Lawsuit Halt Scheme to Bilk Insurance Company
Chiropractic Practice Builder Added
In July 2005, two neurologists (Nils Anderson and Harish Thaker) and two chiropractors (Josef Verhaerdt and Mark Sanna) were added as defendants. The amended complaint charges that VeridianHealth paid kickbacks to Verhaerdt and Sanna to recruit other doctors into the referral and testing scheme. Sanna is alleged to have received nearly a half-million dollars in annual kickback payments. Anderson and Thaker, along with a handful of other off-site neurologists recruited by VeridianHealth, allegedly “read” the worthless diagnostic testing reports. VeridianHealth then billed insurance companies as much as $10,600 per case for these purported services [3]. A few days after the amended complaint was filed, Veridian announced that it was discontinuing its business operations. In August, its some of its creditors filed a bankruptcy petition.
Mark Sanna, D.C., heads Breakthrough Coaching, a company that teaches chiropractors how to build their practices. According to the lawsuit:
In or about 2003, ZT developed a relationship . . . whereby Breakthrough and Sanna would scout for chiropractors to recruit for ZT’s diagnostic testing scheme. As part of this, ZT and Sanna entered into a kickback arrangement whereby ZT began paying Sanna to refer patients to ZT for testing. ZT paid Sanna a $100 fee for each patient one of his chiropractic recruits set up for diagnostic testing with ZT. The $100 fee was paid to Sanna by ZT exclusively for the patient referral. By May of 2005, Sanna’s income from the ZT patient referrals reached $480,000 per year and was one of ZT’s largest operational expenses. The same or similar “per patient” referral fee applied to other so-called “coaches” employed by Breakthrough and generated substantial additional cash flow. ZT also paid Sanna a $50,000 per year fee for membership on the ZT “advisory board.”
Sanna, who has denied doing anything wrong, has been a member of the fraud subcommittee of the American Chiropractic Association’s Insurance and Managed Care Committee. In March 2005, the ACA’s House of Delegates passed a policy statement about multidisciplinary practices which Sanna helped to prepare. The statement included warnings against fraudulent insurance claims, unnecessary referrals and services, unsupervised testing, schemes, and kickbacks [4].
Current Status
In September, 2005, a settlement was finalized with individual defendants Fred Goldman and GTA Group, Inc. Goldman agreed to pay $205,000 to the State of Illinois in return for dismissal of all claims against him and GTA Group. Schichtl received 35% of the proceeds as well as amounts for attorneys’ fees and costs incurred in bringing the litigation [5].
The litigation continues with respect to all remaining defendants, including VeridianHealth’s former CEO, Mitchell Rubin.
References
Madigan files insurance fraud suit against health care “providers”; Defendants have billed private insurers more than $234 million for worthless testing. Illinois Attorney General press release, April 26, 2005.
Illinois judge enters temporary restraining order In VeridianHealth lawsuit. News release, Netzel & Associates Web site, May 13, 2005.
Second amended complaint. The State of Illinois and State of California ex rel Scott Schichtl v, ZT Technical Services, Inc., et al. Circuit Court of Cook County Illinois, Case No. 03 L 008704, filed July 8, 2005.
ACA Insurance and Managed Care Committee. Resolution #2: Multi-Discipline Practices (MDP), passed by ACA House of Delegates, March 2005.
First settlement reached In Veridian Health lawsuit; Veridian forced into involuntary bankruptcy. Netzel & Associates Web site, September 13, 2005.
This page was posted on January 18, 2005.
