Attorney General Bonta Announces $11.4 Million Settlement Against Owner of Pain Clinics for Medi-Cal Fraud

Dr. Lagattuta owns one of California’s largest chains of pain management clinics with multiple facilities in the Central Valley and Central Coast

OAKLAND — California Attorney General Rob Bonta, in partnership with the U.S. Department of Justice, today announced a settlement with the owner of one of California’s largest chains of pain management clinics over allegations that he defrauded Medi-Cal and Medicare of millions of dollars. Dr. Francis Lagattuta and his business, Lags Medical Clinics, which run more than 20 facilities in California’s Central Valley and Central Coast, carried out medically unnecessary tests and procedures on thousands of patients, and billed Medi-Cal and Medicare for these services over the course of more than five years. Today’s settlement totals nearly $11.4 million, of which California will receive over $2.7 million. In addition, over $130,000 will go to Oregon, whose Medicaid program was also defrauded by Dr. Lagattuta.

“Thousands of Medi-Cal patients trusted Dr. Lagattuta to take away their pain,” said Attorney General Rob Bonta. “Instead he exploited their trust by carrying out arrays of unnecessary tests and billing for them over the objections of the doctors he employed. Billing for services that providers know are unnecessary undermines the quality of care that patients receive, and increases the costs to the Medi-Cal program. I am grateful to the U.S. Attorney’s Office for their partnership in this effort to hold Dr. Lagattuta to account. My office remains committed to pursuing justice against those who seek to abuse the Medi-Cal system for their own benefit.”

“Dr. Lagattuta and Lags Medical engaged in a brazen scheme to defraud Medicare and Medicaid of millions of dollars by inflicting unnecessary and painful procedures on patients whom they were supposed to be relieving of pain,” said U.S. Attorney for the United States Attorney's Office, Eastern District of California, Phillip Talbert. “The United States Attorney’s Office and our law enforcement partners will use all of the tools at our disposal to stop fraud against federal health care programs and prevent patient harm.”

The settlement is the result of nearly four years of investigation and data analysis by the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA), the United States Attorney’s Office for the Eastern District of California and the U.S. Department of Justice. Investigators found that from March 2016 through August 2021, Dr. Lagattuta and Lags Medical submitted claims for reimbursement to Medicare and Medicaid for medically unnecessary and excessive tests and procedures, including skin biopsies, spinal cord stimulation procedures, and urine drug testing. In doing so, they are alleged to have violated state and federal False Claims Acts.

In 2016, Dr. Lagattuta created a protocol for providers across his Lags Medical clinics to conduct a battery of medical procedures on all their patients, regardless of medical necessity or their treating provider’s request or consent. As part of the protocol, providers were instructed to reduce pain medication for patients who did not consent to undergo certain procedures. Despite regulations requiring certain skin biopsies to be interpreted by a trained pathologist or neurologist, Dr. Lagattuta directed a family member with no formal medical training and a former Lags Medical Clinic executive’s spouse, who is a respiratory therapist, to conduct the interpretations. In April 2018, Lags Medical terminated a contract with a pathologist because the pathologist refused a request by Lags Medical to approve skin biopsy results without interpreting them himself. 

The funds from today’s settlement were allocated in proportion to losses faced due to the alleged fraud scheme. The United States will receive around $8.5 million, California will receive over $2.7 million, and Oregon will receive over $130,000. Dr. Lagattuta will also be barred for five years from serving any Medi-Cal beneficiaries, billing for services to any Medi-Cal beneficiary, or receiving reimbursement for any services provided to any Medi-Cal beneficiary.

DMFEA protects Californians by investigating and prosecuting those who defraud the Medi-Cal program as well as those who commit elder abuse. These settlements are made possible only through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting.

DMFEA receives 75% of its funding from HHS under a grant award totaling $53,792,132 for federal fiscal year 2022-2023. The remaining 25% is funded by the State of California. The federal fiscal year is defined as through September 30, 2023.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

A copy of the settlement agreement is available here.