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California physicians, others charged in $147 million fraud schemes that included distributing oxycodone to addicts

Cases stem from landmark nationwide sweep that saw more than 400 defendants charged, caused $1.3 billion in losses, the DOJ said.

Beth Jones Sanborn, Managing Editor

As part of an historic nationwide healthcare fraud takedown by federal prosecutors, 14 defendants have been charged in Central California for their alleged participation in fraud schemes that resulted in $147 million in losses, the DOJ announced.

The alleged frauds involved kickback schemes connected to compounded drugs, home health services, physical therapy, acupuncture, Medicare Part D prescription drugs, diagnostic sleep studies and hospice care.

The defendants include four physicians, including Dr. Jeffrey Olsen, who was charged with illegally prescribing controlled substances, including the opiate oxycodone, and making a false statement on a DEA registration application, the DOJ said.

[Also: HHS announces 'largest fraud takedown in history', charging 400 defendants in schemes involving $1.3 billion in false billings]

The 57 year-old Olsen lives in Laguna Beach, and allegedly sold prescriptions to addicts and drug dealers in exchange for cash. There was no medical basis for the prescriptions, according to the DOJ.

"During the investigation, Olsen also sold hundreds of prescriptions to addicts in other states, such as Oregon, without ever seeing the "patients" for an in-person examination. In text messages to these out-of-state customers, Olsen allegedly told customers that, in exchange for exorbitant fees as high as $3,000, he would write prescriptions for whatever drug they wanted, and that he would never check whether they were actually taking the prescribed drugs or whether they were getting additional narcotic prescriptions from other doctors," the DOJ said in a statement.

[Also: Physicians plead guilty in massive test referral scheme that doled out millions in bribes, fraudulent lab business]

Olsen allegedly sold more than 1.2 million pills, most of which were maximum strength, as well as hundreds of thousands of other pills like sedatives Xanax and Soma.

"Americans already struggling with health care issues and rising premiums are further burdened with each dollar lost to fraud," said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "The losses estimated in Los Angeles for this operation alone are staggering as the abundance of health care fraud schemes in southern California adds considerably to this nationwide crime issue.

[Also: Texas provider Union Treatment Center to pay $3 million over fraud scheme, banned from all federal healthcare programs]

At least half a dozen other fraud cases in California are being prosecuted that targeted payers including Medicare, CIGNA and TRICARE. The cases stem from a landmark nationwide sweep that saw more than 400 defendants charged with healthcare fraud related crimes in alleged schemes that caused $1.3 billion in losses.

Twitter: @BethJSanborn

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