Twenty-one Physicians Charged in Kickback Scheme

April 27, 2017

A southern California practice management company called Monarch Medical Group used to advertise that it could provide physicians with new revenue streams from transdermal pain creams, oral medication dispensing, and urine drug-screening tests.

Those revenue streams could lead to prison for 21 physicians charged in a California state court last week with fraudulently billing workers' compensation insurers for these ancillary services and accepting kickbacks for patient referrals. It was all part of a scheme allegedly masterminded by Tanya King and her husband, Christopher King, owners of Monarch Medical Group and related companies, according to state prosecutors and the California Department of Insurance (CDI).

The Kings also were charged in the case, as were two pharmacists who owned a pharmacy and a physician assistant.

"The Kings and their co-conspirators played with patients' lives, buying and selling them for profit without regard to patient safety," said CDI Commissioner Dave Jones in a news release.

From 2011 to 2015, the operation fraudulently billed insurers for $40 million and collected more than $23 million for services rendered to some 13,000 patients. The 21 physicians netted almost $2.2 million in kickbacks, which were labelled as marketing expenses to make them look legitimate, prosecutors said. The average age of the physicians was 57.

Buy for $40, Bill for $700

The scams alleged by prosecutors were based on the three ancillary services that Monarch Medical Group advertised on its website.

The first scam involved the pain creams. Prosecutors said the Kings had their partner pharmacy compound creams "of unknown effects" that were not approved by the US Food and Drug Administration. The Kings bought tubes with a 3-g, 3-day supply of cream for $15 apiece and tubes with a 120-g, 30-day supply for $40 apiece.

Physicians in the scheme received a supply of 3-g tubes of cream that they could dispense to workers' compensation patients from their office. King Medical Management, another King-owned company, would bill workers' compensation insurers more than $200 for these tubes of cream, prosecutors said. In turn, the prescribing physician would receive a share in the profits — as high as 90% — or a flat fee of $50 or $75 per tube.

However, to be eligible for this deal, these physicians were required to prescribe the 120-g tubes for workers' compensation patients, who received them directly from the participating pharmacy. Monarch Medical Group would bill insurers $700 to $1000 for the 120-g tubes, according to prosecutors.

State and federal law enforcement agencies have busted pain-cream kickback schemes  in other parts of the country.

In the second alleged scam, Monarch Medical Group bought repackaged oral pain medications, such as hydrocodone, tramadol, and acetaminophen with codeine, from two California pharmaceutical companies and distributed them to physicians in the conspiracy. These physicians dispensed the medicine while Monarch billed workers' compensation insurers without disclosing the wholesale price or its role in purchasing the products. Physicians received a prearranged cut of the profits.

Finally, the Kings were charged with bribing physicians to perform urine drug-screening tests at the point of care on workers' compensation patients, sometimes using onsite technicians provided by a King-owned lab company. King Medical Management would bill insurers for these tests. For their kickback, physicians would receive a percentage of the profits or a flat rate, such as $100 per test. Regardless of the point-of-care test results, or medical necessity, the samples were referred to another lab for additional testing. The Kings paid this lab $60 per test but billed insurers as much as $700, according to prosecutors.

"King Pushes the Limit"

The website for Monarch Medical Group shows up as "no longer available" when one types in its URL into a web browser, but earlier versions are stored in the Wayback Machine of Internet Archives, shedding light on the company at the heart of the criminal case.

On a 2015 version of its website, Monarch described itself as "a leader in the ancillary business," focusing on orthopedic, pain management, and neurology practices that treat workers' compensation patients and those in preferred provider organization health plans. In addition to transdermal creams, medication dispensing, and urine tests, the company offered to perform billing and collection for client practices, as well as buy their accounts receivable in a transaction known as factoring.

A bio on company founder and CEO Christopher King stated that he had founded nine companies in industries ranging from healthcare to entertainment since 1999. "King pushes the limits of what is possible in business."

Monarch was operating in 15 states, with plans to expand into more, according to the website. One press release described the company as a "practice management giant."

A 2014 article in Forbes on Christopher King described how he made his first million in real estate, lost it all in the 2008 economic crash, and roared back into millionaire-dom with ventures such as Monarch and a partnership in fine wines. "Rolls Royce and Aston Martin vehicles fill his garage," the article said.

And now, criminal charges all around. At a news conference last week, Orange County (California) District Attorney Tony Rackauckas said that if they were found guilty, the 21 physicians and the physician assistant accused of participating in the fraud scheme could receive prison sentences of up to 25 years. The two pharmacists could face 28-year terms.

Tanya King could be sentenced to as many as 117 years in prison if convicted. She was the one who recruited physicians into the scheme and offered them financial incentives to perform the various ancillary services, according to prosecutors. She is charged with the most criminal counts of any defendant — 111, including 91 counts of insurance fraud. In contrast, her husband, Christopher King, is charged with one count of insurance fraud  and one count of conspiracy to commit medical insurance fraud.

Amanda Touchton, the attorney for Christopher King, declined to be interviewed. Richard Moss, the attorney for Tanya King, told Medscape Medical News that "we're anticipating fighting this and in the end, we're confident she will be exonerated." Moss noted that he has yet to see any documentary evidence from the prosecutors that supports the allegations made against his client.

Remarking on how Tanya King has been charged with far more crimes than her husband, Moss suggested the opposite was true. "I think she's the lightweight in the case," said Moss, "and he's the heavyweight."

Follow Robert Lowes on Twitter @LowesRobert


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