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$40 Million Workers’ Compensation Scam Uncovered in Orange County

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In Orange County, California, police have charged a number of pharmacists, doctors, and business owners in one of the largest workers’ compensation fraud rings in the county’s history. The alleged orchestrators of the operation, couple Christopher and Tanya King, face several felony charges. If the courts convict Tanya King of all charges, she may face a sentence of up to 117 years in prison. The fraud ring evidently victimized over 13,000 patients and collected around $40 million illegally.

Details of the Operation

Christopher King, 38, and wife Tanya King, 37, of Beverly Hills, California, own the companies Monarch Medical Group Inc., One Source Laboratories Inc., and King Medical Management Inc. They are medical management and billing companies. Police have accused both defendants of masterminding a major insurance fraud scheme, recruiting physicians and pharmacies to help them pull it off. These parties allegedly received kickbacks in return for helping the Kings defraud patients and insurance companies.

Twenty-two doctors face charges for ordering unnecessary tests and recommending treatments that patients did not need, from the years 2011 to 2015. According to the California Department of Insurance, the scheme victimized more than 13,000 patients and 27 insurance companies. The defendants earned around $23.2 million in the scheme, while billing insurance companies around $40 million, according to the California Department of Insurance (CDI).

The CDI is accusing the Kings of billing workers’ compensation carriers without disclosing that they purchased medications on behalf of physicians who prescribed it, as well as hiding the wholesale cost. The Kings received payments from carriers, and then split the profits with the physician who prescribed the medication, based on a prior agreement.

Involvement from Other Parties

The prosecution has accused the Kings of making agreements (oral and written) with physicians across California to prescribe a non-FDA (Food and Drug Administration) approved compound creams, oral medications, or urine drug tests to patients. Physicians would receive kickbacks ($50 flat rate or a share in the profits, according to investigators) in return for ordering these unnecessary treatments and prescriptions.

Physicians would bill the kickbacks as “marketing expenses” to conceal the fraud scheme. Investigators have also accused the Kings of rewarding doctors with higher volume by paying for office technicians.

The Kings worked with the owners of Steven’s Pharmacy in Costa Mesa, Charles Bonner and Mervyn Miller, to sell more than $1 million in compound creams with no known medical benefits. They partnered with the owners of the pharmacy to manufacture these creams, which have unknown effects. The Kings allegedly bought the creams for $15-$40, but billed insurance carriers $250 to $700. According to allegations, the Kings also repackaged oral pain medications from A-S Medication Solutions and NuCare Pharmaceuticals to sell to patients.

Orange County District Attorney Tony Rackauckas calls the enormous, disproportionate medical bills “appalling,” and announced a shutdown of the fraud ring on April 20, 2017. Since then, the investigation has named 22 doctors (most operating in Southern California), several pharmacies, and the Kings as defendants in the scheme. The California Department of Insurance headed the investigation, with support from the Federal Bureau of Investigation (FBI), National Insurance Crime Bureau, and the Orange County District Attorney’s Office Bureau of Investigation.

Charges for Insurance Fraud

The defendants face many charges for buying and selling patients’ prescriptions without regard for their safety. Dave Jones, California Insurance Commissioner, explains patients should be able to expect their health care providers to treat them based on their needs, not the providers’ greed. He calls this alleged crime an “affront to ethical medical professionals.” As the case gets underway, we will see more released statements regarding the specific charges against the defendants and the potential penalties. The Kings currently face several felony charges.