Radiologist + 3 others could face life in prison for $17M billing fraud

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A California radiologist who owned several medical practices, including an imaging center, has been charged with fraudulently billing workers’ compensation patients for false and unnecessary procedures, and faces sentences of up to 892 years in prison.

On May 11, an Orange County, Calif., grand jury returned a 181-page indictment which included 884 counts of fraud against Sim C. Hoffman, MD, owner of Advanced Professional Imaging, Advanced Management Services and Better Sleeping Medical Center, as well as neurologist Thomas M. Heric, MD, and two claims associates implicated in the alleged schemes. Both Hoffman and Heric have been previously disciplined by the Medical Board of California for excessive billing or fraud.

The case began to unravel in early 2008, when two employees from Hoffman’s Better Sleeping Medical Center in Buena Park, Calif., issued complaints to the California Department of Health Services for unsanitary conditions and a lack of proper patient care at the facility. The Department of Health Services forwarded the complaint to Don Marshall, vice president of the National Anti-Fraud Program for Zenith Insurance Company.

Zenith proceeded with an investigation into fraud allegedly conducted by Better Sleeping Medical Center and Advanced Professional Imaging (also in Buena Park) and contacted the California Department of Insurance in July 2008, claiming that the providers were overbilling for procedures that lacked medical value or necessity.

Over the next three years, the California Department of Insurance and the Orange County District Attorney’s Office (DA) conducted a lengthy joint investigation into Hoffman’s businesses. According to District Attorney Tony Rackauckas, JD, the investigation had to be limited to specific time periods and a total of 600 patients due to the sheer volume of fraud allegedly committed by the defendants.

On May 11, a grand jury filed an indictment for 884 counts of fraud. According to the jury’s transcripts, which were released on June 13, the workers’ compensation fraud committed by the defendants included two separate schemes.

In the first, Hoffman is accused of conducting electromyography (EMG) nerve tests on patients but billing for single fiber EMGs, a procedure that is significantly more complicated and costs roughly 10 times the amount of a $35 normal EMG. According to the DA’s office, only two physicians in California are qualified to administer single fiber EMGs.

Overall, Hoffman, along with defendants Beverly J. Mitchell and Louis U. Santillan, are accused of fraudulently billing seven payors over $9 million worth of single fiber EMG tests—as many as 20 per patient—that were never performed.

The second part of the indictment relates to Better Sleeping Medical Center, which was said to be criminal from the outset with Hoffman’s failure to employ any certified technician or qualified physician to supervise the facility. Sleep centers specialize in the diagnosis and treatment of patients suffering from sleep disorders.

The DA’s office claims that over a one-year period between 2007 and 2008, Hoffman paid neurologist Heric $100 each to write 1,247 “cookie cutter” reports for patients, all of which were documented as including epilepsy and seizure testing, though no patient was ever treated by Hoffman or Heric, the DA’s office said.

Grand jury testimony from medical experts reportedly called Hoffman’s sleep center a “disgrace” that provided “no medical value.” Nineteen insurance companies were billed exactly $6,728 for each patient, totaling $8.4 million over the period covered by the government investigation.

District Attorney Rackauckas argued that patients “were used as pawns in Hoffman’s piggy bank.” The majority of patients, according to Rackauckas’ office, were blue collar Mexican workers who performed manually intensive work and, as a result of these frauds, never received proper care for their legitimate injuries or conditions.

Together, the $17-million, 884 cases of fraud bring maximum sentences of a combined 2,000 years for the four defendants.

“It is no secret that these types of fraud are resulting in higher insurance rates and hemorrhaging California businesses,” Rackauckas said. “We need to end these types of medical fraud mills–STAT… We hope before people engage in these types of schemes, they ask themselves if this is worth 800 years in prison?”