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Justice News

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

FOR IMMEDIATE RELEASE
Wednesday, December 13, 2017

Beverly Hills Doctor Convicted of Fraud, Corruption in Massive Workers’ Comp Scheme

 

 

NEWS RELEASE SUMMARY December 13, 2017

 

SAN DIEGO – Beverly Hills Radiologist Ronald Grusd and two of his corporations, California Imaging Network Medical Group and Willows Consulting Company, were convicted by a federal jury late yesterday of fraud and bribery charges in connection with a massive health care-fraud scheme involving the State of California’s Workers’ Compensation program.

 

After a seven-day trial, the jury found Dr. Grusd and his companies guilty on all charges facing them, including Conspiracy, Honest Services Mail and Wire Fraud, Health Care Fraud, and Travel Act violations, based on their years-long bribery and fraud scheme. 

 

According to evidence presented at trial, Dr. Grusd and his companies paid kickbacks for patient referrals from multiple clinics in San Diego and Imperial counties in order to fraudulently bill insurance companies over $25 million for medical services. Dr. Grusd negotiated with various individuals, including a primary treating physician, the payment of kickbacks for the referral of workers’ compensation patients for various medical services, including MRIs, ultrasounds, Shockwave treatments, toxicology testing and prescription pain medications.

 

After the patients were referred for the treatment or service, one of Dr. Grusd’s companies, California Imaging Network Medical Group, would fraudulently bill insurance companies for the procedures, concealing from both the patients and the insurers that substantial kickbacks had been paid in violation of California law. Another of Dr. Grusd’s companies, Willows Consulting Company, funneled the kickback payments to those directing the referral of the patients from the various clinics. Records presented at trial showed that Dr. Grusd paid over one hundred thousand dollars in bribes to secure the billings for hundreds of patients, with bribes paid on a per-patient or per-body-part formula.

 

Dr. Grusd was ordered to return to federal court on March 12, 2018, for a sentencing hearing for himself as well as both corporations. Since 2009, Dr. Grusd and his various companies have filed tens of thousands of liens in the California Workers Compensation System, seeking reimbursement for hundreds of millions of dollars from multiple insurers. To date, any outstanding liens have been stayed and will be sent to lien consolidation for dismissal proceedings as a result of the convictions. The jury could not reach a unanimous verdict as to Dr. Grusd’s administrator, Gonzalo Paredes, who was ordered back to court on January 4, 2018, for a hearing regarding a retrial.

 

Dr. Grusd, Paredes, and the corporations were originally indicted by a federal grand jury in November 2015, when the U.S. Attorney’s Office and the San Diego District Attorney’s Office, working in conjunction with the Federal Bureau of Investigation and the California Department of Insurance, announced multiple arrests arising from “Operation Back Lash” – a long-term, proactive health care fraud investigation targeting corruption and fraud in the California Workers’ Compensation system that is continuing.

 

Since then, nearly 40 individuals and corporations have been charged with federal and/or state crimes, including doctors, attorneys, marketers and providers of medical services and devices. The four other defendants charged with Dr. Grusd and Paredes – who were alleged to have received bribes in exchange for patient referrals – have pleaded guilty and are cooperating with the continuing investigation while awaiting sentencing. The charges on which Dr. Grusd went to trial were brought in July 2017, when a grand jury returned a Superseding Indictment against him and his companies.

                                                     

Grusd’s practice, California Imaging Network Medical Group, operated clinics throughout California in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.

 

“A patient entrusts his life to his physician,” said U.S. Attorney Adam Braverman. “A doctor’s medical decisions should be based on the best interest of the patient, not the highest bidder. The jury has found that Dr. Grusd perverted that sacred relationship by buying and selling patients – oftentimes on a per-body-part basis – for his own personal enrichment.”

 

U.S. Attorney Braverman commended the tireless efforts of the Federal Bureau of Investigation and the California Department of Insurance to investigate these offenses, and thanked San Diego District Attorney Summer Stephan and her office for collaborating with the United States Attorney’s Office on the Operation Back Lash prosecutions.

 

“These convictions show that the paying of illegal bribes and treating patients as commodities for the purpose of lining conspirator's pockets will not be tolerated,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI will continue to use our investigative expertise to dismantle sophisticated criminal conspiracies at the highest levels. This case exemplifies that the FBI and our law enforcement partners are committed to rooting out corruption in our health care system.”

 

Anyone with information about healthcare fraud may call the FBI at 1-800-CALL-FBI, or 1-800-225-5324 or the California Department of Insurance’s toll-free fraud hotline, 800-927-4357.

 

DEFENDANTS                                Case Number: 15cr2821-BAS                     

 

Ronald Grusd                                                              Los Angeles, CA       

Gonzalo Ernesto Paredes                                            LaVerne, CA

California Imaging Network Medical Group             Incorporated in 2007              

Willows Consulting Company                                   Incorporated in 2011              

 

SUMMARY OF CHARGES

 

Conspiracy to Commit Honest Services Mail Fraud, Mail Fraud, Wire Fraud, and Health Care Fraud, in violation 18 U.S.C. 1349

Maximum Penalty: 20 years in custody; $250,000 fine, or twice the pecuniary gain or loss; three years’ supervised release; restitution to victims of the offense; forfeiture

 

Honest Services Mail and Wire Fraud, in violation of 18 U.S.C. Secs. 1341, 1343 and 1346 (18 Counts)

Maximum Penalty (each count): 20 years in custody; $250,000 fine or twice the pecuniary gain or loss; three years’ supervised release; restitution to victims of the offense; forfeiture

 

Health Care Fraud, in violation of 18 U.S.C. 1347, (14 Counts)

Maximum Penalty (each count): 20 years in custody; $250,000 fine or twice the pecuniary gain or loss; three years’ supervised release; restitution to victims of the offense; forfeiture

 

Travel Act, in violation of U.S.C. 1952 (6 Counts)

Maximum Penalty: Five years in custody; $250,000 fine or twice the pecuniary gain or loss; three years’ supervised release; restitution to victims of the offense; forfeiture

 

INVESTIGATING AGENCIES

 

Federal Bureau of Investigation

San Diego County District Attorney’s Office

California Department of Insurance

 

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

 

Topic(s): 
Health Care Fraud
Press Release Number: 
CAS17-1213-Grusd
Updated December 13, 2017