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10 charged in $15 million physical therapy billing fraud in Los Angeles

Clinic owners/operators paid hundreds of thousands in kickbacks, billed Medicare for services never provided, U.S. Attorney's Office says.

Beth Jones Sanborn, Managing Editor

Ten people have been charged in a tangled Medicare fraud scheme involving several Los Angeles area rehab and physical therapy facilities that together fraudulently billed Medicare for roughly $15 million, the U.S. Attorney's Office announced on Friday.

Authorities said the scheme centered on clinics known as Rehab Dynamics, RSG Rehab and Innovation Physical Therapy, all located in Los Angeles and Orange County, who billed Medicare for services never actually provided to "patients". Medicare paid $7.8 million related to those fraudulent claims. Several other clinics were also connected to the scheme, which overall ran from early 2008 to early 2014, the U.S. Attorney's Office said.

Authorities said court documents show clients who visited Rehab Dynamics and RSG Rehab and other facilities sometimes received services like massage or acupuncture, which are not covered by Medicare, from practitioners not licensed to perform physical therapy, but received no covered services. In exchange for patient referrals, kickbacks were paid by "principals" at Rehab Dynamics and RSG equal to about 55 percent of the reimbursement received from Medicare, the U.S. Attorney's office said.

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Rehab Dynamics, RSG and Innovation Physical Therapy were owned by Joseph Sales, a licensed physical therapist, and Daniel Goyena, a licensed physical therapist assistant. Both pleaded guilty to healthcare fraud and paying illegal kickbacks, and will be sentenced later this year.

Three men arrested Friday, including a father and son, allegedly supplied Medicare beneficiary information to Rehab Dynamics and RSG, and/or facilitated the submission of fraudulent claims to Medicare through their own clinics. Clinic owners David Min and his son Jason Min, as well as clinic owner Simon Hong, all allegedly received large sums of money as kickbacks in the scheme, and have been charged with multiple counts of conspiracy to commit healthcare fraud, receiving illegal kickbacks and aggravated identity theft, the U.S. Attorney's Office said.

Several other Rehab Dynamics employees as well as another alleged "patient recruiter" have also been charged, authorities said. A final defendant, David Y. Kim, who was a licensed chiropractor and clinic owner, was charged in the case but is now fugitive being sought by federal authorities, the Department of Justice said.

Conspiracy to commit healthcare fraud and the "substantive" healthcare fraud charges both carry a maximum sentence of 10 years in prison. Kickback charges and aggravated identity theft carry five and two year maximum terms respectively.

Twitter: @BethJSanborn