National Health Care Fraud Takedown Results in Charges Against 601 Individuals Responsible for More than $2 Billion in Fraud Losses; Seven Charged in San Diego

Assistant U. S. Attorney Valerie Chu (619) 546-6750    

NEWS RELEASE SUMMARY – June 28, 2018

SAN DIEGO – Seven defendants, including a physician and two chiropractors, were charged in San Diego as part of the largest healthcare fraud enforcement action in Department of Justice history.

The national takedown involved 601 charged defendants across 58 federal districts, including 165 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $2 billion in false billings. Of those charged, 162 defendants (including 76 doctors) were charged for their roles in prescribing and distributing opioids and other dangerous narcotics.

In San Diego, the cases include:

• Marco Antonio Chavez, a licensed medical doctor specializing in psychiatry, was charged with 30 counts of health care fraud in connection with over $928,000 in bills he submitted to TRICARE for services he never provided.  He was also charged with five counts of aggravated identity theft and one count of obstruction of a federal audit. According to the indictment, he misappropriated the personal identifying information of TRICARE beneficiaries to submit fraudulent bills to TRICARE, and then lied during the course of a subsequent federal audit. Chavez allegedly used the proceeds of his scheme to purchase, among other luxury items, a 2016 Jaguar F-type and tens of thousands of dollars in David Yurman jewelry.  On June 26, 2018, agents executed a search warrant at Chavez’s residence, and seized the Jaguar.  The United States is seeking to forfeit all proceeds of Chavez’s illegal activity.
   
• Four defendants, including two chiropractors, a physical therapist and an acupuncturist, were charged with conspiracy to commit health care fraud and honest services fraud and to pay unlawful kickbacks stemming from their operation of R.I.S.E. Medical Center.  According to the indictment, R.I.S.E. operated several “Wellness Centers” in San Diego County, including Bonita and Oceanside, and offering a range of services including physical therapy, diagnostic tests, massages, chiropractic treatments, and acupuncture. Since TRICARE and Medicare do not cover most of those benefits, the defendants misrepresented acupuncture, chiropractic, and massage services as “physical therapy,” and billed TRICARE and Medicare as if “physical therapy” had been provided.  Joserodel Zavala Candelario, a chiropractor and owner of R.I.S.E., imposed quotas for non-reimbursable services and treatments, allegedly telling staff that they were expected to provide a certain number of diagnostic tests, “no matter what”; to “grab patients in lobbies to put into provider schedules”; and to ply patients with complimentary treatments so R.I.S.E. could continue to fraudulently bill TRICARE and Medicare.  According to the indictment, the defendants fraudulently billed over $23 million to TRICARE, and over $9 million to Medicare.
   
• In addition, Candelario was also charged with paying a patient recruiter over $18,000 to refer TRICARE patients to the R.I.S.E. clinic.  The recruiter, Mariam Reyes, was charged separately with conspiring to solicit and receive kickbacks.
   
• In a separate indictment, Candelario was charged with participating in a scheme to defraud California Workers’ Compensation insurers and R.I.S.E. patients by receiving illegal kickbacks and bribes to refer patients to certain providers.  According to the indictment, Candelario paid kickbacks to his co-schemers through a front company in exchange for referrals of Workers’ Compensation patients, and then concealed these kickbacks through sham “marketing” agreements.  One of Candelario’s co-schemers, Boris Dadiomov, was charged separately for his role in the fraudulent conspiracy.  As a result of their unlawful cross-referral kickback scheme, Candelario and the other schemers received over 500 illegal patient referrals and submitted over $6.6 million in false billings to insurance companies.  
   

“With healthcare costs skyrocketing, and with patients’ well being on the line, we cannot afford the financial and physical costs of fraud,” said U.S. Attorney Adam Braverman. “Doctors are especially culpable as they are violating the sacred trust they should have with their patients. We are working hard every day to protect patients, taxpayers, ratepayers who are being exploited by those members of the medical community who prefer purchasing power over principle.”

“The FBI is fully committed to protecting our nation’s health care programs that have an impact on San Diegans,” said FBI Special Agent in Charge John Brown.  “As evidenced by the broad range of health care fraud cases announced today, the FBI and our partners have shown that we will uncover fraud affecting our public health insurance programs whether committed by a mental health professional, a chiropractor, physical therapist, acupuncturist, physician, ancillary medical service provider or a medical marketer….the health and safety of our citizens depend on it.”

“Public health insurance programs, such as Medicare and TRICARE, are not a personal pocketbook for criminals seeking to exploit government programs designed to help those who need these plans the most,” stated R. Damon Rowe, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office.  “Taxpayers rightly expect individuals working in the healthcare industry that receive payments from taxpayer-funded programs to scrupulously follow the rules.  IRS Criminal Investigation will continue to protect the integrity of public health insurance programs and ensure that doctors, chiropractors, and medical service providers who profit from these illicit schemes are held accountable.”

The national takedown was announced today by Attorney General Jeff Sessions. The cases aggressively target schemes billing Medicare, Medicaid, TRICARE (a health insurance program for members and veterans of the armed forces and their families), and private insurance companies for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries.  The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus for the Department.  According to the CDC, approximately 115 Americans die every day of an opioid-related overdose.  

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided.  In many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of submitting a total of over $2 billion in fraudulent billings.  The number of medical professionals charged is particularly significant, because virtually every health care fraud scheme requires a corrupt medical professional to be involved in order for Medicare or Medicaid to pay the fraudulent claims.  Aggressively pursuing corrupt medical professionals not only has a deterrent effect on other medical professionals, but also ensures that their licenses can no longer be used to bilk the system.

The Medicare Fraud Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in 10 locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,700 defendants who collectively have falsely billed the Medicare program for over $14 billion.

DEFENDANT                                               Case Number 18cr2930                               

Marco Antonio Chavez                                  

SUMMARY OF CHARGES

(Counts 1-30)

Health Care Fraud – Title 18, United States Code, Section 1347

Maximum Penalty: Twenty years’ imprisonment, $250,00 fine, restitution, forfeiture

(Counts 31-36)

Aggravated Identity Theft – Title 18, U.S.C., Section 1028A

Maximum Penalty: Mandatory two years’ imprisonment, consecutive (per count)

(Count 37)

Obstruction of Federal Audit – Title 18, U.S.C., Section 1516

Maximum Penalty: Five years’ imprisonment, $250,000 fine

DEFENDANT                                               Case Number 18cr3015                               

Boris Dadiomov                                            

SUMMARY OF CHARGES

Conspiracy to Commit Honest Services Mail Fraud and Healthcare Fraud – Title 18, U.S.C., Section 1349

Maximum penalty: Twenty years’ imprisonment and $250,000 fine

DEFENDANTS                                            Case Number 18cr3057       

Joserodel Zavala Candelario   (1)                   

James Ward, Jr. (2)

Robert Cohen (3)

Antony Y. Lim (4)

SUMMARY OF CHARGES

Conspiracy to Commit Offenses– Title 18, U.S.C., Section 371

Maximum Penalty: Five years’ imprisonment, $250,000 fine, restitution, forfeiture

Honest Services Mail Fraud – Title 18, U.S.C., Section 1341, 1346

Maximum penalty: Twenty years’ imprisonment and $250,000 fine, restitution, forfeiture

Health Care Fraud – Title 18, U.S.C., Section 1347

Maximum penalty: Twenty years’ imprisonment and $250,000 fine

Honest Services Wire Fraud - Title 18, U.S.C., Section 1341, 1346

Maximum penalty: Twenty years’ imprisonment and $250,000 fine         

DEFENDANT                                               Case Number 18cr3016                   

Meriam Reyes

SUMMARY OF CHARGES

Conspiracy to Solicit and Receive Kickbacks – Title 18, U.S.C., Section 371

Maximum penalty: Five years’ imprisonment and $250,000 fine, restitution, forfeiture

AGENCIES

Federal Bureau of Investigation

Internal Revenue Service

Defense Criminal Investigative Service

California Department of Insurance

San Diego County District Attorney's Office

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.