Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
California regulators called it the biggest case of workers’ compensation fraud in the state’s history.
James Eisenberg, a Santa Monica physician, and Michael Lightman, a Rancho Palos Verdes businessman, were accused of filing fraudulent workers’ compensation claims amounting to tens of millions of dollars. Additionally, four Amerimed employees and four lawyers were charged as accomplices.
The state alleges that Lightman and Eisenberg, the two corporate officers, spearheaded a statewide network of billing practices, treatment incentive programs and illegal medical referrals through many law offices and treatment facilities throughout California. The clinics are alleged to have zeroed in on person- al injury and workers’ compensation patients, severely over- charging their insurance carriers for services performed (eg. a routine initial medical examination was billed at a minimum of $800 — and if a specialist was consulted, the initial exam charge might go as high as $1450). At its peak of activity, Amerimed is alleged o have been billing nearly $2 million per month in insurance claims, many of which may have been fraudulent.
Eisenberg and Lightman were arrested on June 29, 995, and initially held on $2.5 million bail each. The arrests capped a two- year investigation that started with a June 1993 search and seizure operation.
The two principals have been in and out of the regulatory eye for over twenty years. In the early 1970s, they operated a weight- loss clinic together, but it was shut own by authorities amid allegations of treatment by non-physicians and questionable bill- ing practices. Their medical group operation in the 1980s was restructured into Amerimed in 1990 and began attracting the attention of the Department of Insurance and the District Attorney almost immediately.
One of the affiliates of Amerimed was the Civic Law Center, a high-profile law firm that relied heavily on the television media to attract clients. Commercials asking, “Injured at work?” or “Stress on the job?” plus a convenient 800 telephone number combined to produce enough clients to keep not only Amerimed and Civic Law Center funded, but a number of satellite firms as well.
There was the Injury Claims Center, the marketing arm of the conglomerate. They came up with the advertisements and found people to pass out handbills outside the unemployment offices. They often hired senior citizens to approach the newly unemployed — delivering the message that there was more money to be had from the insurance carriers than from the state unemployment office. The main work office housed about 60 low-paid employees and was a high-pressure setting. Walls were decorated with pictures of $100 bills and the top collector of he week was honored by being allowed to display a cardboard Burger King crown on his desk.
Accurate Imaging took care of the MRI testing — with one little detail missing. They did not have a Magnetic Resonance Imager on premise. Instead, they would send the patients to other facilities for the actual RI and contract the price on a per person cost of $600. Then they took the liberty of billing the insurance carrier upwards of $1800 for the test.
Enter Lien Collection, another arm of the operation, which would then negotiate the $1800 lien down to $1200 — still a 100- percent mark-up from the $600 paid by Accurate Imaging. Pretty slick.
The treatment rendered was one of the telltale signs to alert insurance companies of Amerimed wrongdoing. If a patient walked in with a broken finger, he was put through the same high cost diagnostic routine as a patient with a broken back who was carried in. First came the RVS 90630 complex examination by the initial physician along with a bill for about $800. Then came the referral to the orthopedic specialist and another bill for $1200 to $1500. This was often followed by an internal medicine workup, a psychiatric workup, etc., and a series of inflated bills. The parade of liens kept the Lien Collection arm very busy indeed.
Another source of income was the prescribing of “transcutaneous electrical nerve stimulators.” The TENS units consist of an electrode attached to a nine-volt battery pack and the intent is to reduce pain by providing an ongoing series of small electrical shocks. While the devices retail for about $60 each, insurers were billed over $1,020 per unit. Amerimed would then pay a “commission” of up to $300 to the prescribing chiropractor. These TENS units, at these inflated costs, were dispensed to more than one thousand patients.
Judge Keith Schwartz, in approving a motion (which the A’s office vehemently opposed) to reduce bail from the original $2.5 million to $1 million, commented, “If the bill was so inflated, why did the insurance company pay it?”
There are 50 counts in all, and a long list of defendants:
Dr. James Eisenberg
Michael Lightman, administrator
Robert Yale Libott of Civic Law Center
Lynette Overcamp, Amerimed’s CFO
Sunny Pace, Billing
Marilyn Minott, Office Manager
Colleen S. Woodward, Med-Legal Marketer
William Downer, Operations Manager
Leon Brush, Legal Administrator
Dennis Sommese, Attorney
William (Ray) Jones, Attorney
Deborah Eisenberg (who filed joint income tax returns with her husband, allegedly understated by hundreds of thousands of dollars).
Charges include conspiracy to commit insurance fraud, insurance fraud and unlawful referrals. Arraignments were scheduled for August 21, at which time the next pathway will be decided upon: preliminary hearing or grand jury. If convicted, Lightman and Eisenberg face up to 12 years in prison.
One of the problems inherent in this kind of prosecution is that the public perceives this type f crime as solely an economic loss to the state. “These victims have faces,” said Rosabella Reyes, Los Angeles Deputy District Attorney. “Our work is cut out for us and the battle has just begun.”
© Copyright 1995 Alikim Media