The owner of certainly one of California’s largest chains of pain management clinics has agreed to pay nearly $11.4 million to California, Oregon, and the federal government to settle allegations of Medicare and Medicaid fraud.

The U.S. Department of Justice and the states’ attorneys general say Francis Lagattuta, a physician, and his Lags Medical Centers performed — and billed for — medically unnecessary tests and procedures on hundreds of patients over greater than five years. It was “a brazen scheme to defraud Medicare and Medicaid of tens of millions of dollars by inflicting unnecessary and painful procedures on patients whom they were purported to be relieving of pain,” Phillip Talbert, U.S. attorney for the Eastern District of California, said in an announcement this month.

The federal Medicare program suspended reimbursements to Lags Medical in June 2020, and Medi-Cal, California’s Medicaid program, followed in May 2021. Lags Medical shut down the identical day the state suspended reimbursements. The corporate, based in Lompoc, California, had greater than 30 pain clinics, most of them within the Central Valley and the Central Coast.

A KFF Health News review last yr found the abrupt closure left greater than 20,000 California patients — mostly working-class people on government-funded insurance — struggling to acquire their medical records or proceed receiving pain prescriptions, which frequently included opioids.

Lagattuta and Lags Medical didn’t admit liability under the settlement. Lagattuta denied the governments’ claims, saying in an announcement he was “pleased” to announce the settlement of a “long-standing billing dispute.” As a part of the agreement, Lagattuta can be barred for not less than five years from receiving Medicare and Medicaid reimbursements.

“For the reason that Centers have been closed for a few years, it made sense for Dr. Lagattuta to settle the dispute and proceed to maneuver forward along with his other business interests and practice,” Malcolm Segal, an attorney for Lagattuta and the centers, said within the statement.

In line with state officials, the federal government will receive the majority of the cash, about $8.5 million. California will receive about $2.7 million, and an extra $130,000 will go to Oregon. The settlement amount is predicated partly on Lagattuta’s and Lags Medical’s “ability to pay.” It doesn’t cover the governments’ full losses, which the U.S. attorney’s office in Sacramento said usually are not public record.

A virtually four-year investigation by federal officials and the California Department of Justice found that from March 2016 through August 2021, Lagattuta and his company submitted reimbursement claims for unneeded skin biopsies, spinal cord stimulation procedures, urine drug tests, and other tests and procedures. Lagattuta began requiring all his clinics to perform various medical procedures on every patient, the officials said, regardless of in the event that they were needed or requested by patients’ medical providers. Patients who refused were told they’d have their pain medication reduced and will suffer opposed medical consequences.

U.S. and California investigators piggybacked on a federal claim filed in late 2018 by a whistleblower, Steven Capeder, Lags Medical’s former operations and marketing director, who will receive greater than $2 million of the settlement.

As a part of the settlement, Lagattuta and his company acknowledged that in mid-2016 he began requiring his providers to do not less than two to 3 skin biopsies on Medicare patients every day and told providers to quit in the event that they would not comply. Such biopsies are used to measure small-fiber neuropathy, which causes burning pain with numbness and tingling within the feet and lower extremities.

In line with the settlement, a monthly report in early 2018 set a goal of performing 250 biopsies per week. Lagattuta created a separate team that was required to order not less than 150 biopsies weekly, often overruling providers. And the corporate’s chief executive officer in late 2019 texted Lagattuta to report a very high variety of biopsies, illustrating the text with emojis of a money bag and a smiley face.

Authorities said Lagattuta violated regulations requiring that skin biopsy results be interpreted by a trained pathologist or neurologist. As a substitute, they are saying, Lagattuta had the biopsies read by a member of the family who had no formal medical training and by a former clinic executive’s spouse, who was trained as a respiratory therapist.

Lags Medical clinics performed greater than 22,000 biopsies on Medi-Cal patients from 2016 through 2019.

The settlement also alleges Lagattuta encouraged unsuitable patients to undergo spinal cord stimulation. It describes the procedure as “an invasive surgery of last resort,” by which implants placed near the spinal cord apply low-voltage electrical pulses to nerve fibers.

Lagattuta paid a psychiatrist $3,000 every month to falsely certify that each Lags Medical candidate for the procedure had no psychological or substance use disorders that will negatively affect the consequence, in line with the settlement. As an example, the settlement says the psychiatrist overruled a Lags Medical social employee to OK the procedure for a young woman who had bipolar disorder with hallucinations that included hearing a person’s voice ordering her away from bed.

He also issued blanket orders for each patient to have urine drug testing, a policy the corporate’s CEO said “must be an enormous money maker.”

KFF Health News found that from 2017 through 2019 nearly 60,000 of probably the most extensive urine drug tests were billed to Medicare and Medi-Cal under Lagattuta’s provider number. Medicare reimbursed Lagattuta $5.4 million for those tests.

The clinics “rigorously examined, tested, and treated” greater than 60,000 patients in the course of the time covered by the settlement, “when others might need been content to prescribe medication to mask pain,” said Lagattuta’s statement.

This text was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.