uncovered further evidence of Fairhurst’s activities, including the use of a personal credit card that was linked to the clinic’s bank account. The clinic’s board of directors referred its findings to the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse for prosecution earlier this year.

If convicted, Fairhurst faces up to five years in prison.

To report fraud or abuse, call the Bureau of Medi-Cal Fraud and Elder Abuse's hotline at (800) 722-0432.

LOS ANGELES – Continuing his effort to curb prescription-drug abuse, Attorney General Edmund G. Brown Jr. today unveiled a new internet-based prescription-monitoring database that provides physicians, pharmacists and law enforcement officers a powerful technology to stop 'drug seekers' from obtaining prescription drugs.

"The recent deaths of Anna Nicole Smith and Michael Jackson have made clear to the whole world just how dangerous prescription drug abuse can be,” said Brown. “Today, my office is inaugurating a high-tech monitoring system that will enable doctors and law enforcement to identify and stop prescription-drug seekers from doctor-shopping and abusing prescription drugs.'

The state's secure database, known as the Controlled Substance Utilization Review and Evaluation System (CURES), contains more than 100 million entries representing controlled substances (Schedule II, III and IV) dispensed in California. Controlled substances are classified under federal guidelines based on potential for abuse and accepted medical use in treatment in the United States and international treaties.

Prescription Drug-Monitoring Database

Today’s launch of the online CURES database is part of Brown’s effort to curb prescription-drug abuse in the state and make it easier for doctors to track their patients’ prescription-drug history. The database gives health professionals (doctors, pharmacists, midwives, and registered nurses), law enforcement agencies and medical profession regulatory boards instant computer access to patients’ controlled-substance records. This replaces the state’s previous system that required mailing or faxing written requests for information. Each year, more than 60,000 such requests are made to the Attorney General’s office.

Each database record contains a patient’s dispensed drug record, including:

• Drug Name
• Date Filled
• Quantity, Strength and Number of Refills
• Pharmacy Name and License Number
• Doctor’s Name and DEA Number
• Prescription Number

Under the new system, a pain-management physician examining a new patient complaining of chronic back pain would be able to instantly look up the patient’s controlled-substance history to determine whether the patient legitimately needs medication or is a “doctor shopper.” “Doctor shoppers” are prescription-drug addicts who visit dozens of doctors to obtain multiple prescriptions for drugs. In the past, the doctor’s request could take several days for a response. Now with CURES instant access, doctors can identify doctor shoppers and other prescription-drug abusers before they write them another prescription. Law enforcement can also flag a person in the database to alert physicians to potential abusers.

Last year, the Attorney General’s office provided more than 64,000 Patient Activity Reports to authorized subscribers.

Growing Problem of Prescription-Drug Abuse

With 7,500 pharmacies and 158,000 prescribers reporting prescription information annually, CURES is the largest online prescription-drug monitoring database in the United States. Its goal is to reduce drug trafficking and abuse of dangerous prescription medications, lower the number of emergency room visits due to prescription-drug overdose and misuse, and reduce the costs to healthcare providers related to prescription-drug abuse.

Prescription-drug abuse costs the state and health insurers millions of dollars each year. The National Survey on Drug Use and Health estimates that 20 to 30 percent of California’s drug abusers primarily use prescription drugs. In addition, a 2005 survey by the Drug Abuse Warning Network estimates that non-medical use of pharmaceuticals accounted for more than 500,000 emergency room visits in California, an enormous drain on the state's healthcare system.

According to the latest Department of Justice 'Drug Trends' report, Valium, Vicodin, and Oxycontin are the most prevalent pharmaceutical drugs obtained fraudulently. Vicodin and Oxycontin are the two most abused pharmaceutical drugs in the United States.

CURES Success Stories

Prescription-drug abuse can have serious consequences for both abusers and the public. Each year, hundreds of people die from prescription-drug overdose in California. Dozens more are injured or killed by prescription-drug abusers who are driving under the influence of medication. The problem is on the rise; recent studies have found that teens are increasingly more likely to have abused prescription drugs than most illicit drugs.

Last year, Brown and the CURES team targeted the top 50 doctor shoppers in the state, who averaged more than 100 doctor and pharmacy visits to collect massive quantities of addictive drugs like Valium, Vicodin, and Oxycontin. The crackdown led to the arrest of dozens of suspects, including Frankie Greer, 53, who visited 183 doctors and 47 pharmacies to feed a prescription-drug habit that included some of the most dangerous painkillers in lethal combinations. In a one-year period, Greer sought out multiple doctors at hospital emergency rooms to prescribe her more than 4,830 hydrocodone tablets, 2,210 oxycodone tablets and 156 Oxycotin pills, along with a variety of additional addictive painkillers.

In May 2009, the CURES team worked with the Ventura County Sheriff’s Office to provide detectives with the prescribing history of Dr. Bernard Bass, a Burbank doctor accused of writing hundreds of fraudulent prescriptions to feed his patients’ drug addictions. Seven of his patients died from prescription-drug overdoses. Following an investigation that included the CURES report of the prescriptions he had written, Dr. Bass faced criminal charges, lost his medical license and surrendered his license to prescribe controlled substances.

CURES can also alert law enforcement and licensed medical professionals to signs of illegal drug diversions. Last fall, Brown’s office teamed up with the Simi Valley Police Department to investigate Ricky Washington, known to police for his violent history, street gang-affiliation and previous drug-trafficking arrests. The 12-month investigation revealed a criminal conspiracy in which Ricky Washington and associates had stolen the identities of eight doctors, which they used to illegally write prescriptions. The drug-trafficking group also stole the identities of dozens of innocent citizens, designating them as 'patients' in order to fill the fraudulent prescriptions. The drug ring obtained more than 11,000 pills of highly addictive drugs like Oxycontin and Vicodin.

For more information on the California Department of Justice Bureau of Narcotic Enforcement and California's current prescription drug monitoring system visit: http://ag.ca.gov/bne/cures.php.

For doctors and other authorized healthcare and prescription-drug providers, visit ag.ca.gov for more information on CURES and how to register.

Bakersfield – Attorney General Edmund G. Brown Jr. announced that Kern Valley Hospital administrator Pamela Ott was charged on eight felony counts of elder abuse today for allowing staff to forcibly administer psychotropic medications to patients for their own convenience, rather than for their patients’ therapeutic interests. These actions are alleged to have resulted in the deaths of three nursing home residents.

“As hospital administrator, Pamela Ott, was ultimately responsible for safeguarding the welfare of her patients,” Brown said. “Instead, Ott abdicated her responsibility and allowed the staff of the Kern Valley Hospital to foricibly sedate patients who questioned their care.”

Brown the charges against Ott in Kern County Superior Court. She surrendered herself in court this morning and pled not guilty. She was released on her own recognizance on the condition that she not run a skilled nursing facility. A preliminary hearing is set for November 4, 2009. Today’s charges are in addition to those filed in February 2009 against:

• Gwen Hughes, the former Director of Nursing at the skilled nursing facility of the Kern Valley Healthcare District in Lake Isabella, Kern County on charges of elder abuse and assault with a deadly weapon.

• Debbi Hayes, the former pharmacist at the Valley Healthcare District, on charges of elder abuse and assault with a deadly weapon. On August 14, 2009, Hayes pled no contest to a felony charge of conspiracy to commit an act injurious to public health. She is a cooperating witness for the people.

• Dr. Hoshang Pormir, a staff physician at Kern Valley Healthcare District, who was serving as the medical director of the skilled nursing facility, on charges of elder abuse.

As the Administrator of the Kern Valley Health Care District, Ott hired and supervised Director of Nursing Gwen Hughes.

Upon taking over in September 2006, Hughes ordered that Alzheimer's and other dementia patients be given high doses of psychotropic medications to make them more tranquil and easy to control. She ordered the administration of these medications to patients who argued with her, were noisy, or who were otherwise disruptive. Two patients who resisted were held down and forcibly given injections. Ms. Ott was informed of these actions and allowed them to continue.

Hughes is also alleged to have directed Debbi Hayes, the hospital pharmacist, to fill prescriptions for psychotropic medications. Hayes wrote and filled these prescriptions without first obtaining a doctor's approval.

Dr. Pormir approved these psychotropic medications only some time after they had been administered and without examining the patients first and determining whether these psychotropic medications were medically necessary.

Several of these patients are alleged to have had medical complications as a result of being given these psychotropic medications, including lethargy and the inability to eat or drink properly. It is believed that three patients died and one patient suffered great bodily injury as a result.

The investigation

Kern Valley Healthcare District operates a small community hospital and skilled nursing facility in Lake Isabella. The case came to the attention of authorities in January 2007, when an ombudsman reported to the Bakersfield office of the California Department of Public Health that a patient in the skilled nursing facility had been held down and given an injection of psychotropic medication by force.

The Department of Public Health immediately sent an investigative team with a doctor, a nurse, and a doctor of pharmacology. They determined that 22 patients, including some who were suffering from Alzheimer's at the skilled nursing facility, were being given high doses of psychotropic medication not for therapeutic reasons, but to simply control and quiet them for the convenience of the staff.

The Department of Public Health issued a Certificate of Immediate Jeopardy which resulted in the immediate dismissal of the Ms. Hughes. The matter was then turned over to the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.

Special Agents from the Bureau of Medi-Cal Fraud and Elder Abuse began a year-long investigation, with the co-operation and assistance of the Department of Public Health and the administration of the Kern Valley Healthcare District.

A search warrant was served on the facility in August 2008, resulting in the seizure of numerous medical files and records.

If convicted, all defendants could face up to 11 years in prison.

The case is being prosecuted by the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse, with the co-operation and assistance of the Kern County District Attorney's Office.

To view the news releases issued February 2009 about this case, go to http://ag.ca.gov/newsalerts/release.php?id=1682&.

To report elder abuse or Medi-Cal fraud, call the Bureau of Medi-Cal Fraud and Elder Abuse's hotline at (800) 722-0432.

The complaints are attached.

Los Angeles – Attorney General Edmund G. Brown Jr. today announced that deputies in his office are launching an independent inquiry into how Health Maintenance Organizations review and pay insurance claims submitted by doctors, hospitals and other medical providers.

This investigation is prompted by reports that California’s five largest health-insurance providers are denying insurance claims at rates of up to 39.6 percent.

“These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved,” Brown said.

In the coming days and weeks, deputies will review records and will speak with individuals who have relevant knowledge of the issues raised.

Los Angeles – Attorney General Edmund G. Brown Jr. announced that agents from his office late last night arrested two individuals who bilked Medicare out of $678,000 by submitting phony bills for walkers, wheelchairs, diabetic shoes and even body braces and canes, using the proceeds for luxury goods including a gold-colored Hummer H200.

A third suspect remains at large.

“At a time when government needs every dollar it has, these individuals submitted completely false claims for equipment they never purchased,” Brown said. “Such callous disregard for the public interest is intolerable and warrants swift prosecution.”

In April 2009, agents from the Attorney General’s Bureau of Medi-Cal Fraud and the U.S. Department of Health and Human Services launched a joint investigation into dozens of suspicious Medicare claims for durable medical goods.

The four-month investigation found that, beginning in November 2008, the defendants established dummy medical supply companies, obtained stolen social security numbers and physician providers numbers, made counterfeit state IDs, and used the information to submit false claims totaling $678,000 to Medicare.

After receiving payment from Medicare, the defendants deposited the funds into an account at Center Bank in Los Angeles, using them to pay for luxury goods, including the Hummer that Odonnell purchased.

Brown’s office filed charges Tuesday in LA Superior Court and yesterday arrested the following individuals:

• Monica Odonnell, 44, of Canoga Park, on four counts of misapplication of records, and computer access and fraud. She is being held on $15,000 bail in the Los Angeles County Jail. Odonnell is a Department of Motor Vehicles employee.
• Ekaterina Shlykova, 23, of Los Angeles on one count of perjury. She is being held on $25,000 bail in the Los Angeles County Jail.
• A third individual -- Evgeny Lyadov, 32, of Los Angeles -- was charged with 36 counts of grand theft, making fraudulent claims, identity theft, and perjury. Lyadov remains at large. A search of his office uncovered over $170,000 in cash, fraudulent credit cards and duplicate passports.

Medicare schemes are often uncovered when one business submits an unusually large number of claims for the same device or beneficiaries. To evade detection, these defendants sought to give the impression that doctors were ordering medical equipment for different beneficiaries at different stores.

Ultimately, however, the actual Medicare beneficiaries complained that their monthly statements showed that they had received medical equipment from businesses in Los Angeles, when they had not.

Auditors investigated and discovered a large number of claims for the same devices were being made from a company called “North Hollywood Medical Supply” and referred the suspicious activity for prosecution.

"Medicare fraud is an increasingly serious problem that costs taxpayers billions in lost and wasted dollars,' said Sarah J Allen, Special Agent in Charge for the San Francisco Region of the Office of Inspector General for the Department of Health of Human Services. 'Today’s arrests represent one victory in a bigger battle to stop these fraudulent schemes so that Medicare can better serve those who really need and deserve help.'

If convicted, Odonnell and Shlykova could receive up to three years in state prison. Lyadov could face more than 15 years in prison.

To report fraud or abuse, call the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse at (800) 722-0432.

Copies of the arrest warrants and criminal complaints are available upon request.

Federal and State authorities this morning arrested 20 defendants accused of being part of ring that defrauded Medi-Cal out of nearly $4.6 million by using unlicensed individuals to provide in-home care to scores of disabled patients, many of them children with cerebral palsy or developmental disabilities.

The 20 defendants arrested this morning are among 42 defendants named in a 41-count indictment that was returned by a federal grand jury on June 25. The indictment is part of an investigation called Operation License Integrity, a two-year investigation conducted by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General, and the Office of the California Attorney General-Bureau of Medi-Cal Fraud and Elder Abuse. The indictment alleges that the 42 defendants and two others, one of whom has already pleaded guilty to health care fraud charges, conspired to bill Medi-Cal nearly $4.6 million for in-home licensed nursing services that were actually provided by unlicensed individuals.

The organizer of the ring, Priscilla Villabroza, a registered nurse who ran a Santa Fe Springs-based company called Medcare Plus Home Health Providers, pleaded guilty in federal court last year to five counts of health care fraud. According to court documents, Villabroza and others hired individuals to provide care to disabled Medi-Cal patients, many of whom were children and young adults served under a program called Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Supplemental Services. The indictment alleges that from August 2004 through the end of 2007, Villabroza and others hired unlicensed individuals to provide services to the disabled Medi-Cal patients and billed Medi-Cal as if they were licensed vocational nurses (LVNs). Some of the unlicensed individuals had foreign training, but never passed a nursing exam here. Some of them had no medical training at all.

'Villabroza and her associates concocted a clever rip-off where they hired untrained and unlicensed nurses to provide care to children with serious health conditions,' California Attorney General Edmund G. Brown Jr. said. 'At a time of budgetary crisis, they cheated California's welfare system and pocketed millions of dollars in unauthorized state reimbursements.'

'We believe that this is the largest single case alleging Medi-Cal fraud ever filed in the state,' said United States Attorney Thomas P. O’Brien. 'The nearly four dozen people associated with this fraud ring not only cheated taxpayers, they endangered the lives of young people they promised to protect and care for.'

The unlicensed nurse defendants visited the patients at home and at school and provided nursing services that included administering medications, adjusting ventilators, and feeding through gastronomy tubes. Some parents and patients reported to authorities that the 'nurses' lacked basic skills. In one case, a 'nurse' was unable to replace a tracheotomy tube that had fallen out of a young patient’s neck. In another case, an imposter nurse simply fled a medical situation when she apparently was unable to provide assistance.

Salvador Hernandez, Assistant Director In Charge of the FBI in Los Angeles, stated: 'This case is particularly troubling in that patients received sub-standard care for serious medical conditions when defendants operated without a license and in their own best interest, not their patients’ interests. The FBI and our partners will continue to provide resources to detect and fight health care fraud that affects the stability of government programs and our economy.'
Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services, commented: 'Today's arrests send a strong message to those who would corruptly take advantage of the Medi-Cal system. Greed, at the expense of our most vulnerable citizens and their quality of care, will not be tolerated. The Office of Inspector General will continue to closely work with our Federal, State and local law enforcement partners to prevent, deter and prosecute health care fraud.'
A key assistant to Villabroza – Susan Bendigo, an RN who ran a Medcare Plus subsidiary – was indicted last year. Bendigo is a fugitive who fled the United States during the investigation into her activities.
Villabroza, Bendigo and supervisors involved in the scheme allegedly directed the unlicensed nurse defendants to lie about their licensing and qualifications by telling the parents or guardians of the disabled Medi-Cal beneficiaries that they were LVNs, according to the indictment. The unlicensed nurse defendants falsely presented themselves as professionals, concealed their unlicensed status from the parents or guardians of the disabled Medi-Cal beneficiaries, and in some cases affirmatively misrepresented themselves as LVNs.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The defendants arrested today are expected to make their initial appearances this afternoon in United States District Court in Los Angeles. The other defendants named in the indictment will be summoned to appear in court for arraignments in the coming weeks.
All of the defendants named in the indictment are charged with conspiracy to commit health care fraud, a felony count that carries a statutory maximum penalty of 10 years in federal prison. All of the defendants are also named in at least one substantive count of health care fraud, a charge that carries a maximum statutory penalty of 10 years in federal prison.
Both the California Department of Registered Nursing, which licenses RNs, and the California Department of Consumer Affairs Bureau of Vocational Nursing, which licenses LVNs, maintain websites where consumers can check the licensing status of any purported professional providing services to them. These can be accessed at http://www2.dca.ca.gov.
Anyone who suspects Medi-Cal fraud related to the use of unlicensed nurses or any other type of Medi-Cal or Medicare fraud may report their concerns to the U. S. Department of Health and Human Services’ Office of Inspector General hotline at 800-HHS-TIPS (800-477 8477) or the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse hotline at 800-722-0432 or webpage, http://www.dhcs.ca.gov/individuals/Pages/StopMedi-CalFraud.aspx.

Los Angeles – As part of a wide-ranging effort to rein-in Medi-Cal fraud, Attorney General Edmund G. Brown Jr. will today file criminal charges against two dozen in-home healthcare workers who “shamelessly bilked” the program by seeking payment for services to clients who were in fact dead, hospitalized or incarcerated.

“These individuals shamelessly bilked the Medi-Cal program by claiming payment for services never rendered,” Brown said. “In fact, their supposed clients were dead, hospitalized or incarcerated.”

Under Medi-Cal’s In-Home Supportive Services program, workers perform non-medical services for qualified Medi-Cal recipients. This includes housekeeping, grocery shopping and meal preparation. In-home healthcare workers are required to submit timesheets signed and certified by their clients to receive payment. In 2008, more than 400,000 Californians received in-home healthcare services, twice as many as in 1999. State costs for operating the program are approximately $2 billion per year.

After a 2008 audit revealed that hundreds of payment requests had been submitted for in-home services never performed, Brown’s office and the California Department of Health Care Services launched an investigation into the program, leading to the charges filed today and an ongoing investigation into physicians who facilitate this type of fraud.

Today’s charges are part of Brown’s larger effort to investigate and prosecute those who would defraud Medi-Cal, which receives approximately $20 billion in state funding every year. Over the past two years, Brown has filed legal action against 31 pharmaceutical companies, 7 medical laboratories and dozens of healthcare providers and workers, resulting in criminal charges against 204 individuals and the recovery of $225 million to the state.

Today’s Charges
The following defendants, 13 of whom have prior criminal records, will be charged with one count of grand theft and one count of presenting false Medi-Cal claims in Los Angeles County Superior Court today.

• • Larry Denman, 54, of Compton, who submitted false claims totaling $3,394 for services to his mother who, in fact, was hospitalized and later died.
• Louwanda Hurt, 40, of Los Angeles, who submitted false claims totaling $1,488 for services to her client who, in fact, had died.
• Shirley Byrd, 48, of Long Beach, who submitted false claims totaling $2,953 for services to her mother who, in fact, had died.
• Rufus Jackson, 34, of Los Angeles, who submitted false claims totaling $6,506 for services to his client who, in fact, had died.
• Christopher Thomas, 25, of Long Beach, who submitted false claims totaling $1,467 for services to her client who, in fact, had died.
• Gwendolyn Jackson, 51, of Los Angeles, who submitted false claims totaling $1,557 for services to her mother who, in fact, had died.
• Diane Trujillo, 45, of Los Angeles, who submitted false claims totaling $1,645 for services to her mother who, in fact, had died.
• Pamela Renee Nelson, 48, of Los Angeles, who submitted false claims totaling $1,935 for services to her mother who, in fact, had died.
• Nadia Hoppes, 47, of Long Beach, who submitted false claims totaling $1,634 for services to her client who, in fact, had died.
• Patches Lee Miller, 38, of Long Beach, who submitted false claims totaling $3,510 for services to her client who, in fact, had died.
• Adrianna Prude, 42, of Hawthorne, who submitted false claims totaling $4,000 for services to her client who, in fact, had died.
• Percy Sok, 25, of Long Beach, who submitted false claims totaling $1,921 for services provided to his father who, in fact, had died.
• Chris Dion Jones Sr., 42, of Lakewood, who submitted false claims totaling $4,670 for services provided to his mother who, in fact, had died.
• Brenda Denise Rochelle, 42, of Los Angeles, who submitted false claims totaling $3,386 for services to her son who, in fact, had died.
• Raymond Lee Allen, 50, of Los Angeles, who submitted false claims totaling $2,261 for services to his client who, in fact, had died.
• Melchizedek Colemen, 27, of Los Angeles, who submitted false claims totaling $4,360 for services to his client who, in fact, had died.
• Ana Bertha Pineda, 31, of Bellflower, who submitted false claims totaling $2,065 for services to her grandmother who, in fact, had died.
• Qwa'stosha Spruille, 40, of Torrance, who submitted false claims totaling $1,109 for services to her client who, in fact, had been incarcerated.
• Donna Kaye Tibbs, 52, of Los Angeles, who submitted false claims totaling $5,404 for services to her client who had been placed in a nursing home and later died.
• Roderick Edward Woods, 48, of San Pedro, who submitted false claims totaling $2,007 for services to his client who, in fact, had died.
• Gerald Robert Harris, 51, of Los Angeles, who submitted false claims totaling $6,083 for services to his mother who, in fact, had died.
• Lorraine Lee, 43, of Long Beach, who submitted false claims totaling $6,958 for care provided to her mother who, in fact, had died.
• Ernest James Rogers, Jr., 53, of Los Angeles, who submitted false claims totaling $5,010 for services to his client who, in fact, had died.
• Faith Shelmon, 57, of Los Angeles, who submitted false claims totaling $4,487 for services to her husband who, in fact, had died.

Brown also filed charges against Richard F. Villegas, 38, of Downey, who submitted false claims totaling $13,243. He forged the signature of his deceased father, who was his in-home healthcare worker. He is also facing one count of grand theft and one count of presenting false Medi-Cal claims.

Defendants will be sent a letter ordering them to surrender to the court in June. If they fail to appear, an arrest warrant will be issued. If convicted, the defendants could face one year in county jail to five years in state prison.

An example:
Larry Denman had been paid by In-Home Supportive Services to provide care for his mother, Lillie Denman. On March 4, 2007, she was admitted to St. Francis Medical Center. On March 23, she was transferred to a convalescent home and died the next day.

The investigation found that Denman billed In-Home Supportive Services for providing 385 hours of homecare to his mother while she was hospitalized and for nearly a month after her death. Denman forged his mother’s signature to obtain payment.

"The strong, appropriate actions taken in these IHSS fraud cases are a direct reflection of the team effort among DHCS and the Attorney General's Office to protect those being defrauded and prosecute the offenders to the fullest extent allowed by law,' said DHCS Director David Maxwell-Jolly.
DHCS works closely with the Attorney General's Office to prevent, detect and investigate Medi-Cal provider and beneficiary fraud.

The $40 billion Medi-Cal program receives 50 percent of its funding from the state and 50 percent from the federal government. One in 6 California residents is a Medi-Cal beneficiary.

As part of his effort to combat Medi-Cal fraud over the past few months, Brown has:

• Filed suit against seven private laboratories to recover hundreds of millions of dollars in illegal overcharges for blood tests and other laboratory procedures.

• Filed criminal charges against six individuals who paid healthy seniors to be admitted to a hospice for the terminally ill and then billed state and federal health care programs $9 million for procedures that were never performed.

• Arrested two individuals who filed false claims totaling $1.34 million to Medicare for medical services that were never performed.

To report fraud or abuse, call the Attorney General’s Office (Bureau of Medi-Cal Fraud and Elder Abuse) at (800) 722-0432.

Los Angeles – Continuing his fight to combat Medicare and Medi-Cal fraud, Attorney General Edmund G. Brown Jr. last night filed criminal charges against six individuals who paid healthy seniors to be admitted to a hospice for the terminally ill and then billed state and federal health care programs for “phantom procedures” never performed.

The six defendants – including a mother and her two children – were physicians and staff at “We Care” hospice in Sherman Oaks. One defendant was arrested today. Another four will surrender to authorities later this month. One remains at large.

“We Care obviously didn’t care about doing the right thing or helping sick people,” Brown said. “The owners, physicians, and staff of We Care paid healthy seniors to be admitted to hospice and then billed Medicare and Medi-Cal for phantom procedures. In total, they bilked the public out of $9 million and used the funds to enrich themselves and pay for expensive homes and luxury cars.”

Brown’s Office and the U.S. Department of Health and Human Services launched a joint investigation in 2008 after an audit found that a suspiciously large number of patients admitted to We Care were in good health and the mortality rate was low for a hospice.

Typically, 80% of patients die during their first six months in hospice. At We Care, only 11% of the 362 Medicare beneficiaries and 4% of the 143 Medi-Cal beneficiaries died between 2004 and 2007.

The joint investigation ultimately revealed that the staff of We Care paid “cappers” a finder’s fee for identifying and enrolling relatively healthy Medicare and Medi-Cal beneficiaries into hospice care. Subsequently, the staff billed the government for procedures and services that were not performed or medically necessary – including mental health evaluations and the administration of oxygen. This amounted to $9 million in fraudulent billings.

The defendants operated the scheme between 2004 and 2007, until the hospice’s license was revoked and the facility was closed.

The following defendants were charged in Los Angeles Superior Court:

• Milagros Delmendo, 58, of Northridge, on four counts of grand theft, presenting false Medi-Cal claims, making fraudulent claims to the government, and paying unlawful remuneration. Ms. Delmendo was arrested today by Special Agents from the Attorney General’s Office and the U.S. Department of Health and Human Services and booked in the Los Angeles County Jail. Ms. Delmendo was the owner of We Care.

• Kristina Delmendo Deguzman, 31, of Northridge on three counts of grand theft, presenting false Medi-Cal claims, and making fraudulent claims to the government. She will surrender to authorities Wednesday.

• Mark Delmendo, 28, of Studio City, on three counts of grand theft, presenting false Medi-Cal claims, and making fraudulent claims to the government. A warrant has been issued for his arrest.

• Nolan Jones, M.D., 60, of Los Angeles, on three counts of grand theft, presenting false Medi-Cal claims, and making fraudulent claims to the government. He has agreed to surrender to authorities.

• Anselmo Alliegro, M.D., 78, of Dundalk, Maryland, on three counts of grand theft, presenting false Medi-Cal claims, and making fraudulent claims to the government. He will surrender to authorities later this month.

• Ramon Parayno, 46, of Studio City, on two counts of grand theft and paying unlawful remuneration. He has agreed to surrender to authorities.

Here’s how the scheme worked:

The owner of We Care, Milagros Delmendo, paid Ramon Parayno $500 for each beneficiary admitted, and an additional $500 for each month the patient remained under care. Parayno would split his fee 50/50 with the beneficiary. At one point in 2005, Parayno made in excess of $25,000 in a month.

Once enrolled, physicians Nolan Jones and Anselmo Alliegro falsely diagnosed patients as suffering from a terminal disease, such as end-stage Chronic Obstructive Pulmonary Disease (COPD).

The investigators also found that nursing staff had been directed by Ms. Delmendo and her children -- employees Mark Delmendo and Kristina Delmendo Deguzman -- to falsely note in medical charts that their patients suffered from “shortness of breath,” “generalized weakness,” or “moderate to severe pain.”

Patients with end-stage COPD are not able to walk and require oxygen. The majority of patients diagnosed with COPD at We Care, however, were observed without oxygen or the assistance of a wheelchair. Many of the primary care physicians interviewed by investigators stated that their patients were not terminally ill and should not have received hospice care.

In one case, We Care billed Medicare $39,031 for hospice care for a patient whose medical problems only included arthritis and high blood pressure.

The Delmendo family used the proceeds of the scheme to purchase expensive cars, designer clothing, and luxury homes, including one purchased in cash for $1.7 million.

If convicted on all counts, the defendants could receive up to nine years in prison. To report fraud or abuse, call the Attorney General’s Office (Bureau of Medi-Cal Fraud and Elder Abuse) at (800) 722-0432.

The complaint and affidavit are available upon request.

SAN DIEGO-- Attorney General Edmund G. Brown Jr. today announced that agents from the Bureau of Narcotic Enforcement today arrested five college-age individuals who conspired to fraudulently obtain thousands of “dangerous and potentially lethal” prescription drugs.

From January to March 2009, the co-conspirators illegally obtained 2,500 pills, primarily Oxycontin and Xanax, with a street value in excess of $70,000.

“These individuals used stolen physician information to obtain thousands of dollars worth of dangerous and potentially lethal prescription pills,” Attorney General Brown said. “This is one more example of how legal medications are being diverted for illicit purposes.”

In February 2009, a San Marcos pharmacist’s suspicions were aroused when a young woman attempted to fill a prescription for 120 Xanax pills. When the pharmacist contacted the doctor’s office to confirm the prescription, he was informed that it was invalid and the woman was not a patient.

The pharmacist subsequently notified the Attorney General’s office, which launched a two-month investigation that culminated in today’s arrests including:

• Sean Christiansen, 24, of Vista for violation of probation, possession of a controlled substance, sale of a controlled substance, and conspiracy;

• Christopher Zenkus, 24, of Poway on 4 counts of commercial burglary, 5 counts of false impersonation, 3 counts of prescription fraud, and 1 count of unlawful possession of a prescription blank;

• Stephen Cleeton, 20, of Poway on 6 counts of commercial burglary, 6 counts of forged narcotic prescription; and 2 counts of unlawful possession of a prescription blank;

• Courtney Morgan, 20, of San Diego on, 11 counts of commercial burglary, 7 counts of forged narcotic prescription; and 4 count of unlawful possession of a prescription blank;

• Erica Peterson, 20, of Del Mar on 4 counts of commercial burglary, 2 counts of forged narcotic prescription; and, 3 counts of unlawful possession of a prescription blank.

Fellow conspirator, Paige Billheimer, 21, of San Diego remains at large. She is expected to be charged with 6 counts of commercial burglary, 1 count of prescription fraud, and 5 counts of forged narcotic prescription.

The investigation revealed that Zenkus had stolen the Drug Enforcement Administration and medical license numbers of a San Diego physician and used this information to order five blank prescription pads that could be used to write 500 prescriptions.

Subsequently, Zenkus, Christansen, and their co-defendants filled fraudulent prescriptions at 11 different pharmacies in the San Diego area, obtaining 1,020 Oxycontin pills with a street value of $55,000; 1,390 Xanax pills with a street value of $7,000; 720 Acetaminophen and Hydrocodone pills with a street value of $5,040; 360 Percocet pills with a street value of $3,600; and 60 Adderall pills with a street value of $180.

In some cases, the defendants would go from pharmacy to pharmacy to fill prescriptions, using their parents’ health insurance to pay for the pills.

Paperwork found in Sean Christiansen’s vehicle detailed indicates that he was earning $31,000 a week through the illegal sale of prescription drugs.

According to the latest Department of Justice “Drug Trends” report, Oxycontin is among the most prevalent medicines obtained fraudulently and is one of the most abused medicines in the United States.

If convicted, defendants face up to 1-5 years in prison.

The Bureau of Narcotic Enforcement’s San Diego Regional Pharmaceutical Narcotic Enforcement Team led the two-month investigation, which also included agents from; California Department of Health Services, California Department of Insurance. The San Diego County Sheriff and San Diego County Probation Department assisted in today’s arrests.

Copies of the arrest warrants are attached.

FOR IMMEDIATE RELEASE
Friday, March 20, 2009
Contact: Office of the Attorney General - Christine Gasparac (916) 324-5500
Cotchett, Pitre & McCarthy - Niall McCarthy (650) 697-6000

Brown Sues to Recover Hundreds of Millions of Dollars Illegally Diverted from Medi-Cal

LOS ANGELES – Responding to a whistleblower’s allegation of “massive Medi-Cal fraud and kickbacks,” Attorney General Edmund G. Brown Jr. joined legal action against seven private laboratories to recover hundreds of millions of dollars in illegal overcharges to the state’s medical program for the poor.

“In the face of declining state revenues, these medical laboratories have siphoned off hundreds of millions of dollars from programs intended for the most vulnerable California families.” Attorney General Brown said. “Such a pattern of massive Medi-Cal fraud and kickbacks cannot be tolerated, and I will take every action the law allows to recover what is owed,” Brown added.

According to whistleblower Chris Riedel, the CEO of Hunter Laboratories, “I confirmed with the California Department of Health Care Services that these practices were illegal. We then had a choice--either join the other labs in violating the law or be unable to compete for business. We choose to suffer the financial consequence, and follow the law.”

The lawsuit, which is pending in San Mateo Superior Court, contends that the 7 medical labs systematically overcharged the Medi-Cal program over the past 15 years.

The defendants include:
• Quest Diagnostics, Inc., based in Madison, NJ; its affiliate Specialty Laboratories, Inc., based in Valencia, CA; and 4 other Quest affiliates.
• Health Line Clinical Laboratories, Inc., now known as Taurus West, Inc., based in Burbank, CA.
• Westcliff Medical Laboratories, Inc., based in Santa Ana, CA.
• Physicians Immunodiagnostic Laboratory, Inc., based in Burbank, CA.
• Whitefield Medical Laboratory, Inc., based in Pomona, CA.
• Seacliff Diagnostics Medical Group, based in Monterey Park, CA.
• Laboratory Corporation of America, based in Burlington, NC.

California law states that 'no provider shall charge [Medi-Cal] for any service…more than would have been charged for the same service…to other purchasers of comparable services…under comparable circumstances.' Yet, these medical laboratories charged Medi-Cal up to six times as much as they charged some of their other customers for the very same tests. For instance,

• Quest Diagnostics, Inc. charged Medi-Cal $8.59 to perform a complete blood count test (CBC), while it charged some of its other customers $1.43 for the exact same test. This is one of the most frequently requested blood tests.

• Laboratory Corporation of America charged Medi-Cal $30.09 to perform a Hepatitis C Antibody screening, while it charged some of its other customers only $6.44 for the test.

• Health Line Clinical Laboratories charged Medi-Cal $12.65 to perform an HIV Antibody screening, while charging some of its other customers $1.75 for the test.

These are not isolated examples. They are part of a pattern of fraudulent overcharging and kickbacks that developed over the past decade. Here’s how it worked:

• The defendant labs provided deep discounts when they were being paid directly by doctors, patients, or hospitals. Prices were often below the lab’s cost and sometimes free.

• In exchange for these steep discounts, the defendants expected its customers to refer all of their other patients (where the lab was paid by an insurance company, Medicare, and Medi-Cal) to its lab. Under California law, this amounted to providing an illegal kickback.

• These sharply reduced prices, however, were not made available to Medi-Cal. Instead of charging the discounted prices, the defendants charged Medi-Cal up to 6 times more than the defendant charged others for the same tests. In effect, defendants shifted the costs of doing business from the private sector to Medi-Cal.

• Additionally, defendants offered their clients who paid them directly (not through Medi-Cal or other insurance) deeper and deeper discounts in order to get a larger share of the lab testing business. This created an unfair playing field, and laboratories that followed the law could not effectively compete. These law-abiding companies were sometimes forced to sell or go out of business completely.

The case was filed under seal in San Mateo Superior Court under California's False Claims Act by a whistleblower and qui tam plaintiff Hunter Laboratories, which processes blood tests. Hunter Laboratories had found that it could not compete in a significant segment of the marketplace where many of the major players were offering referring doctors, hospitals, and clinics far lower rates than they were charging Medi-Cal.

After the whistleblowers filed the complaint, the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse investigated the allegations and Attorney General Brown intervened under seal. The case became public this week.

Hunter Laboratories' attorney, Niall P. McCarthy of Cotchett, Pitre & McCarthy, commented that “At a time when California is laying off teachers and firefighters and is in a massive budget crisis, it is unconscionable that these defendants would bilk the system to the tune of hundreds of millions of dollars.”

Under California's False Claims Act, anyone who has previously undisclosed information about a fraud, overcharge, or other false claim against the state, can file a sealed lawsuit on behalf of California to recover the losses. They must notify the Attorney General as well.

Such a case is called a 'qui tam' case. If there is money recovery, the law provides that the qui tam plaintiff receives a share of the amount recovered if the requirements of the statute are met.

The lawsuit asks for relief in the amount of triple the amount of California’s damages, civil penalties of $10,000 for each false claim; and recovery of costs, attorneys’ fees and expenses. It is estimated that damages could amount to hundreds of millions of dollars.

The clinical testing field is a $50 billion industry nationwide. The defendants named in the lawsuit include some of the largest clinical laboratories in the country.

Quest Diagnostics is the leading provider of diagnostic testing, information and services in the United States, with more than 500 patient service centers in California.

Laboratory Corporation of America performs more than one million tests on approximately 400,000 samples each day and has more than a dozen patient centers in Los Angeles.

To report fraud or abuse, call the Bureau of Medi-Cal Fraud and Elder Abuse's hotline at (800) 722-0432.