Trial Opens for Woman Charged With Offering Kickbacks for Patients

A Huntington Beach woman who allegedly paid $9,400 to a Seal Beach health club owner and thousands of dollars to others in exchange for patient referrals to the diagnostic testing firm she represented went on trial Tuesday in federal court here.

Catherine F. Brouwers, 28, was promoting health testing services for American Medical Diagnostics, a Montclair company owned by two brothers, David and Michael Smushkevich.

Starting in November, 1984, and continuing through 1985, Brouwers allegedly offered Steven Ellis, owner of the Rossmoor Athletic Club in Seal Beach, and others money in the form of lease payments in exchange for patient referrals. Brouwers, a nurse from Michigan, also is accused of offering a chiropractor up to 25% of the insurance payment collected in exchange for patient referrals, according to a 14-count grand jury indictment filed in July.

Federal law prohibits offers of fees for patient referrals in any case involving Medicare money. Brouwers is accused of soliciting referrals in return for payments that were to be made out of Medicare funds.

If convicted, Brouwers faces a five-year prison sentence and up to $10,000 in fines on a conspiracy charge and five years in prison and up to $24,000 in fines on each of 13 counts of offering illegal kickbacks.

Medicare Billed $2 Million

In 1985, Medicare was billed $2 million for many of the diagnostic tests performed by five Smushkevich companies, according to government prosecutors.

David Smushkevich and three others were indicted by a federal grand jury in Los Angeles Sept. 24 on similar charges of conspiracy and soliciting and accepting illegal kickbacks. On Monday, Smushkevich pleaded not guilty.

In a related case, Lauro Mangibas of Norwalk pleaded guilty this week to a charge that he paid a company owned by David Smushkevich 50% of the net profits his laboratory received from Medicare.

In his opening statement in the Brouwers case, Assistant U.S. Atty. Brian J. Hennigan told the jury Tuesday that fees ranged as high as $7,000 per patient for heart-and-circulation function tests performed by Brouwers in various Orange County clinics and health clubs.

Bills for the tests were submitted to insurance companies and Medicare by American Diagnostics, according to court records.

Brouwers’ attorney, Dennis G. La Barbera, warned the jury that they would have a “tough time trying to figure out the truth.”

“There are a number of witnesses who are greedy and dishonest,” La Barbera said. “People were unhappy with Brouwers because they weren’t getting paid enough.”

He also said Brouwers, who has pleaded not guilty to all the charges, paid the health club owner and others by check, which she would not have done if she was doing anything illegal. “Miss Brouwers had no intent to violate the law,” La Barbera told the jury.

First Witness

Dr. Robert J. Peterson, an osteopathic physician from Huntington Beach, was the government’s first witness. He said Brouwers, who initially worked for him as a nurse and billing clerk, left his office to work as a promoter for American Diagnostics in late 1984. He said she returned to his office a few months later and offered to pay him $300 to $400 per cardiovascular test for any patient he referred to the company. For patients covered by Medicare, Peterson said the fee would have dropped to $100 or $200 because the government has limits on the fees it pays for medical services.

Peterson also testified that Brouwers offered to pay him $50 to $100 an hour to rent a room to conduct the tests, which measure blood flow to parts of the body. He said he turned down her offer.

“My own feeling was, I did not want to deal with them,” Peterson told the jury.

In an interview outside the courtroom, Peterson said “he had a bad feeling about the group” Brouwers represented. And he said he had heard through the “medical grapevine” that there might be problems with American Diagnostics’ billing practices.

“No money was ever paid for patient referrals,” said Evan Ginsburg, an attorney who represents American Diagnostics and Michael Smushkevich.

Ellis, of the Rossmoor Athletic Club in Seal Beach, testified that Brouwers paid him $1,400 in January, 1985, in exchange for permission to conduct health screening tests in the club. He was paid an additional $4,000 in rent in February, 1985. But, he said, complaints from members prompted him to end his working relationship with Brouwers and American Diagnostics.

“It was obvious to me something was wrong here,” said Ellis, who has been granted immunity from prosecution in exchange for his testimony. “Not only were the bills high, but the people did not receive the results of the tests.”

Ellis said he agreed to work with the company again in August, 1985, in exchange for another $4,000 rent payment, but he later stopped the testing program.