Diagnostic Laboratory Indicted for Fraud & Illegal Kickbacks to Nevada Physicians
Las Vegas, Nev. - A California medical diagnostic testing company which operated clinics in Las Vegas, Nevada, and its two top corporate officers, have been indicted on federal health care fraud, money laundering, and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
SDI FUTURE HEALTH, INC. ("SDI"), a California corporation based in Westlake Village, TODD STUART KAPLAN, age 46, of Thousand Oakes, California, and JACK BRUNK, age 48, of Newbury Park, California, were indicted by the Federal Grand Jury in Las Vegas yesterday and charged with one count of Conspiracy to Commit Health Care Fraud; 124 counts of Health Care Fraud; one count of violating the Medicare Anti-Kickback statute; one count of Conspiracy to Commit Money Laundering; and 10 counts of Attempt to Evade or Defeat Tax. They face up to 20 years in prison and fines of $250,000 on each of the Health Care Fraud and Money Laundering offenses, and up to five years in prison and fines of $250,000 on the Anti-Kickback and Tax Evasion counts.
According to the Indictment, the SDI defendants were in the business of providing medical diagnostic testing services to the medical community. SDI owned and operated clinics in Las Vegas, Nevada, and in at least 10 other states. SDI defendants marketed a test for diagnosing sleep apnea, a common sleep disorder. The test was referred to as a sleep study or polysomnography. SDI also marketed a series of heart monitoring tests, which SDI called a Cardiac Risk Assessment or "CRA".
In general, the 136-count Indictment charges that between January 1999 and January 2002, the SDI defendants devised and executed a scheme to defraud health care benefit programs, such as Medicare, Blue Cross/Blue Shield, and Sierra Health, of money and property. The object of the scheme was to enrich the SDI defendants by selling and obtaining reimbursement for medical tests that were unnecessary and not medically needed, and for billing health care benefit programs for services not performed. SDI billed health care benefit programs between $1,775 and $3,725 for the first sleep study ordered, and between $4,225 and $5,350, for the second sleep study ordered. SDI billed health care benefit programs between $145 and $3,995, for the "CRA", depending on the type of heart monitoring test performed.
It was further part of the scheme to defraud that the SDI defendants induced physicians, including Las Vegas physicians, to accept remuneration or "kickbacks" from SDI in exchange for referring patients to SDI labs. The remuneration took the form of:
(1) assigning SDI employees [referred to as Health Service Coordinators (HSCs)] to work, free of charge, in the offices of physicians;
(2) direct cash payments under the guise of medical director fees;
(3) gifts of expensive sports memorabilia; and
(4) assignment of fees.
SDI allegedly used their HSC's to evaluate patients for sleep studies and to write prescriptions for medically unnecessary tests. The prescriptions were often written by the HSC without any evaluation of the patient's medical condition by a physician and without the presence of any signs and symptoms indicating a medical need for the sleep studies or heart monitoring.
SDI defendants also allegedly pressured patients to make appointments at SDI clinics, and informed them that their treating physicians had ordered the sleep studies.
No Las Vegas physicians are specifically charged in the Indictment; however, it is alleged that between January 1999 and January 2002, the SDI defendants entered into agreements with physicians A, B, C, D, and E, who were physicians practicing in Las Vegas, and that the agreements called for payment of kickbacks in return for referrals to SDI.
During the relevant time frame, SDI treated in excess of 15,000 patients. The estimated loss to the victims is approximately $22 million.
KAPLAN is charged with attempted tax evasion for failing to report $617,147 in personal income for the calendar years 1998 through 2000; BRUNK is charged with attempted tax evasion for failing to report $451,088 in personal income and capital gains for the calendar years 1999 through 2001; and the SDI corporation and individual defendants are charged with attempted tax evasion for failing to report $1,291,218 in employee's salaries for the calendar years 1998 through 2000.
The Indictment alleges that if convicted, the defendants shall forfeit approximately $24 million to the United States, because the monies were derived from the proceeds of their offenses.
Defendants KAPLAN and BRUNK were summoned, and are scheduled to make an initial appearance in court on March 22, 2005, at 3:00 p.m.
The case is being investigated by the Nevada Health Care Fraud Task Force, comprised of Special Agents with the FBI, IRS Criminal Investigation, U.S. Department of Health and Human Services Office of the Inspector General, and investigators with the State of Nevada Office of the Attorney General, Insurance Fraud Division. It is being prosecuted by Assistant United States Attorneys Steven W. Myhre, Crane Pomerantz, Roger W. Wenthe, and Daniel Hollingsworth.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.