Ninth Circuit Takes the Profit Out of Health Care Fraud
Post 4978
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FRAUD WILL BE DEFEATED & DETERRED BY TAKING THE PROFIT OUT OF THE CRIME
Julian Omidi and his business, Surgery Center Management, LLC (“SCM”), appealed from the district court’s forfeiture judgment of nearly $100 million, which came after a lengthy criminal health insurance fraud trial and years of litigation where Omidi and SCM were convicted of charges arising from their “Get Thin” scheme in which Omidi and SCM defrauded insurance companies by submitting false claims for reimbursement. The Ninth Circuit dealt with Omidi’s claim that the trial court erred when it allowed forfeiture under 18 U.S.C. § 981(a)(1)(C).
In United States Of America v. Julian Omidi, aka Combiz Julian Omidi, aka Combiz Omidi, aka Kambiz Omidi, aka Kambiz Beniamia Omidi, aka Ben Omidi, United States Of America v. Surgery Center Management, LLC, Nos. 23-1719, 23-1959, 23-194, United States Court of Appeals, Ninth Circuit (January 16, 2025) ruled forfeiture was proper.
BACKGROUND
The “Get Thin” Scheme
Before Ozempic and similar “wonder drugs,” medically-assisted weight loss had to happen the old-fashioned way- surgical intervention.
The Wizard of Loss was Dr. Julian Omidi. Omidi helmed a massive health insurance fraud scheme called “Get Thin.” Omidi’s scheme promised dramatic weight loss through Lap-Band surgery and other medical procedures. Using catchy radio jingles and ubiquitous billboard ads, Omidi urged potential patients to call 1-800-GET-THIN and “Let Your New Life Begin.”
Through the 800 number and an associated call center, Get Thin funneled patients to a network of consultants whom Omidi tasked to “close a sale.” Irrespective of medical need the sales people were tasked to unearth comorbidities that could help get the lucrative Lap-Band surgery pre-approved by insurers.
Once patients were successfully recruited, Omidi directed his employees to falsify patient data, fabricate diagnoses, and misrepresent the extent of physician involvement in their treatments to deceive insurance companies into paying for thousands of sleep studies, endoscopies, Lap-Band insertions, and other costly treatments.
A grand jury indicted Omidi and SCM for mail fraud, wire fraud, money laundering, and other related charges arising from the Get Thin scheme. After three-and-a-half years of pretrial litigation and a 48-day jury trial, the jury convicted Omidi and SCM of all charges. The district court sentenced Omidi to 84 months’ imprisonment and fined SCM over $22 million.
The government argued, in addition to imprisonment and fines, that the total proceeds of Get Thin’s business during the fraud period – $98,280,221 – should be forfeited because the whole business was “permeated with fraud.” Applying the requisite preponderance standard (and after hearing weeks of trial testimony), the district court agreed with the government. Reviewing the relevant statutes and persuasive out-of-circuit authority, it agreed that the $98,280,221 in proceeds were directly or indirectly derived from the fraudulent Get Thin scheme.
DISCUSSION
Fraud convictions frequently require multiple determinations: the appropriate sentence, the restitution amount which compensates victims for the harm caused, and the forfeiture judgment which punishes defendants by depriving them of the proceeds of their crime. Forfeiture is imposed as punishment for a crime; restitution makes the victim whole again. The Ninth Circuit examined forfeiture, and found that it serves an entirely different purpose than restitution.
Because the very nucleus of the defendants’ business model was rotten and malignant and any money generated through a few potentially legitimate sales resulted directly or indirectly from the fraudulent scheme. Thus, forfeiture of money generated through supposedly legitimate transactions was appropriate. The Ninth Circuit concluded that all Get Thin proceeds were derived from a single intake process that, by design, disregarded medical necessity in favor of profit as part of the larger fraudulent billing scheme.
All proceeds directly or indirectly derived from a health care fraud scheme like Get Thin-even if a downstream legitimate transaction conceivably generated some of those proceeds-must be forfeited. The Ninth Circuit concluded that the district court did not err in so concluding.
Accordingly, the Ninth Circuit found that all proceeds directly or indirectly derived from a health care fraud scheme like Get Thin – even if a downstream legitimate transaction conceivably generated some of those proceeds – must be forfeited.
ZALMA OPINION
If health insurance fraud, or fraud of any kind, is to be deterred or defeated it is essential that the profit is taken out of the crime. The crimes perpetrated by Omidi and SCM garnered almost $100 million. By using forfeiture of $100 million the crime was punished more effectively than the 84 months in prison since there will be none of the proceeds of the crime available when Omidi is released from prison.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Go to X @bzalma; Go to the Insurance Claims Library – https://lnkd.in/gwEYk
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