LOS ANGELES – Four people have been charged in a superseding indictment unsealed today for allegedly participating in a scheme that submitted more than $50 million in fraudulent claims to California's Drug Medi-Cal program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided at all or were provided to students who did not actually have substance abuse problems.

Two of the defendants who worked at the Long Beach-based Atlantic Health Services (formerly known as Atlantic Recovery Services, or ARS), including President and Chief Executive Officer, Richard Mark Ciampa, were arrested this morning by federal authorities.

The superseding indictment, which charges the defendants with health care fraud and aggravated identity theft and charges Ciampa with money laundering, alleges that ARS was paid more than $46 million after it submitted false and fraudulent claims for group and individual substance abuse counseling services.

“These defendants stole tens of millions of dollars earmarked for helping children with substance abuse problems,” said United States Attorney Eileen M. Decker. “This fraud not only harmed taxpayers, but also placed some of the most vulnerable in our society at greater risk.”

The defendants named in the indictment are:

· Richard Mark Ciampa, 62, of Long Beach, the President and CEO of ARS who ultimately was responsible for the claims billed to Medi-Cal and received the bulk of ARS' earnings;

· Gregory Hearns, 60, of Long Beach, the Billing Supervisor for ARS who compiled the monthly billing and arranged for its submission to Medi-Cal;

· LaLonnie Egans, 58, of Bellflower, who managed counselors at three schools;

· Tina Lynn St. Julian, 52, of Compton, who worked as a counselor at two schools.

Egans and St. Julian were named as defendants in the original indictment and are expected to be arraigned on the superseding indictment in the coming weeks. Ciampa and Hearns were arraigned on the superseding indictment this afternoon in United States District Court.

“Medical professionals who seek to enrich themselves through Medi-Cal fraud undermine this taxpayer-funded program and drive up health care costs for everyone,” said Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation.  “Today's arrests should send a clear message to all health care providers that health care fraud is a federal crime that carries serious consequences and will not be tolerated.”

ARS received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County.  The schools included various sites operated by Soledad Enrichment Action, and public schools in Montebello, Bell Gardens, Lakewood, and the Antelope Valley.

The superseding indictment alleges that, during a 10-year period through April 2013, when ARS was shut down following a suspension of payments, ARS submitted bogus claims for payment to the Drug Medi-Cal program.  Ciampa and Hearns are alleged to have caused the submission of these false claims and created an environment for rampant fraud by constantly warning ARS managers and counselors that they would lose their jobs if they did not increase the billing.  Ciampa also directed managers and counselors to bill for two crisis intervention sessions per student per month, even though crisis interventions were to be billed only if the student had relapsed or faced an imminent threat of relapse, neither of which could be planned in advance.  The claims are also alleged to have been false and fraudulent for a number of other reasons, including:

· ARS billed for services provided to students who did not have substance abuse disorders and therefore did not qualify to receive Drug Medi-Cal services;

· ARS billed for counseling sessions that were not conducted at all;

· ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content, and setting;

· ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes, and update logs (which listed the dates and times of counseling sessions); and

· ARS personnel forged student signatures on documents.

Ciampa also is alleged to have conducted or caused others to conduct six monetary transactions involving monies ARS received as reimbursement from Medi-Cal for ARS' fraudulent claims. These transactions include intra-bank transfers and wire transfers among ARS bank accounts that Ciampa controlled; a transfer to Ciampa's personal account; a transfer to another individual associated with ARS; and purchase of a cashier's check for Ciampa's down payment on two Long Beach properties.  The superseding indictment also includes forfeiture allegations pertaining to these Long Beach properties and other property connected to health care fraud funds and money laundering.

“It is outrageous for health care executives and counselors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense,” said Special Agent in Charge Christian Schrank for the Office of the Inspector General of the U.S. Department of Health and Human Services. “Our agency will work closely with our State and other Federal law enforcement partners to guard these precious Medi-Cal dollars against fraud.”

Previously, at least 17 other defendants have pleaded guilty to health care fraud charges or signed plea agreements stemming from the ARS scheme. Those are the former ARS Program Manager, Lori Renee Miller, 54, of Lakewood; former ARS managers Angela Frances Micklo, 57, of Palmdale; Maribel Navarro, 49, of Pico Rivera; Carrenda Jeffery, 65, of the Mid-City District of Los Angeles; Cathy Fernandez, 54, of Downey; Erin Hoover, 38, of Long Beach; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 45, of El Sereno; and Sandra Lopez, 42, of Huntington Park; and former ARS counselors Shyrie Womack, 33, of Bellflower; Tamara Diaz, 46, of East Los Angeles; Margarita Lopez, 41, of Paramount; Irma Talavera, 27, of Paramount; Laura Vasquez, 53, of Pico Rivera; Cindy Leticia Ortiz, 30, of Norwalk; and Arthur Dominguez, 64, of Glendale.

Another defendant – Dr. Leland Whitson, 76, of Redondo Beach, the former Medical/Clinical Director of ARS – previously pleaded guilty to making a false statement affecting a health care program.

The defendants who have already pleaded guilty are scheduled to be sentenced by United States District Judge Philip S. Gutierrez.

If convicted, Ciampa faces a statutory maximum sentence of 194 years in federal prison; Hearns faces a statutory maximum sentence of 134 years in federal prison; Egans faces a statutory maximum sentence of 32 years in federal prison; and St. Julian faces a statutory maximum sentence of 42 years in federal prison.

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed innocent until and unless proven guilty in court.

The cases against these defendants are the result of an investigation by the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS-Criminal Investigation.

Two Linked to Long Beach Treatment Program Taken into Custody This Morning

USAO – California, Central

Topic: Healthcare Fraud   Identity Theft Updated July 11, 2016

Central District of California DOJ / 16-153 / July 08, 2016