21 Doctors, Plus Pharmacists and Practice Managers, Charged in $40 Million Kickback Scheme

May 1, 2017

Last week, the California Insurance Commissioner and the Orange County District Attorney shut down a $40 million fraudulent medical billing and kickback operation by filing criminal charges against 21 doctors plus 5 others: pharmacists and purported “medical group management company” owners.

Involved are Tanya Moreland King and her husband Christopher King, the owners of medical billing and medical management companies Monarch Medical Group, Inc., King Medical Management, Inc. and One Source Laboratories, Inc.

They’re the alleged masterminds of a complex insurance fraud scheme of recruiting doctors and pharmacists to prescribe unnecessary treatment for workers’ compensation insurance patients.

The Orange County DA charged the Kings, 2 pharmacists, and 21 physicians, with, variously, prescribing, dispensing, billing, and collecting for unnecessary non-FDA approved creams, tests and treatments. They’re alleged to fraudulently billed $40 million in connection with Workers Compensation patients, of which $23.2 million was collected.

The Kings are charged with having entered into oral and written agreements with doctors across California and paying them “marketing expenses” each time they prescribed a compound cream or oral medication or ordered a urine drug test. Additionally, it’s alleged that the Kings rewarded higher-volume physicians by paying for office technicians.

The Kings are also alleged to have conspired with one of the pharmacists to manufacture a variety of creams, not FDA approved, with unknown effects. It’s alleged that 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 per tube.

The Kings also stand accused of purchasing repackaged oral pain medications from two companies using their company, Monarch Medical Group, as a cover. It’s alleged that they sent the repacked meds to the physicians involved in the scam.

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. They’re accused of splitting the profits with the prescribing physician based upon a pre-arranged agreement.

The Kings are also accused of providing technical staff to participating physician’s offices through their company, One Source Labs.

It’s also claimed that the physicians ordered 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.

The Essential Takeaways For You

  1. Unfortunately, many “medical group management companies” are clearing houses for scams. Someone who says that they’ll help you run your business while you practice medicine may be planning on using you as an unwitting (or perhaps witting?) participant in fraudulent billing.
  2. Although there’s benefit in compounded medications, there’s a fine line between legal compounding and illegal drug manufacturing.
  3. Despite protestations from physicians engaged in the practice, the wholesale use of urine tests is a flare on a moonless light for fraud investigators.
  4. There’s lots of money to be made legally. Yes, not as much as can be made illegally. But you can spend the legal earnings outside of jail.
  5. Unfortunately, in today’s business and regulatory climate, physicians and other healthcare providers have targets on their backs. The Kings and their co-defendants were charged as a result of a combined investigation by the California Department of Insurance, the Orange County D.A, the FBI, and the National Insurance Crime Bureau. (Don’t recognize that last one? Although it appears to be named to imitate one, it’s neither a federal nor a state agency. It’s a trade association of insurance companies. Yes, insurance companies band together to conduct investigations and then turn you over to the real cops.)
  6. Just because someone is, or 20 people you know are, engaging in some deal, such as prescribing pain creams or making referring physicians partners in their medical practices, doesn’t mean that it’s legal. On top of that, if you’ve seen one legal deal, you’ve seen one legal deal.
  7. The devil is always in the details. Get legal assistance and get it early. If you’re already engaged in some deal (or scheme…) get assistance immediately to sort and sift for potential illegality.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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