Alleged Drug Testing Case – Employers X-Mods Could Be Affected

The Alameda County District Attorney’s office is pursuing fraud charges against an orthopedic surgeon and his office manager for billing six workers’ comp carriers for medical services that it alleges were never provided. Investigators allege that they discovered at least 30,000 fraudulent bills filed for bogus supplemental reports related to drug screenings.

“If the case is proven,” says Dale Debber founder of Compline, “it could positively affect the X-Mods of thousands of businesses.” Compline will provide guidance to its member brokers as the case develops.

Charges are filed against Dr. Douglas J. Abeles, a physician and surgeon, and his office manager Gabriela Cuevas. Abeles’ orthopedic practice is in Castro Valley, but prosecutors say he also owns four other medical businesses connected with drug testing urine analysis and billing. Investigators allege that the drug testing and billing operations – Physicians Rx Network (PRxN) and Redwood Laboratory Management (RLM) – were the source of the fraudulent activity. Abeles’ companies are said to be active in the compound drug market and allegedly handles the billings for contracted providers.
The 31 count criminal complaint includes charges of grand theft, conspiracy, insurance fraud, filing false claims, and false impersonation. Abeles is named in all the charges, while Cuevas is named in 25 of the counts. Prosecutors say that Cuevas managed the day-to-day operations of PRxN/RLM and reported directly to Abeles.

Zenith Insurance Company tipped off the billing fraud investigation with a report to the California Department of Insurance and the Alameda County DA. Claims adjusters there suspected billing fraud when they began receiving billings for “Urine Toxicology Review” reports that all looked the same from physicians contracted with PRxN. Investigators contacted five other carriers – Berkshire Hathaway, Fireman’s Fund, Liberty Mutual, State Compensation Insurance Fund and Travelers – who reported receiving similar claims for supplemental reports.

It is unknown at this time if additional carriers are involved.

Alameda County inspector Michael Carter says the fraud typically began with an injured worker’s visit with a pain management physician who was contracted with PRxN. The physician would order a urine test to determine if the worker was taking their medications. PRxN and/or RLM would provide the urinalysis supplies, equipment, testing, personnel and associated billing services.

Prosecutors say that when PRxN/RLM submitted the bills for these services to the carriers it also sent a bill for a supplemental “Urine Toxicology Review” that included billing codes for a special report and for prolonged physician service without patient contact. The reports stated that the provider spent about 45 minutes reviewing the medical records associated with the urinalysis reports from PRxN. The signature area of the reports was stamped “Dictated but not signed.”

Prosecutors say the urinalysis reports were never sent to the physicians and the physicians never authorized the URTs. PRxN/RLM billed $239.88 for the special report and $109.02 for the prolonged physician service.

Abeles is free on $355,000 bail and Cuevas was released on her own recognizance. An arraignment hearing is scheduled for Nov. 3, 2014.