On January 29th, 2016

13 New Indictments in Operation Backlash

Department of Insurance investigates one of the largest workers’ compensation health care insurance bribery schemes in the department's history

SAN DIEGO - Operation Backlash first made headlines back in November, when eight suspects, including doctors and their associates, were indicted in a bribery scheme that ripped off  insurance companies and lead to  millions of dollars in fraudulent workers' compensation insurance claims.

On January 28, 2016, the California Department of Insurance announced 13 new indictments against  seven additional Southern California professionals, including a radiologist, a pain management physician, two chiropractors, a medical equipment provider, a medical clinic administrator and a medical marketer.

The charges in this case are the result of an extensive investigation by the California Department of Insurance, the FBI and the San Diego County District Attorney's office.  The investigation revealed a widespread kickback scheme, involving  attorneys, doctors and medical providers who referred patients for health services in exchange for money. The defendants paid kickback payments to the owners and operators of chiropractic clinics in San Diego, Escondido and Calexico, in exchange for the patient referrals.

"You can only begin to imagine the complexity of this lengthy investigation by local, state and federal investigators, " said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona.  CSLEA represents California Department of Insurance investigators along with 7,000 other law enforcement, public safety and consumer protection professionals who work for the State of California.

According to the San Diego County District Attorney's office,  on January 27th, law enforcement officers fanned out across three counties in a sweeping, early morning take down of the suspects, arresting nine and  serving  search warrants at seven locations.

Some of the defendants in Operation Backlash are accused of recruiting individuals to file workers’ compensation claims resulting from an on-the-job injury. The defendants then directed these patients to specific chiropractors who, in exchange for dozens of new workers’ compensation patients each month, agreed to meet a quota set by the defendants for referrals of the new patients for ancillary goods and services such as MRIs and durable medical equipment from specific providers.

The defendants either operated the companies that provided the durable medical equipment the chiropractors were required to use or were paid by the ancillary-procedure providers for the referrals for MRIs and other tests. If the chiropractors failed to average a certain quota of referrals per applicant, the pipeline of new applicants was cut off, according to court records.

“It is paramount that patients are treated solely on the basis of their medical need - not the doctor’s economic needs or pre-existing, hidden fee agreements,” said U.S. Attorney Laura Duffy. “These prosecutions are part of an effort by my office and our law enforcement partners to address the staggering scope of health care fraud and protect the well-being of patients.”

“These providers built an elaborate and illegal kickback and bribery scheme that bought and sold patients - putting profits ahead of patient medical needs,” said Insurance Commissioner Dave Jones. “Workers’ compensation is designed to protect injured workers and legitimate businesses, not create a fraudulent profit center for providers bent on taking advantage of the system. Fraudulent enterprises like this create a multi-billion dollar drain on California’s economy.”

The defendants have been identified as:

David NguyenRonald S. Grusd, M.D., 69, of  Los Angeles,

Gonzalo E. Paredes , 59  of La Verne,

Alexander K. Martinez, 38, of  El Centro,

Ruben M. Martinez, 59 of Murrieta,

Amir O. Khan, D.C.,  53, of Orange,

Farhat F. Khan,  52, of Orange,

Alexander K. Martinez, 38, of  El Centro,

Emmanuel E. Go, 52, of Laguna Niguel,

Christopher E. Go, 28, of Laguna Niguel,

Alexander K. Martinez, 38, of El Centro,

Eric J. Schames, 33,  of  Los Angeles,

Jennifer L. White, 35 , of Glendale,

Julian K. Garcia, 32, of  National City,

Eric SchamesAlexander K. Martinez, 38, of  El Centro,

Phong H. Tran M.D.,  51, of Irvine,

David C. Nguyen, D.C.,  48, of Huntington Beach,

Alexander K. Martinez, 38, of  El Centro

(Photos provided by the California Department of Insurance - top to bottom - David Nguyen, Jennifer White, Eric Schames

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