11 O.C. defendants charged in a multi-million dollar, large scale fraudulent drug treatment scheme

Case # 18CF2703, 18CF2704, 18CF2706-18CF2710, 18CF2712, 18CF2713, 18CF2717

Date: September 26, 2018

FIVE DOCTORS, TWO ADMINISTRATORS, AND FOUR BODY BROKERS CHARGED WITH INSURANCE FRAUD FOR EXPLOITING DRUG ADDICTS TO BILL INSURANCE FOR NON-FDA APPROVED AND DANGEROUS SURGERIES

SANTA ANA, Calif. – Orange County District Attorney (OCDA) Tony Rackauckas recently formed the Sober Living-home Investigation and Prosecution (SLIP) task force to stop large scale insurance fraud and to address citizen and community complaints and concerns about criminal activities occurring within the addiction treatment industry. SLIP netted 11 defendants in a multi-million dollar, large scale insurance fraud scheme. Five doctors, two administrators, and four body brokers were charged with participating in this scheme.

The OCDA set out to find and stop unscrupulous addiction treatment operators and medical professionals who are reaping financial gains off the backs of this vulnerable population seeking recovery (Public Hearing on Rehabilitation Exploitation and Health Care Trafficking in Costa Mesa).

All defendants below are scheduled to be arraigned on Sept. 27, 2018, in Department C-55, Central Justice Center, Santa Ana. The time is to be determined.

Defendants:

David Michael Scarpino, 53, Doctor, Huntington Beach

Case # 18CF2704

Charged on Sept. 24, 2018, with the following felony counts:

• Conspiring in unauthorized practice of medicine
• (19) Insurance fraud – written claim
• Sentencing Enhancement: Aggravated white collar crime over $100,000

Maximum Sentence: 28 years and eight months in state prison

Dylan James Walker, 27, Body Broker, Huntington Beach

Case # 18CF2712

Charged on Sept. 24, 2018, with the following felony count:

• (62) False and fraudulent claim

Maximum Sentence: 43 years and eight months in state prison

Michael Henry Wong, 53, Doctor, Irvine

Case # 18CF2706

Charged on Sept. 24, 2018, with the following felony counts:

• Conspiring in unauthorized practice of medicine
  (22) Insurance fraud – written claim
• Sentencing Enhancement: Aggravated white collar crime = over $100,000

Maximum Sentence: 23 years and eight months in state prison

Nabil Charle Morcos, 66, Doctor, Irvine

Case # 18CF2707

Charged on Sept. 24, 2018, with the following felony counts:

Conspiring in unauthorized practice of medicine
(22) Insurance fraud – written claim
Sentencing Enhancement: Aggravated white collar crime = over $100,000

Maximum Sentence: 31 years and eight months

Harrison Anthony Romanowski, 27, Body Broker, Huntington Beach

Case # 18CF2708

Charged on Sept. 24, 2018, with the following felony count:

• (35) False and fraudulent claim

Maximum Sentence: 25 years in state prison

John T. Kahal, 67, Body Broker, Dana Point

Case # 18CF2709

Charged on Sept. 24, 2018, with the following felony count:

• (16) False and fraudulent claim

Maximum Sentence: 13 years in state prison

Jordan Tyler Hendrickson, 25, Body Broker, Studio City

Case # 18CF2710

Charged on Sept. 24, 2018, with the following felony count:

(14) False and fraudulent claim

Maximum Sentence: 11 years and eight months in state prison

Gary Lamont Baker, 54, Doctor, Tustin

Case # 18CF2713

Charged on Sept. 24, 2018, with the following felony counts:

• Conspiring in the unauthorized practice of medicine
• (5) Insurance fraud – written claim
• Assault with force likely to produce great bodily injury

Maximum Sentence: 10 years and eight months in state prison

Fritz John Baumgartner, 61, Doctor, Rancho Palos Verdes

Case # 18CF2717

Charged on Sept. 24, 2018, with the following felony counts:

• (2) Conspiring in the unauthorized practice of medicine
• (4) Rebates for referral
• (3) Conspiracy to commit medical insurance fraud
• (5) Insurance fraud – written claim
• Assault with force likely to produce great bodily injury
• Sentencing Enhancement: Aggravated white collar crime = over $500,000

Maximum Sentence: 22 years and four months in state prison

Thuy Rucks, 78, Owner of SoberLife USA, Mission Viejo

Case # 18CF2703

Charged on Sept. 24, 2018, with the following felony counts:

• Unauthorized practice of medicine
• (4) Unlawful offer or receipt of consideration by claims handler for referral
• (4) Conspiracy to commit medical insurance fraud
• (3) insurance fraud – written claim
• Sentencing Enhancement: Aggravated white collar crime = over $100,000

Maximum Sentence: 19 years and four months in state prison

Christianne Tiemann, 66, Employee of SoberLife USA, Trabuco Canyon

Case # 18CF2703

Charged on Sept. 24, 2018, with the following felony counts:

• Unauthorized practice of medicine
• (4) Unlawful offer or receipt of consideration by claims handler for referral
• (4) Conspiracy to commit medical insurance fraud
• (3) insurance fraud – written claim

Maximum Sentence: 19 years and four months in state prison

Background

Naltrexone is a prescription drug that is an opiate antagonist, primarily used to manage alcohol and opioid dependence. It works in the brain to prevent opiate effects (e.g. feelings of well-being, pain relief) and decreases the desire to take opiates. It is manufactured in two forms: a tablet that is taken orally, oftentimes daily; a liquid that is injected into the body through a syringe, oftentimes monthly; Naltrexone is approved by the Federal Drug Administration (FDA) in the form of a pill and an injectable form (Vivitrol) as an additional tool to curb an addict’s cravings for opiate drugs and alcohol. Naltrexone in pellet form must be specially manufactured by a compounding pharmacist at the request of a doctor because it is experimental and not FDA approved for use in the United States. In order to properly insert the pellet into a patient’s body a surgical procedure is necessary. If a physician does not administer Naltrexone responsibly, he/she may potentially expose his patient to life-threatening opioid intoxication.

Administration of the FDA approved versions of Naltrexone are less profitable because they involve pills and injections, none of which require surgeries. It is not an effective drug for treatment of methamphetamine, as it does not prevent effects of stimulants.

Circumstances of the Case

Rucks is accused of being the owner of SoberLife USA and advertising on the Internet that it is an alcohol and opiate treatment facility that promotes the Naltrexone implant surgery and of misleading the public that the Naltrexone implant is FDA approved. Tiemann is an employee of SoberLife. Both are accused of submitting fraudulent billing to insurance companies.

Rucks and Tiemann, through Soberlife USA, are accused of hiring Hendrickson, Kahal, Romanowski, and Walker as body brokers or marketers to pay people up to $1,000 who they met at sober living homes, AA meetings, and by word of mouth to undergo a medically unnecessary surgery. The surgeries involve cutting open the patient’s stomach or back and implanting a non-FDA approved Naltrexone pellet. Many of these patients/victims were from out of state and developed serious side effects from the surgery upon returning home. Some of the patients were paid to get the Naltrexone implant themselves.

Doctors Morcos and Scarpino are accused of misleading patients about the propriety and safety of this surgery. They are also accused of not performing the necessary examination to determine if the patients were good candidates to receive Naltrexone in the course of their treatment before recommending this surgery. Every medical report included the same statement that the patient did not receive remuneration for this treatment. Doctors Baker, Baumgartner, and Wong are accused of performing these unnecessary surgeries for profit.

The defendants are accused of participating in a scheme that subjected patients to a procedure that was experimental, not FDA approved, and dangerous and billing insurance companies such as Anthem Blue Cross, United Health Care and Centene (Healthnet) on average $40,000 per surgery. Some who received surgeries were addicted to methamphetamine and no opiates.

“Exploiting addicts’ vulnerabilities to conduct unnecessary and dangerous surgeries for profit is unconscionable. It’s simply wrong to use human beings as ATM machines. OCDA’s fight to stop opiate epidemic and insurance fraud is multi-faceted from suing the big Pharma for creating the opiate epidemic, to enacting necessary legislation to suing civilly to whole sale shut down businesses and to criminally pursuing the worst offenders,” stated District Attorney Tony Rackauckas

Prosecutor: Senior Deputy District Attorney Shaddi Kamiabipour and Deputy District Attorney Hope Callahan, Insurance Fraud Unit.