Kickback Verdict Against Doctor Overturned

A Tustin doctor who said his life was ruined when he was falsely accused of insurance fraud had his conviction overturned by an appellate court that ruled prosecutors did not prove their case against him.

“I’m deliriously happy,” Dr. Sunil K.S. Gulaya said Thursday. “I believe there is justice in the system after all.”

Gulaya, 46, was arrested during a 1994 sting operation intended to crack down on health insurance fraud. He was convicted of unlawfully offering a payment in exchange for patient referrals and was placed on probation. That sentence was deferred while he appealed his conviction.

At trial, the Orange County district attorney’s office introduced a taped conversation between Gulaya and an undercover agent, posing as a law firm administrator, who asked for a referral fee. During the trial, Gulaya said he dismissed the conversation at the time and noted that no such payment was ever made.

Prosecutors argued that by discussing the referral fee, the doctor committed a crime.

But the 4th District Court of Appeal in Santa Ana rejected that argument, ruling that such interpretation “would lead to the absurd conclusion that if a physician uttered such words as part of a theatrical performance or as a joke, he or she would be in violation of the law.”

Prosecutors must establish that the doctor intended to make the illegal payment, which prosecutors did not do, Justice William Rylaarsdam wrote.

Vincent Rabago, a deputy attorney general who argued the case on appeal, declined to comment Thursday.

Gulaya was among 20 people, including seven physicians, arrested in February 1994 after an 18-month probe in which authorities set up a fake law firm claiming to represent clients injured in car accidents. Employees and doctors at eight clinics in Santa Ana and one in Irvine were prosecuted on charges of insurance fraud, conspiracy to commit insurance fraud and offering kickbacks.

Information on whether other convictions from that sting operation were overturned was not available Thursday.

Although Gulaya has not served any jail time, he said the guilty verdict destroyed his family and career and has had a devastating effect on other aspects of his life.

After his arrest, he lost about 90% of his clientele, became an outcast and was hurled into a deep depression.

“My whole life has been destroyed,” the neurologist said. “I had to sell my home. I got divorced. I am now living in a small apartment in Tustin.”

Gulaya, who was forced to close his San Bernardino practice after his conviction, is struggling to maintain his Santa Ana office.

“It’s a big challenge to reconstruct my life again. Because I’m older now, I just don’t have the motivation and the drive that I used to have,” the doctor said. “I’m angry about this. I’m angry about my fate, what my family had to endure.”