$40 Million Dollars Paid by Insurance Carriers and 13,000 California Patients Affected in an Alarming Kickback Scheme
Yesterday, 26 defendants (21 doctors, 2 pharmacists, 1 physician assistant, and 2 business owners) were criminally charged in connection with a 40-million-dollar kickback scheme affecting 13,000 California patients statewide. Two defendants, Tanya King and Christopher King “the Kings”, allegedly masterminded a complex insurance fraud scheme by recruiting both pharmacists and doctors to prescribe medically unnecessary or ineffective treatment for workers’ compensation patients. Between 2011 and 2014, defendants and their co-conspirators, billed insurance companies $40 million dollars and collected $23 million dollars. Defendants are accused of allegedly running three scams:
- Snake Oil Scam
- The Kings contracted with a pharmacist to mass manufacture thousands of compound transdermal creams, which are not FDA approved or formulated to specific patients.
- The cost to manufacture each tube of compound cream was between $15-$40, while insurance companies were billed $250-$700/per tube.
- The scheme further involved recruiting physicians with cash incentives to prescribe the creams.
- Medical Kickback Scam
- The Kings purchased repackaged pain medication from two repackagers and sent medications to the physicians involved in the scam.
- When medication was dispensed, workers’ compensation insurance carriers were billed without being advised of the wholesale cost.
- The profits were split between prescribing physicians.
- Bogus Urine Test Scam
- Physicians ordered unnecessary urine tests under the guise of verifying that workers’ compensation patients were taking medications as prescribed.
- The cost per urine test was $60, but insurance carriers were billed hundreds of dollars per patient.
The defendants in the action are looking at a long string of felony charges. The named defendants involved in the scheme can be found here. We are reviewing our open files to determine if any of these physicians have been involved. Interestingly, we have found that CMS has responded favorably to re-review requests, when we have disclosed news of an indictment or disciplinary actions involving physicians who have either overprescribed medications or mismanaged their practice.
As a Medicare-Set Aside provider, one of our primary duties is to analyze recommended medical treatment options for injured workers to ensure Medicare Secondary Payer Compliance. We stand behind providing the most compliant cost-effective solutions possible; but we also stand behind advocating for both our clients and injured workers. The bottom line is that we believe that medically necessary treatment options or options that may be efficacious should be provided. When we are tasked with providing a clinical analysis of recommended treatment options, our clinical experts review and determine the medical necessity and appropriateness of the treatment. In some cases, we have noted over prescribing actions and recommendations of physicians. The alarming news of this insurance fraud scheme and similar news is ethically concerning. In this case, 13,000 patients either received treatment they did not need, that was not medically necessary, or were not provided the treatment they actually needed. We will continue to advocate on behalf of interested parties and provide the intervention we can. If you are concerned about recommended treatment options, our clinical experts are here to help. Contact us at firstname.lastname@example.org to find out more about our clinical solutions, and how we can provide the analysis and focused intervention that ensures a successful outcome for all parties.