WASHINGTON – Mohammad Rasekhi M.D., Sheila Busheri, Southern California Medical Center (SCMC) and R & B Medical Group Inc., doing business as Universal Diagnostic Laboratories (UDL) (collectively, the defendants), have agreed to pay $10 million to resolve allegations that they submitted false claims to Medicare and California’s Medicaid program, known as Medi-Cal, arising from allegations of paying kickbacks and making self-referrals. The defendants are all based in southern California. Rasekhi is the founder and chief medical officer of SCMC and the co-owner of UDL. Busheri is the chief executive officer of SCMC and the co-owner and chief executive officer of UDL. SCMC is a federally qualified health center that operates six clinics in southern California. UDL is a reference and esoteric laboratory in Southern California.

The United States alleged that the defendants knowingly submitted or caused the submission of false claims to Medicare and Medi-Cal by (a) paying kickbacks to marketers to refer Medicare and Medi-Cal beneficiaries to SCMC clinics in violation of the Anti-Kickback Statute (AKS), (b) paying kickbacks to third-party clinics in the form of above-market rent payments, complimentary and discounted services to clinic staff and write-offs of balances owed by patients and clinic staff in exchange for referring Medicare and Medi-Cal beneficiaries to UDL for laboratory tests in violation of the AKS and (c) referring Medicare and Medi-Cal beneficiaries from SCMC clinics to UDL for laboratory tests in violation of the Stark Act prohibition against self-referrals.

The AKS prohibits parties who participate in federal health care programs from knowingly and willfully offering or paying remuneration in return for referring an individual to, or arranging for, the furnishing of any item or services for which payment is made by, a federal health care program. Likewise, the Stark Act, which is also known as the Physician Self-Referral Law, prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. “Designated health services” include “clinical laboratory services.” Compliance with the AKS and Stark Act are conditions of payment under federal healthcare programs.

“Kickback and self-referral schemes risk impairing the judgment of healthcare providers and diminish the reliability of the care that they render,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This resolution upholds the department’s commitment to ensuring that Medicare and Medicaid beneficiaries receive care that is untainted by the providers’ financial interest.”

“Providers who exploit the Medicare, Medicaid and TRICARE programs for their personal financial gain will be held accountable under the False Claims Act,” said U.S. Attorney Martin Estrada for the Central District of California. “This significant resolution evidences our steadfast commitment to ensuring the integrity of federally funded health care programs.”

“There is an expectation that providers who receive Medicare and Medicaid program funds obey the law and operate with integrity,” said Acting Special Agent in Charge Eric Larson of the Department of Health & Human Services Office of the Inspector General (HHS-OIG). “This settlement is a reminder that HHS-OIG is committed to working with our law enforcement partners on holding those providers accountable who exploit taxpayer-funded healthcare programs for their own personal gain.”

“The announced settlement brings closure to the defendants’ schemes to defraud federal healthcare programs, including the Department of Defense’s TRICARE program,” said Special Agent in Charge Bryan D. Denny of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Western Field Office. “This case underscores DCIS’ commitment to working with its partners to hold accountable those who defraud TRICARE, particularly in instances wherein the alleged illicit activities jeopardize patient care.”

Medicaid is funded jointly by the states and the federal government. The State of California paid a portion of the Medicaid claims at issue and will receive approximately $4 million from the settlement.

The settlement announced today resolves, in part, claims brought under the qui tam or whistleblower provisions of the False Claims Act by Ferzad Abdi, Julia Butler, Jameese Smit and Karla Solis, who were former employees or managers of SCMC and UDL. The qui tam provisions permit a private party called a “relator” to file an action on behalf of the United States and receive a portion of any recovery. The relators’ qui tam case is captioned United States ex rel. Abdi v. Rasekhi, No. 18-cv-03966 (CDCA). Concurrent with this announcement, the relators reached a separate settlement with the defendants for $5 million to resolve additional allegations in their qui tam complaint. The United States and the State of California declined to intervene as to those allegations and was not a party to the separate agreement. The relators’ share of the two settlements has not yet been determined.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, U.S. Attorney’s Office for the Central District of California and California Department of Justice, with assistance from HHS-OIG.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney Samson Asiyanbi of the Civil Division’s Fraud Section and Assistant U.S. Attorney Jack Ross for the Central District of California handled the matter.

The claims resolved by the settlement are allegations only. There has been no determination of liability.