Doctors’ Offices, Medical Labs Raided in Insurance Fraud Probe

Federal and state investigators raided 24 doctors’ offices and medical laboratories in Orange, Los Angeles, Riverside and San Diego counties, seizing records and equipment that allegedly link the firms to a multimillion-dollar insurance fraud scheme.

Evan L. Ginsburg, a Fullerton attorney who represents two laboratory owners, said agents armed with shotguns burst into a Tustin diagnostic laboratory Monday morning and, though they made no arrests, “imprisoned” laboratory workers and patients for several hours.

Calling the raids “overkill,” Ginsburg said the agents seized patient lists, billing information, payroll records, computers and typewriters at several laboratories owned by his clients, including the Fitness Spectrum medical lab in Tustin, and at their homes.

The raids may force laboratory owners Michael and David Smuskevitch to close their businesses, said Ginsburg, who vowed to seek a federal court order demanding return of the records.

Ginsburg also claimed the agents seized records from several doctors who have no business connection with the Smuskevitches.

In addition, James N. Barber, a Salt Lake City attorney who also represents David Smuskevitch, claimed that agents “exceeded the scope of their search warrant by a substantial amount,” seizing laboratory employees’ personal property as well as several thousand dollars of laboratory receipts.

Federal and state officials declined Tuesday to give details of the investigation, but they confirmed that the raids were part of a continuing investigation into charges that Southern California diagnostic laboratories have fraudulently billed insurance companies for millions of dollars in unnecessary medical tests, often on healthy patients.

Assistant U.S. Atty. Brian Hennigan said Tuesday that he could not release names of the laboratories or doctors affected because affidavits seeking the search warrants were under court seal. He did confirm, however, that more than 200 agents from six agencies took part in the raids Monday morning.

Among the agencies involved, Hennigan said, were the state Department of Insurance, the state Bureau of Medical Quality Assurance, the Los Angeles County Sheriff’s Department, U.S. postal inspectors, the inspector general’s office of the U.S. Department of Health and Human Services, and the U.S. Defense Department’s criminal investigation service.

The latter agency became involved because many of the allegedly fraudulent claims were billed to CHAMPUS, the Civilian Health and Medical Program of the Uniformed Services, said Bill Landreth, a San Diego agent for the criminal investigation service.

Three private insurers have sued the Smuskevitch brothers in federal court, claiming that the Russian emigre brothers billed them for unnecessary tests or sometimes for medical tests that were never performed. Insurers claimed that the laboratories solicited healthy patients by phone, performed expensive and unusual vascular flow studies and ultrasound examinations, and then billed insurance companies for $2,000 to $10,000 in unnecessary tests.

Ginsburg on Tuesday denied that any laboratory tests were unnecessary. He also argued that the confiscation of records Monday had upset both laboratory owners and their patients. “Can you imagine that someone has a test done for cancer and now we can’t notify them? That would be terrible,” he said.

Santa Ana attorney Ken Sisco also complained that 18 agents wearing bulletproof vests and armed with shotguns “stormed into” a Stanton medical clinic Monday, seizing files from Dr. Lowell Kirk, a general practitioner. Sisco said he did not know if Kirk had any business relationship with the Smuskevitch laboratories but when Kirk asked for an explanation for the search, “no one would say.”