| For Immediate Release Case# 14ZF0334 Case# 14ZF0335 |
August 22, 2014
MEDICAL BUSINESS OWNER, DOCTORS, AND PHARMACISTS TO BE ARRAIGNED FOR DEFRAUDING OVER $100 MILLION FROM INSURANCE COMPANIES IN TOXIC MEDICATION SCHEME
*Three defendants face manslaughter charges for death of baby resulting from exposure to the toxic cream
SANTA ANA – A medical business owner, Workers’ Compensation doctors, and pharmacists are scheduled to be arraigned on an indictment for defrauding over $100 million from insurance companies by mass producing, distributing, and prescribing an expensive, toxic medication. Three of the defendants are also charged with manslaughter after a baby boy died as a result of exposure to the toxic cream.
The Orange County District Attorney (OCDA) took the case to the Orange County Grand Jury, which indicted the defendants on June 17, 2014. The defendants are scheduled to be arraigned today, Aug. 22, 2014, at 9:00 a.m. in Department C-45, Central Justice Center, Santa Ana. The defendants face sentences ranging from probation up to 14 years in state prison if convicted.
| Defendant, Age, City, Occupation | Charges | Custody Status | |
| 1 | Kareem Ahmed, 45, Rancho Cucamonga, Medical business owner | 1 felony count of conspiracy to commit insurance fraud, 4 felony counts of insurance fraud written claim, 1 felony count of involuntary 1 felony count of manslaughter by lawful act in unlawful manner, sentencing enhancements for aggravated white collar crime over $500,000 | Released on $5 million bail |
| 2 | Eduardo Ernesto Anguizola, 63, Orange, doctor | 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim, sentencing enhancement for committing property damage over $1.3 million | Released on $800,000 bail |
| 3 | Michael Edward Barri, 46, San Clemente, chiropractor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $400,000 bail |
| 4 | Daniel Alexander Capen, 64, Manhattan Beach, doctor | 1 felony count of rebates for patient referrals, 2 felony count of insurance fraud written claim, 1 felony count of false and fraudulent claim, sentencing enhancement for property damage over $1.3 million | Released on $1 million bail |
| 5 | Craig Michael Chanin, 48, Cambria, doctor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $250,000 bail |
| 6 | Evette Charbonnet, 36, Mandeville, LA, medical business employee | 16 felony counts of insurance fraud written claim | Released on $500,000 bail |
| 7 | Bruce Dwight Curnick, 60, Upland, medical business employee | 1 felony count of conspiracy to commit a crime, 1 felony count of rebates for patient referrals | Released on $100,000 bail |
| 8 | David Kalani Evans, 42, Alta Loma, chiropractor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $100,000 bail |
| 9 | Curtis William Hague, 42, Huntington Beach, pharmacist | 1 felony count of false and fraudulent claim, 1 felony count of insurance fraud written claim | Released on $100,000 bail |
| 10 | Andrew Jarminski, 51, Fullerton, doctor | 1 felony count of conspiracy to commit insurance fraud, 1 felony count of rebates for patient referrals, 1 felony count of submitting a false document in support of a claim, 1 felony count of submitting a false claim, 1 felony count of involuntary manslaughter by lawful act in unlawful minor, sentencing enhancements for aggravated white collar crime over $500,000, property damage over $1.3 million | Released on $150,000 bail |
| 11 | Rahil Rashid Khan, 46, Huntington Beach, doctor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $600,000 bail |
| 12 | Arsalan Pourteymour, 66, Alta Loma, doctor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $250,000 bail |
| 13 | Randy Scott Rosen, 51, Los Angeles, doctor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim, property damage over $200,000 | Released on $300,000 bail |
| 14 | Michael Rudolph, 64, Whittier, pharmacist | 1 felony count of conspiracy to commit insurance fraud, 3 felony counts of insurance fraud written claim, 1 felony count of filing a false and fraudulent claim, 1 felony count of involuntary manslaughter by lawful act in unlawful manner, sentencing enhancements for aggravated white collar crime over $500,000 | Released on $500,000 bail |
| 15 | Robert Julian Villapania, 55, Rancho Cucamonga, chiropractor | 1 felony count of rebates for patient referrals, 2 felony counts of insurance fraud written claim, 1 felony count of false and fraudulent claim | Released on $500,000 bail |
Background of the Case
In the United States, there are two categories of prescription drugs, those that are approved or not approved by the U.S. Food and Drug Administration (FDA).
Prescriptions drugs that are mass produced or manufactured must go through FDA procedures to ensure consumer usage safety before they can be distributed to the patient.
Deviation in use from FDA guidelines is considered “off-label” use, which is not illegal but for which the doctor prescribing the drug may incur more personal liability if the patient is harmed. Patient treatment is the priority and a physician may work with a pharmacist to compound a customized prescription drug to create medications for the patient’s needs, despite the drug not receiving approval from the FDA.
Pharmacies and pharmacists creating prescription compounds for individual patients are not generally subject to the jurisdiction of the FDA and are instead regulated by the Board of Pharmacy in each state. It is illegal for a pharmacist to manufacture large quantities of a non-approved drug without first obtaining a manufacturing license from the FDA.
Circumstances of the Medical and Insurance Case
At the time of the crime, Ahmed is accused of owning and operating Landmark Medical Management LLC (Landmark Medical) and its subsidiaries: Physicians Funding Solutions, LLC, Med-RX LLC, Healthcare Finance Management LLC, Rx-Funding LLC, and Pharmafinance LLC. All of these businesses were used to financially facilitate the crimes below.
Charbonnet is accused of being Landmark Medical’s marketing manager and Curnick is accused of being Landmark Medical’s Vice President.
In October 2009, Ahmed is accused of working with Mike Shah, the owner of a Costa Mesa pharmacy, to formulate three compounded transdermal creams, or a topical skin pain relief cream, containing expensive prescription drugs including unsafe amounts of tramadol, dextromethorphan, and amitriptyline.
Ahmed is accused of asking Charbonnet and Curnick to calculate and determine the insurance pay-out price for the compound transdermal creams. In order to yield a higher insurance rate and profit, Ahmed is accused of instructing Shah to increase the percentage of the costly drugs in the creams. Ahmed is also accused of instructing Shah to avoid using high-profile prescription drugs in the compound that may attract the attention of federal regulators, such as Oxycontin and Percocet.
The resulting compound transdermal creams contained highly toxic levels of drugs, which could result in serious injury or death if accidently ingested. Ahmed is accused of neglecting to place warning labels about the toxicity of the creams or inform patients about its dangers.
In June 2010, Hague is accused of opening Curt’s Compounding Pharmacy in Fountain Valley. He is accused of operating a closed-door pharmacy with Ahmed as his only client.
Ahmed is accused of giving the formula for his compounded cream to Hague. Hague is accused of selling the creams to Ahmed at a cost of $35 to $72 per tube. Ahmed is accused of then billing the insurance companies between $1,200 and $1,900 for each cream prescribed to a patient.
Between June 2010, and December 2012, Hague is accused of compounding over 145,000 transdermal creams in 30-gram to 240-gram tubes and selling them to Ahmed at a profit to Hague of over $8 million.
Rudolph is accused of being a pharmacist and owner of Healthcare Compounding Pharmacy in Tustin. In October 2010, Ahmed is accused of entering into an agreement with Rudolph to mass-manufacture the compound creams because Hague could not keep up with Ahmed’s prescription demand. Between October 2010, and December 2012, Rudolph is accused of manufacturing over 10,000 additional compounded transdermal creams.
Hague and Rudolph are accused of illegally mass producing the compounded creams without a manufacturing license from the FDA, as required by law.
Between June 2010, and December 2013, Ahmed is accused of fraudulently billing insurance companies and receiving over $105 million for the compounded transdermal creams.
Charbonnet and Curnick are accused of identifying Workers’ Compensation doctors and inducing them to prescribe Ahmed’s compound transdermal creams to Workers’ Compensation patients. Ahmed is accused of knowing that Workers’ Compensation doctors did not generally dispense or prescribe compounded drugs because it is not profitable for the doctors. He is accused of illegally paying kickbacks to physicians ranging from $65 to $165 per tube to prescribe the compounded transdermal cream to patients.
Charbonnet and Curnick are accused of regularly meeting with participating physicians and pharmacy owners to implement and oversee the fraudulent scheme.
During this time, Ahmed is accused of paying the following physicians and offices to dispense and prescribe the compounded transdermal creams to patients: Anguizola is accused of receiving over $2.3 million; Capen is accused of receiving over $2.6 million; First Choice Healthcare Medical Group and Chanin are accused of receiving over $770,000; Jarminski is accused of receiving over $1.9 million; Khan is accused of receiving over $1.1 million; Performance Medical Group and Pourteymour are accused of receiving over $680,000; Regional Associates Medical Group and Villapania are accused of receiving over $1 million; Rosen is accused of receiving over $600,000; and Tristar, Gross, and Barri are accused of receiving over $1.1 million.
The physicians listed above are accused of prescribing a large quantity of the compounded transdermal creams to patients in order to receive payment from Ahmed. They are accused of not warning patients that the creams are highly toxic and that, if accidentally ingested, these transdermal creams could cause great bodily injury or death. Ingestion could occur simply by eating after application of the cream without first washing ones hands.
Circumstances of Involuntary Manslaughter Case
In 2011, Jane Doe fell and injured her knee while at work. At the time of her injury, Jane Doe was pregnant. Jarminski is accused of being Jane Doe’s assigned Workers’ Compensation physician.
In August 2011, Jane Doe gave birth to a healthy boy without complications.
On Feb. 2, 2012, Jarminski is accused of illegally instructing his physician’s assistant to prescribe Jane Doe with the toxic compounded transdermal cream. He is accused of instructing her to apply the cream to the painful area on her knee three times a day to help alleviate her pain. Jarminski is accused of failing to advise Jane Doe of the dangers and risk if using the prescribed transdermal cream.
Later that night, Jane Doe applied the prescribed cream to her knee. At the time, her baby was crying, and Jane Doe held and fed her baby without washing her hands after she had applied the cream. The next morning, Jane Doe found her baby non-responsive and not breathing. He was rushed to the hospital, where he was pronounced dead.
An autopsy revealed that the baby died from multiple drug intoxication from lethal levels of tramadol, dextromethorphan, and amitriptyline in his blood. All the ingredients found in the baby’s system were contained in the compounded transdermal cream Jane Doe was prescribed.
Ahmed, Rudolph, and Jarminski are accused of causing the death of Jane Doe’s baby. Under the law, a defendant may be charged with involuntary manslaughter when they act with criminal negligence, committing a crime or a lawful act in an unlawful matter, causing the death of another person. Criminal negligence involves more than ordinary carelessness, inattention, or mistake in judgment. A person acts with criminal negligence when he acts in a reckless way that creates a high risk of death, and a reasonable person would have known that acting in that way would create such a risk. Simply stated, a person acts with criminal negligence when the way he acts is so different from the way an ordinarily careful person would act in the same situation that his act amounts to disregard for human life or indifference to the consequences of that act. An act causes death if the death is the direct, natural, and probable consequence of the act and the death would not have happened without the act.
The Los Angeles Police Department began investigating this case and discovered the pharmacies that had been mass-producing and distributing the compound creams. The case was referred to the OCDA, who jointly investigated this case with the California Department of Insurance.
Deputy District Attorney Shaddi Kamiabipour of the Insurance Fraud Unit is prosecuting this case.