21 California Doctors Charged In $40M “Snake Oil” Scheme

162017_132140396847214_292624_nOn April 20, 2017, the California Department of Insurance and the Orange County District Attorney announced that 21 California doctors, two pharmacists, and the two owners of medical billing and management companies have been charged with participating in a $40 million fraudulent medical billing and kickback scheme involving over 13,000 workers’ compensation patients.

California officials contend that from 2011 to 2015, the defendants participated in fraudulent billing for unnecessary creams, tests, and treatments to maximize their profits that resulted in at least 27 insurance carriers paying approximately $23.2 million (a total of $40 million was billed to insurers).

The doctors are accused of entering into written agreements with the two owners of various medical billing and medical management companies that paid the participating doctors kickbacks each time they prescribed a compound cream or oral medication or ordered a urine drug test. The illegal kickbacks were labeled as “marketing expenses” in an attempt to conceal the kickbacks.

The doctors are accused of receiving $50 each time they prescribed a variety of creams that were not FDA approved that cost the owners of the medical billing and management companies between $15 and $40 per tube, and then billed to patients’ workers’ compensation insurance carriers for between $250 and $700 per tube.

The doctors are also alleged to have entered into agreements with the two owners of the medical billing and management companies to receive illegal kickbacks when they prescribed repackaged oral pain medications they received directly from two companies. The owners of the medical billing and management companies were notified each time the doctors dispensed the repackaged oral pain medications at the time the doctors scanned the bar codes on the packages. The workers’ compensation insurance carriers would then be billed without disclosing the wholesale cost or the fact the medications had been purchased on behalf of the physicians who ultimately prescribed it. The doctors would receive illegal kickbacks once payments were made, according to the criminal allegations.

The doctors also allegedly participated in a fraudulent urine test scheme in which they ordered unnecessary urine tests for patients under the guise of verifying that patients on workers’ compensation were taking their medications as prescribed.

In announcing the criminal charges, the California Insurance Commissioner stated, “Patients have the right to expect treatment decisions by health care professionals are based on medical need and not unadulterated greed. The magnitude of this alleged crime is an affront to ethical medical professionals.”


It is important for patients and nonpatients alike to be aware and understand that not all doctors they come in contact with have their best interests at heart. As with other professionals, their greed can cloud their professional decisions and their self-dealing can harm their unwitting patients. While other unscrupulous professionals, such as shady financial advisors, may cause their victims to lose money when they put their financial interests above their clients, doctors who place their own wealth above the health of their patients may cause their victims to suffer something more permanent and more serious than the loss of money: unnecessary physical injury or even death.

If you suffered serious injury as a result of medical negligence in California, you should promptly find a California medical malpractice lawyer who may investigate your California medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.

Click on the “Contact Us Now” tab to the right, visit our website, or call us toll-free in the United States at 800-295-3959 to find medical malpractice attorneys in your state who may assist you.

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This entry was posted on Friday, June 16th, 2017 at 5:17 am. Both comments and pings are currently closed.

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