Medical Maniacs


A Southern California medical practice’s conspiracy to defraud Medicare and Medi-Cal, by billing the health benefits programs for false anti-psychotics prescriptions multiple times, has history-making impudence, according to a January report by Healthcare Finance News. The report details an investigation – dubbed ”Operation Psych Out” – and subsequent indictment of a physician and his colleagues for a $20 million prescription drug harvesting scheme. Why so historic? As it turns out, literally no American, ever, has had the audacity (gumption?)to put anti-psychotic medications at the center of large-scale insurance benefit fraud, making this sick scheme a first for the United State. (”I’d like to thank my crazy aunt Mildred, without whom I might never have envisioned this ill-fated and morally corrupt idea.”)

This may come as a shock, but the practice’s actual clientele did not include anywhere close to $20 million worth of mentally ill people. Thus to justify their practice’s sharp increase in anti-psychotics prescriptions, the defendants falsified the medical records of their most vulnerable patients – including homeless people, the elderly and drug-addled veterans – to make them look clinically insane. (Imagine discovering an official record stating that, no, your recent forgetfulness isn’t due to just age and, actually, you’re as nutty as a fruitcake? That itself is enough to drive anyone over the edge!)

Once these ”caregivers” had created a fleet of nonexistent nutsos in desperate need of anti-psychotic pills and billed Medicare and Medi-Cal for their prescriptions, the practice was in possession of millions of dollars in anti-psychotic medications. So they did what any common drug peddler would do: resold the pills to other pharmacies via the black market. And when the pharmacies went on to sell the anti-psychotics to patients who actually needed them, Medicare and Medi-Cal were effectively billed a second time.

Believe it or not, it gets worse.

The U.S. Attorney’s investigation (that’s right: ”Operation Psych Out”)discovered that one of the practice’s female employees had been posing as a licensed physician, when she filled thousands of prescriptions pre-signed by an actual doctor. She was, in fact, licensed to practice medicine in Armenia – which is where she’s believed to have fled after being found guilty of health care fraud conspiracy, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, false statements to the federal government and conspiracy to use other persons’ identification documents in furtherance of fraud. (A convicted felon on an international prowl for victims to defame and stuff full of pills.)

At the federal level, aggravated identity theft alone carries a mandatory minimum sentence of two years in prison. The American doctor is now serving nine years in federal prison, while his remaining co-conspirators (who did not flee the country) were sentenced to eight and fifteen years, respectively.

This group of felons preyed upon America’s most vulnerable populations by taking advantage of the stigma attached to mental illness, and ruined their own lives in the process. Best of luck explaining this one on future job applications, Doc.

Source: Today’s ”Fraud of the Day” is based on ”Doctor sentenced to 9 years in $20 million clinic scandal tied to fraudulent prescriptions,” by Beth Jones Sanborn and published by Healthcare Finance News on January 13, 2016.

The physician at the center of a multimillion conspiracy to defraud Medi-Cal and Medicare has been sentenced to nine years in federal prison, the U.S. Attorney’s Office announced. Dr. Kenneth Johnson, 49, is one of three found guilty following a 2014 trial and an investigation authorities dubbed “Operation Psyched Out”.

Johnson’s sentence is the result of his role in a scheme that spawned fraudulent prescriptions for pricey anti-psychotic medications, drugs for which the government was re-billed “over and over”, authorities said.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.