Trial opens in LA weight-loss doctor's alleged bogus billing scheme

LOS ANGELES (CNS) -- A prosecutor told a Los Angeles jury Wednesday that the operators of the now-defunct 1-800-GET-THIN ad campaign used fabricated sleep studies to convince insurance companies to pay out tens of millions of dollars for weight-loss surgery, but the defense countered that the defendants were innocent victims of a con man who routinely falsified test results.

Former weight-loss doctor Julian Omidi, 53, of West Hollywood, and Dr. Mirali Zarrabi, 59, of Beverly Hills, face multiple federal counts alleging mail and wire fraud, false statements, money laundering and aggravated identity theft stemming from GET THIN's Lap-Band surgery and sleep study programs between May 2010 and March 2016.

The Lap-Band weight-loss-surgery business was widely advertised on Southern California freeway billboards, radio and television, attracting people desperate to shed excess pounds. But before insurance companies would pre-approve the $100,000 surgery, prospective patients had to show they suffered from certain afflictions, including sleep apnea.

In his opening statement in Los Angeles federal court, Assistant U.S. Attorney Ali Moghaddas alleged that Omidi "created a process" that turned "patients into profits" by directing employees to "falsely diagnose patients with a sleep disorder they didn't have."

Zarrabi allowed his electronic signature to be used by GET THIN to make it appear that he had reviewed the falsified sleep studies, even though he knew the reports were being altered, according to Moghaddas. The doctor also allegedly demanded to be paid for the use of his electronic signature on hundreds of prescriptions for devices to treat sleep apnea, the prosecutor said.

Insurance companied paid out between $14,000 and $17,000 for every sleep study that was billed by the defendants, Moghaddas said.

However, defense attorney Michael Schachter said Omidi and Zarrabi were, in fact, victims of a sleep-study con man named Charles Klasky, who "posed as an expert in sleep medicine" and tricked Omidi into allowing him to oversee the sleep-study program.

It was Klasky -- who is awaiting sentencing after pleading guilty to a federal conspiracy charge -- who hired Zarrabi and fudged the sleep apnea test results, Schachter told the jury in downtown Los Angeles.

"You will not hear from a single witness that will say that Julian Omidi told them to alter test results," the attorney said, promising that the prosecution will be unable to prove its case during what promises to be a months-long trial.

Klasky came along at the right time and "took charge" of Omidi's program "without any previous experience," Schachter said.

Surgery Center Management, a corporation controlled by Omidi, together with his brother and mother, is also named in the indictment. Omidi's mother, Cindy, was sentenced to probation in 2015 after she was convicted of violating laws designed to prevent money laundering.

The Lap-Band is a silicone ring that is surgically implanted around the stomach to discourage overeating.

Prosecutors allege that patients were harmed as a result of the charged fraud scheme when they were subjected to unnecessary medical procedures, and that insurance providers were conned out of millions of dollars after receiving fraudulent bills.

Omidi, a physician whose license was revoked in 2009, controlled, in part, the GET THIN network of companies that focused on the promotion and performance of elective, Lap-Band weight-loss surgeries.

According to Moghaddas, Omidi established procedures requiring prospective patients -- even those covered by insurance plans he knew would never cover Lap-Band surgery -- to have at least one sleep study, and employees were offered commissions to make sure the studies occurred.

"He decided every patient would get a sleep study," the prosecutor said, adding that the alleged scheme "got the patients in the door with false promises, gave them false hope, and billed their insurance companies with false claims."

The U.S. Attorney's Office contends that after patients underwent sleep studies -- often with little indication that any doctor had ever determined the study was medically necessary -- GET THIN employees, allegedly acting at Omidi's direction, falsified the results to reflect that the patient had moderate or severe sleep apnea, and that they suffered from severe daytime sleepiness.

Omidi then caused those falsified reports to be used in support of GET THIN's pre-authorization requests for Lap-Band surgery, according to the indictment.

Allegedly relying on the false sleep studies, as well as other false information, including patients' heights and weights, insurance companies authorized payment for some of the proposed Lap-Band surgeries. The indictment alleges that GET THIN received at least $38 million for the Lap-Band procedures.

Even if the insurance company did not authorize the surgery, GET THIN still was able to submit bills for an average of $15,000 for each sleep study, according to the indictment. The insurance payments were deposited into bank accounts associated with the GET THIN entities, prosecutors said.

Benefit programs allegedly victimized by the billing scam include TriCare -- the health care program for uniformed service members, retirees and their families around the world -- and various private insurance companies.

If convicted as charged, Omidi and Zarrabi could face up to 20 years in prison for each of the mail fraud and wire fraud counts alleged in the indictment alone.

The trial could take as long as two or three months. The government has almost four dozen witnesses it plans to call, including two cooperating defendants, court papers show. Omidi's lawyers provided a witness list of 96 people, including "a deceased GET THIN patient," according to the prosecution's trial memorandum.