Between 2011 and 2015, a premeditated complex insurance fraud scheme saw more than a dozen doctors and pharmacists billing at least 27 insurance carriers in the US for unnecessary creams, tests, and treatments prescribed to patients, in exchange for monetary gains.

“They have played with patients’ lives, buying and selling them for profit without regard to patient safety,” said Insurance Commissioner Dave Jones.

Investigations led by the California Department of Insurance reported that approximately USD23.2 million was paid out to the defendants, and a total of USD40 million billed to insurers. According to Nancy Kincaid, a spokeswoman for the state Department of Insurance, about “13,000 patients state-wide got a treatment they didn’t need or did not get the treatment they were supposed to get” as a result of the alleged fraud.

Beverly Hills couple believed to be the masterminds

More than 21 defendants comprising doctors, pharmacists, and business owners were charged with multiple felony counts, including conspiracy to commit medical insurance fraud, the state insurance department attested.

Among them was a couple from Beverly Hills believed to be the mastermind behind the fraud. Christopher King, 38, and Tanya Moreland King, 37, who own Monarch Medical Group Inc., King Medical Management Inc. and One Source Laboratories Inc., had paid doctors and pharmacists to prescribe unwarranted treatment for workers’ compensation insurance patients.

Two pharmacists – Charles Bonner, 56, and Mervyn Miller, 66 – are alleged to have sold more than USD1 million in compound creams that were not federally approved nor have any known medical benefits, said Orange County District Attorney Tony Rackauckas.

According to the prosecutors, the couple collaborated with pharmacist Charles Bonner, owner of Stevens Pharmacy in Costa Mesa, to manufacture a variety of creams that were not FDA approved.

Conspiring doctors received over USD2.1 million in kickbacks

Kickbacks of a flat USD50 rate (or a share in the profits) were offered to healthcare practitioners who were willing to conspire with them and were alleged to have labelled the gains as “marketing expenses”.

“It’s illegal for medical professionals to accept payment or some (other) sort of inducement in exchange for prescribing some sort of medical treatment,” Kincaid said.

“They know that. They learn about that in medical school. These are doctors who betrayed their patients for cash. This is nothing but greed,” said the spokeswoman.

Of the USD40 million billed to insurance companies, Rackauchas said the Kings allegedly collected about USD23 million in profit.

According to Jones, patients have the right to expect that treatment and decisions by healthcare professionals are based on medical need and not unadulterated greed. He said that the magnitude of this alleged crime is an affront to ethical medical professionals.

Scams included snake oil, medication kickback and bogus urine test

Under the “snake oil scam”, the Kings had purchased from Bonner the “compound transdermal creams” at around USD15 and USD40 per tube, but billed the patients’ workers’ compensation insurance carriers at USD250 and USD700 for each.

As for the “medication kickback scam”, the couple had purchased and repackaged oral pain medications from companies in Orange and Costa Mesa, and subsequently sent it directly to the doctors. Upon prescription, they would bill insurance companies, with no disclosure of the wholesale price.

Rackauckas said doctors in the “bogus urine test scam” of ordering unnecessary urine tests, which were referred to Pacific Toxicology Laboratory for more tests, and here the lab received USD60 for each test while billing the insurance companies hundreds of dollars per patient.

Medical insurance fraud drives up the cost of medical care, Rackauckas said, and they affect the health of our economy and our bodies.

“In order for the system to survive, we must have ethical doctors who abide by their Hippocratic oath to do no harm,” Rackauckas added.

According to prosecutors, Tanya King could be slapped with 117 years in prison, while it is still unclear how long her husband would face if convicted. The two pharmacists, Bonner and Miller, could be sentenced to 28 years of jail term and 21 doctors and a physician’s assistant could be imprisoned for 25 years. MIMS

Read more:
Dermatologist profited by misdiagnosing his patients with skin cancer
Ex-pharma executives charged for bribing doctors to prescribe fentanyl off-label
Three dentists and a manager charged for fraudulent Medisave claims