A Burbank medical laboratory, responding to federal allegations of widespread billing fraud and physician kickbacks, on Monday denied any wrongdoing and defended its business practices as "perfectly proper."
"What they [prosecutors] have done is take common business practices and made it sound as if it's not only criminal, but part of organized crime," said Patric Hooper, a Los Angeles lawyer representing Health Line Clinical Laboratory.
In court papers made public last week, federal prosecutors in Los Angeles accused Dr. Aramais Paronyan of masterminding a conspiracy in which Health Line billed the government at least $13 million for medical tests that were unnecessary or not ordered by doctors. They also accused the company of paying illegal kickbacks to doctors who steered patients to Health Line.
Government sources also said they have evidence that Paronyan, an Armenian-trained physician, and Health Line have links to Russian organized crime.
The U.S. attorney's office in Los Angeles has said it anticipates grand-jury indictments in the case within several weeks.
Hooper, who represents Health Line and its Burbank laboratory director, Gary Burhartsmeier, denied that the lab performed excessive tests or paid kickbacks to doctors to gain patient referrals. He criticized the government's case as described in an FBI search-warrant affidavit as being largely based on information gathered by "uninformed, inexperienced and unknowledgeable auditors and investigators." He also contended that government investigators were inappropriately targeting ethnic minorities.
Government sources say most of the targets of their investigation are doctors and businesspeople of Armenian or Russian heritage.
Hooper contended that the government's case relies heavily on a 1997 financial audit by the state controller of Health Line Medi-Cal billings. The FBI inquiry also relied on information from several confidential informants, court-authorized wiretaps and surveillance, according to court papers.
The auditors concluded that, based on a limited number of claims reviewed, the lab had inflated its Medi-Cal charges by 41%. According to the affidavit, five doctors interviewed by state auditors confirmed that Health Line had charged the state for tests they had not ordered.
As a result of the audit, the state Department of Health Services in February froze all payments to Health Line for treating patients on Medi-Cal, the state-federal medical-insurance program for the poor. Health Line has appealed the ruling and sued the state controller, alleging that her agency lacked the authority to audit Medi-Cal providers. Byron Tucker, a spokesman for the state controller, called Health Line's claim "utter nonsense."
Hooper contends that the controller's office misinterpreted the lab's records because its auditors "lacked expertise" in health-care audits. In court papers, Health Line contends that many of its patients are Armenian immigrants on Medi-Cal who have high rates of exposure to hepatitis, anemia and autoimmune diseases that require much testing.
Assistant U.S. Atty. Stephen Larson declined comment on Hooper's remarks.