A radiologist was among a number of healthcare providers arrested by investigators in Southern California in connection with an alleged scam that defrauded the state workers' compensation system of $25 million in improper claims.
Federal and state investigators charge that a network of healthcare providers "bought and sold patients like cattle," paying tens of thousands of dollars for patient referrals without the patients' knowledge, and then billing the California workers' compensation system. The scheme deprived patients of their right to honest services from their physicians, the investigators said.
They indicted eight medical professionals and their associates after serving search warrants at locations in San Diego, Chula Vista, National City, Murrieta, and Los Angeles. Among those arrested were radiologist Dr. Ronald Grusd of Los Angeles, as well as a chiropractor, a medical equipment provider, an administrator, and a marketing executive. One defendant remains a fugitive, and a warrant has been issued for his arrest.
The investigators on November 11 said the scheme preyed on patients who were injured on the job and filed workers' compensation claims with the state. The current round of indictments covers patients treated by chiropractors.
The chiropractors served as "the gateway to a wide array of healthcare fraud," according to the investigators, referring patients for MRI scans and x-rays, and ordering specialized treatments such as shockwave therapy. With respect to Grusd, the investigators charge that he allegedly paid bribes to a San Diego chiropractor in exchange for patient referrals to his radiology practice, California Imaging Network Medical Group, which operates sites throughout Southern California.
The bribes were allegedly funneled to the chiropractor through a company Grusd operated, Willows Consulting, which the investigators claim was a shell corporation. To further hide the alleged kickbacks, checks were issued to front companies named "Line of Sight" and "Desert Blue Moon" that were operated by intermediaries. The intermediaries took cuts from the payments and then paid the chiropractor.
This isn't the first time Grusd has run afoul of authorities. In 2010, a company Grusd operated at the time, Oak Diagnostics, paid the U.S. government $647,000 to settle charges that it filed false claims with Medicare for unnecessary medical imaging studies performed between 1999 and 2002. Oak Diagnostics paid the settlement without conceding wrongdoing.
In this week's events, officials provided further details of the indictments against the chiropractors, who in one case received $100 per patient for referrals, with intermediaries getting a cut of $25 per patient. Illegal bribes were paid in cash during clandestine exchanges in restaurants and parking lots, the investigators said; in one case, $6,000 in cash, hidden in a gift bag, was delivered to a chiropractor in a parking lot in Oceanside.
In another case, a San Diego chiropractor referred patients to a medical equipment provider, who in return paid the chiropractor $50 per patient in cash. The equipment provider then improperly billed workers' comp insurers millions for hot and cold packs for patients, the investigators charged.
