To paraphrase William Shakespeare, a rose by any other name might just be fraud.
Are marketing agreements legal? What about management or “administrative services” agreements? How about agreements for scheduling? Surely, those type of arrangements can’t send you to prison!
Indeed, they can if they’re just window dressing for underlying fraud.
And, in the case of Sam Sarkis Solakyan, the CEO California based Vital Imaging, Inc. and San Diego MRI Institute, they can send you to prison for 5 years.
An X-Ray View
As the aftermath of his conviction at trial in July, 2021, Solakyan and was sentenced on January 28, 2022, to five years in federal prison and ordered to pay $27,937,175 in restitution to victim insurance companies. The underlying scheme submitted more than $250 million in fraudulent claims, the vast majority for MRIs that weren’t medically necessary, through the California Workers Compensation system for medical services procured through bribes and kickbacks to physicians and others. He’s also been barred from working in the healthcare and workers compensation industries during the three years of supervised release that’s to follow his imprisonment.
Solakyan, through Vital Imaging, San Diego MRI Institute, and other companies, operated diagnostic imaging facilities from the Bay Area in the north to San Diego in the South.
Convicted of one count of conspiracy to commit honest services mail fraud and health care fraud, and 11 counts of honest services mail fraud, Solakyan conspired with physicians and others in a scheme in which the doctors were paid bribes and kickbacks in exchange for referral of Workers Compensation patients. Some of the illegal remuneration was in cash and some was in the form of a “cross referral” scheme in which the participants referred patients to one another.
So-called “recruiters” working for the Solakyan entities required physicians to refer a minimum number of patients to receive cross referrals.
And, getting back to the naïve questions at the top of this post, the participants in the conspiracy obscured the true nature of the financial relationships by entering into sham agreements for “marketing”, “administrative services”, and “scheduling”, when the arrangements were really for kickbacks and bribes.
In addition to Solakyan: Chiropractor Steven Rigler pleaded guilty to one count of conspiracy to commit mail fraud and was sentenced to a 6-month federal prison term. Fermin Iglesias, who was the CEO of various scheduling companies, pleaded guilty to conspiracy to commit mail fraud and health care fraud, and was sentenced to five years in federal prison. Co-conspirator Carlos Arguello was sentenced to four years in federal prison.
What You Really Need to Know
1. Just because an arrangement looks on paper like it’s a management type agreement doesn’t effectively cover up an illegal scheme any more than a beach towel covers up an oil spill in the Gulf of Mexico.
2. The underlying scheme, not the ink on the paper, governs legality versus illegality.
3. Kickbacks and bribes don’t have to be in dollars. You scratch my back, I’ll scratch yours (cross referral schemes) are illegal remuneration, too.
4. A state-law scheme (e.g., worker’s comp) quickly becomes a federal offense via the use of the mail or other means of interstate communication (e.g., a fax machine, a cell phone, a text message).
5. Insurance companies have fraud department stacked to the rafters with former criminal investigators and they love to use the feds to pressure fraudsters and to do the collection work (restitution) for them.
6. A rose by any other name would smell as sweet, but a papered-up scheme actually smells like fraud.
