Federal agents have arrested the man accused of masterminding a $1-billion medical insurance fraud scheme by filing claims through a chain of clinics he owned in Southern California.
Michael Smushkevich was charged with mail fraud and arrested last week by federal agents as he left a restaurant in Rosemead.
In the mid-1980s, Smushkevich opened dozens of medical clinics throughout Southern California. He employed aggressive telephone solicitors who offered free checkups to people with medical insurance coverage, according to the complaint filed in Los Angeles federal court.
Prosecutors said Smushkevich collected "tens of millions" of dollars from several insurance companies before the fraud was uncovered. They said he submitted more than $1 billion in fraudulent claims.
His clinics only accepted patients with medical insurance coverage. The comprehensive exams, which often included expensive laboratory tests, were frequently done without the patient ever seeing a doctor, the complaint alleges.
After completing the tests, Smushkevich and his employees allegedly submitted inflated claims for payment, making it appear that the healthy people tested were suffering from serious ailments.
In one example cited in the complaint, 11 clinics submitted claims for $18,000 worth of tests performed on a healthy woman.
On Wednesday, U.S. Magistrate Charles Eick denied bail to Smushkevich, who holds passports from Mexico, Israel and the Soviet Union. Eick agreed with Assistant U.S. Atty. Lee Michaelson's contention that Smushkevich posed a serious flight risk if released.
In 1988, shortly after federal agents armed with 25 search warrants raided his clinics, Smushkevich moved himself and his business operations to Tijuana, Mexico. Since then, Michaelson told the judge, Smushkevich has traveled extensively in the Soviet Union, Israel, Canada and Europe. She said bank records seized by the agents reveal money has been moved out of the country to Mexico and Luxembourg.
James Barber, Smushkevich's attorney, said his client has no intention of leaving the country. Barber said he planned to file an appeal on the bail ruling.
Late Friday, U.S. postal inspectors arrested Carolyn Vasquez, identified in court as Smushkevich's girlfriend and mother of his 2-year-old son, on similar mail fraud charges. According to the complaint, Vasquez not only helped file the phony claims, but wired more than $400,000 to banks outside of the United States.
According to court records, Prudential Insurance paid out at least $5 million in fraudulent claims to Smushkevich's clinics. Aetna and two other insurers won an $18-million judgment against Smushkevich in a civil case. The insurance companies have yet to collect.
Michaelson previously said in open court that a Los Angeles federal grand jury is reviewing the charges against Smushkevich and Vasquez in light of an April 26 indictment against two doctors who worked for them. A new, broader indictment is expected to be issued by the end of the month.
Dr. William Kupferschmidt of Rancho Palos Verdes and Dr. Ameer Dixit of Laguna Niguel were charged with mail fraud and conspiracy for their roles in allegedly defrauding several insurance companies out of $7 million.