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Justice News

Department of Justice
U.S. Attorney’s Office
Central District of California

FOR IMMEDIATE RELEASE
Wednesday, January 6, 2016

Doctor Who Pre-Signed Thousands of Prescriptions in $20 Million Health Care Fraud Scheme Sentenced to Nine Years in Prison

            LOS ANGELES – The medical doctor at the center of a conspiracy linked to a sham medical clinic in Glendale was sentenced today to nine years in federal prison for his role in a $20 million scheme to defraud the Medicare and Medi-Cal programs.

            Dr. Kenneth Johnson, 49, of Ladera Heights, received a 108-month prison term from United States District Judge S. James Otero.

            Johnson was sentenced for his role in a scheme that, among other things, fraudulently prescribed expensive anti-psychotic medications and then re-billed the government for those drugs over and over. Johnson pre-signed thousands of prescriptions that were later used to fill millions of dollars in fraudulent prescriptions for anti-psychotic drugs.

            Observing that Johnson’s involvement in the conspiracy caused “significant loss by any measure,” Judge Otero stated that the sentence was necessary to “deter others from engaging in this type of conduct, especially physicians.”

            Johnson is one of three people found guilty after a trial in 2014 – and one of a total of 16 defendants who have been convicted – in relation to the scheme run out of Manor Medical Imaging in Glendale. The scheme generated fraudulent billings of more than $20 million, of which Medi-Cal and Medicare actually paid more than $9 million.

            Using prescriptions that were pre-signed by Johnson, employees of Manor Medical generated thousands of prescriptions for identify theft victims – such as elderly Vietnamese beneficiaries of Medicare and Medi-Cal, military veterans who were recruited from drug rehab programs, and denizens of Skid Row. Members of the conspiracy created or doctored patient files to make it falsely appear the drugs were necessary and the patients were legitimately treated. After the prescriptions were filled at pharmacies and paid for by Medicare and Medi-Cal, they were sold on the black market and redistributed to pharmacies, where the drugs would be subject to new claims made to Medicare and Medi-Cal as though they were new bottles of drugs.

            “Dr. Johnson essentially sold his prescription pad when he became part of the conspiracy that defrauded the government out of millions of dollars,” said United States Attorney Eileen M. Decker. “Johnson played a crucial role in this scheme, which could not have functioned without his medical license lending an air of legitimacy to the clinic.”

            The case was the first in the nation involving an organized scheme to defraud government health care programs through fraudulent claims for expensive anti-psychotic medications. At a prior hearing, Judge Otero noted that the conspiracy was “particularly devious,” because the participants believed they targeted “under-the-radar” drugs in an effort to evade the attention of law enforcement.

            In its sentencing brief, the government argued that Johnson “used his skill and professional licensure – issued in order to help people – to fraudulently take millions of dollars from programs designed to help the nation’s most vulnerable citizens.” 

            Previously in this case, another leader of the conspiracy – Lianna “Lili” Ovsepian, 35, of Tujunga, the manager and owner of Manor Medical – was sentenced to eight years in prison after pleading guilty to health care fraud charges. Her brother Artak Ovsepian, 34, of Tujunga – who was convicted with Johnson at trial – received a 15-year prison term in August. The third person convicted at trial – Nuritsa Grigoryan, 51, of Glendale – the holder of an Armenian medical license, who pretended to be an American doctor when she saw homeless “patients” and who filled out the bogus prescriptions pre-signed by Johnson – fled the United States after being found guilty and remains a fugitive.

            The investigation in this case, which was called Operation “Psyched Out,” was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS-Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.

16-003
Updated January 7, 2016