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Attorney General Bill Lockyer Announces Arrests in $1.4 Million Medi-Cal And Medicare Fraud Scheme

Trio of Alleged Felons Face More Than 20 Years in Prison if Convicted
Thursday, November 2, 2006
Contact: (415) 703-5837

(LOS ANGELES) – Attorney General Bill Lockyer today announced the arrest of three Los Angeles residents on allegations that they bilked the Medicare program out of more than $1.4 million over a two-year period while also trafficking in Medi-Cal beneficiary information. Among the crimes committed by the trio are the fraudulent reporting of medical services that were never provided and billing for services allegedly provided to patients who were already deceased.

Rudik Avakyan, Gayane Abramyan and Lusine Khatchatryan were officially charged yesterday in Los Angeles County Superior Court with a felony complaint alleging 37 counts of grand theft, attempted grand theft and filing of false claims. Agents from the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA) arrested Avakyan yesterday, Abramyan this morning, and Khatchatryan intends to voluntarily surrender later today. BMFEA attorneys will prosecute the case. Bail has been requested at $1.1 million for Avakyan, and $100,000 each for both Abramyan and Khachatryan.

“Medicare and Medi-Cal fraud not only rips off taxpayers, it also puts public health at risk by limiting the amount of resources available to help those truly in need,” Lockyer said. “These defendants must be held accountable for allowing their greed to turn to fraud.”

The arrests stem from a year long investigation by the BMFEA into a sophisticated fraud operation led by Avakyan, owner and operator of the Workplace Industrial Management Clinic, with the assistance of his purported “medical assistants”, Abramyan and Khatchatryan. The scheme started with the defendants use of so-called “cappers” to recruit Medi-Cal and Medicare card holders at Los Angeles’s venerable Union Rescue Mission - one of the country’s largest missions which is dedicated to helping poor men, women and children in downtown Los Angeles. The defendants paid the cappers $350 for each patient they brought to Avakyan’s clinic. The capper’s activity caused Mission staff to become suspicious, so they reported their concerns to Assembly Speaker Fabian Nunez who in turn alerted the Attorney General to the potential illegal activity.

“This is one of the worst kinds of fraud because it targets some of the most vulnerable Californians,” said Assembly Speaker Fabian Núñez. “Those responsible for bilking the Medicare program deserve the harshest penalties allowed by law. We cannot tolerate this kind of fraud and I am pleased by the hard work done by the Attorney General’s Office to unravel this ring of rip-off artists.”

Once at the clinic, those patients who actually required medical assistance were treated by the clinic’s medical director, Dr. Prasantha Nath. Dr. Nath, who previously served as Mother Teresa’s personal physician, would work at the clinic two to three days a week and see one to four patients each day.

However, the Attorney General’s investigation revealed that the defendants fraudulently submitted claims for hundreds of patients that Dr. Nath could not possibly have treated, padded Medicare bills with treatments that never occurred, submitted bills for services rendered to 35 patients who were already deceased, and filled out medical treatment charts for patients as much as 6 months prior to them actually being seen by a doctor. In addition, the investigation revealed that the defendants billed Medicare for treatments that were purportedly provided by Dr. Nath while he was out of the country serving the needs of tsunami victims in Sri Lanka and the needy in India.

As Attorney General, Lockyer has made the prosecution of Medi-Cal fraud a top priority. Under his leadership, criminal filings and restitution have increased by 116 percent and 172 percent, respectively. Lockyer’s Medi-Cal enforcement efforts have resulted in more than $512 million in civil and criminal court-ordered restitution and penalties.

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