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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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
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Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...