Two Docs Accused in $250M Gastric Band Insurance Scam

Marcia Frellick

March 06, 2018

Two southern California doctors have been arrested on charges of fraudulently billing health insurers for millions of dollars for procedures related to their 1-800-GET-THIN lap-band surgery business, according to the US Department of Justice (DOJ).

Charges against Julian Omidi, MD, 49, of West Hollywood, whose medical license was revoked in 2009, and Mirali Zarrabi, MD, 55, of Beverly Hills, include mail fraud, wire fraud, false statements, money laundering, and aggravated identity theft.

The charges were detailed in a 37-count federal indictment unsealed February 28 and were related to surgeries and tests performed between May 2010 and March 2016.

The alleged scheme included requiring patients to have unnecessary assessments, falsifying medical tests to justify bariatric surgeries, and duping insurers and patients out of $250 million.

In a press release about the indictment, the DOJ describes the alleged scheme in this way: Omidi required prospective bariatric surgery patients — even those with insurance plans he knew would not pay for the operation — to have at least one sleep study. The purpose of the sleep studies was to find a comorbidity, such as sleep apnea, that GET THIN could then use to convince the patient's insurer to preapprove the bariatric surgery.

Additionally, the DOJ claims that after the sleep studies GET THIN employees, at Omidi's direction, falsified results so the findings could support GET THIN's preauthorization requests for surgery.

Insurers, relying on the false studies and other fabricated information, such as height and weight, authorized payment for some of the surgeries. The indictment alleges GET THIN received at least $38 million for the surgeries.

The DOJ added that even if the insurer did not approve the surgery, GET THIN was able to bill for about $15 000 for each sleep study and received millions of dollars this way.   

Zarrabi, prosecutors say, "allowed his electronic signature to be used by GET THIN to make it falsely appear that he had reviewed and interpreted the falsified sleep studies, even though he knew the reports were being altered. Zarrabi also allegedly demanded to be paid for the use of his electronic signature on hundreds of prescriptions for devices to treat sleep apnea."

Prosecutors say Zarrabi did not review the prescriptions, which were sent with the falsified sleep study reports to durable medical equipment providers. The providers, who were given the bogus information, then billed for often unnecessary sleep apnea equipment.

The indictment also named two corporations owned, in part, by Omidi: Surgery Center Management and Independent Medical Services.

Medical leaders described the scope of the damage in the DOJ statement.

"Doctor Zarrabi and former physician Omidi victimized countless patients when they allegedly provided medically unnecessary treatment in order to boost their own profits to the tune of tens of millions of dollars," California insurance commissioner Dave Jones said in a statement.

"Medical provider fraud is a multibillion dollar problem that drives up health insurance premiums and creates a drain on our economy."

The DOJ says victims included patients insured by Anthem Blue Cross, UnitedHealth Group, Aetna, and Cigna, among others.

Claims Are False, Says Omidi's Lawyer

Omidi's attorney, Kamille Dean, gave this statement to Medscape Medical News: "The indictment against my clients (which also includes Surgery Center Management and Independent Medical Services) is based on false claims. The charges do not have any legitimacy. The passage of time has shown the government claims are untrue. This case is fraught with government misconduct."

She referred to two letters she sent to the DOJ which, she says, "demonstrate that the government's claims are meritless. The government refused to meet to obtain the critical exculpatory evidence that exonerates my clients, which the government was obligated to provide to the grand jury."  

Zarrabi's attorney, Thomas O'Brien, declined to comment.

According to the DOJ, if convicted, the men could face decades in prison based on a maximum penalty of 20 years for each of the alleged 31 counts of mail and wire fraud.

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