Pulling the Wool Over Your Eyes

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36419114 - hand about to bang gavel on sounding block in the court room

Judges during the early history of the United States used to wear powdered wigs made of wool, mirroring their counterparts in British courts. When an unscrupulous individual was said to be “pulling the wool over someone’s eyes” in court, it meant that they were lying to the judge and getting away with it. Fast forward to modern times when a wigless judge in San Diego was able to see through the lies of a Beverly Hills, California radiologist, who committed workers’ compensation fraud by bilking more than $25 million from the California workers’ compensation system.

The radiologist operated a medical group out of 13 cities in the counties of San Diego and Imperial. He owned another company that paid out more than a quarter of a million dollars in kickbacks for patient referrals to his clinics. (The radiologist owner negotiated with a number of individuals to refer new patients for medical services including MRIs, ultrasounds, shockwave treatments, toxicology testing and prescriptions for pain medications.)

When new patients received a treatment, the medical company would fraudulently bill workers’ compensation insurance companies for the procedures. (Obviously, the doctor didn’t reveal that a bribe had been paid to get the patient in the door. That would reveal that he had violated California law.) His consulting company then funneled the kickbacks to the patient recruiters. Here’s an interesting fact about this case – the owner paid more than $100,000 in bribes on a per-patient or per body part formula – to get hundreds of new patients to his practice. (It would be interesting to see which body part fetched the highest payout.)

“Operation Back Lash,” an on-going fraud investigation that targeted corruption and fraud in the California workers’ compensation program, was responsible for homing in on the radiologist’s scheme. He, his two companies and his administrator were two of nearly 40 individuals and corporations that were charged with federal or state crimes. (Others that were involved in the scam included doctors, attorneys, marketers and providers of medical services and devices.)

During a seven-day trial, a jury found the Californian radiologist and his companies guilty of committing workers’ compensation fraud, while they could not reach a unanimous verdict on his administrator. Four other defendants charged in connection with the case pleaded guilty.

Apparently, while testifying in court, the radiologist tried to pull the wool over the judge’s eyes by saying he was confused and did not know what he was doing was illegal. (Acting dumb on the witness stand usually does not work.) While not exactly smart while on trial, the judge deemed the defendant smart enough to try the crime again and sentenced him to 10 years in prison and a fine of $250,000. His two companies were also each required to pay a $500,000 fine and an additional $15,600 in special assessments. (The only wool seen in this case will be the blanket this crafty radiologist will receive on his bunk when he checks into prison.)

Today’s “Fraud of the Day” is based on an article entitled, Bilked $25 Million from Insurance Companies, Paid Kickbacks to San Diego Health Clinics,” published by The Times of San Diego on December 13, 2017.

Sentencing is scheduled for March 12 for a Beverly Hills radiologist and two of his corporations convicted in San Diego federal court of fraud and bribery in connection with a healthcare scam involving California’s workers’ compensation system.

Following a seven-day trial, a jury on Tuesday found Ronald Grusd and his companies, California Imaging Network Medical Group and Willows Consulting Company, guilty on all charges facing them.

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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.