UPDATE: Two orthopedic surgeons — one from Franklin Lakes and the other Hackensack — are among seven doctors charged with taking hundreds of thousands of dollars in kickbacks from the owner of a network of diagnostic imaging centers in Bergen County and elsewhere in New Jersey in exchange for referrals.
James W. Cahill of Franklin Lakes referred hundreds of scans worth hundreds of thousands of dollars from his Hackensack office to the illicit organization run by Rehan “Ray” Zuberi, the owner of Diagnostic Imaging Affiliates (DIA) of Hackensack, Acting Attorney General John Hoffman said this afternoon.
In exchange, Cahill received $4,000 or so in gift cards, some of which he used at a boating supply store in Lodi, Hoffman said.
Cahill’s wife used a $1,000 gift card at a Louis Vuitton store in Hackensack on Christmas Eve 2012, he added.
- ALSO SEE: A Hackensack orthopedic surgeon charged with taking kickbacks in exchange for referrals to a network of Bergen County-based diagnostic imaging centers allowed a medical school graduate to distribute steroids at his clinic without a license, records show. READ MORE….
Michael L. Gross of Manhattan referred from his Hackensack office thousands of scans that were billed by DIA to insurers for hundreds of thousands of dollars, Hoffman said.
In turn, he got $4,500 in gift cards that he and his practice’s administrator used on luxury items, the attorney general said.
“On one occasion in May 2013, he allegedly used a $1,000 Nieman Marcus gift certificate to partially pay for a $5,627 purchase, which included a $3,000 gown,” he said. “It is also alleged that a DIA employee made purchases estimated at more than $8,000 at a health spa owned by Gross.”
“These kind of activities can raise insurance premiums, create distrust by the public and other professionals who work with these doctors and the quality of their care comes into play because of the financial incentive of accepting kickbacks for referrals,” one legal observer told CLIFFVIEW PILOT .
Yesterday’s arrests were the latest phase of “Operation RayScam,” which found that Zuberi, 45, enlisted his wife, his father and two brothers-in-law in the alleged scheme.
Under his direction, “the organization paid kickbacks to numerous medical practitioners, including chiropractors and physicians, in return for patient referrals to DIA testing centers for expensive diagnostic tests (e.g., MRIs and PET scans),” Hoffman said.
The money was paid through checks from shell companies created by the crew, he said.
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Zuberi, of Boonton Township, and his accomplices also submitted $8 million in bogus Medicaid applications while avoiding income and franchise taxes, Hoffman said.
He and his wife, 38-year-old Humara Paracha, the president of DIA, haven’t paid taxes to the state since 2009 despite making millions of dollars, he said.
“The medical practitioners arrested yesterday betrayed the trust of their patients and allegedly scammed insurers both public and private to enrich themselves,” Hoffman said.
“Medical practitioners should only be concerned with the quality of care they provide and recommend,” the attorney general added. “They should not be selling their medical opinion to the highest bidder.”
CLIFFVIEW PILOT broke the news of Zuberi’s arrest ( SEE: State authorities confirm arrest of radiology chief following Medicaid fraud raids of Hackensack, Englewood clinics ).
More than a dozen search warrants were executed by more than 100 investigators at radiology centers controlled by Zuberi on State Street in Hackensack, on Dean Street in Englewood and in Jersey City and elsewhere, as well as at Zuberi’s 9,000-square-foot mansion, his father’s Middlesex County home and another private residence.
Authorities seized more than more than $100,000 cash from Zuberi, as well as high-end Lamborghinis, Ferraris and other sports car, and placed liens on his home and imaging equipment.
Zuberi served 10 months in state prison in the early 2000s after pleading guilty to his role in a large Medicaid fraud money laundering scheme. As part of the scheme, ringleaders paid kickbacks to Zuberi to refer blood specimens to a clinic he operated in Clifton for bogus and expensive tests. The clinics’ patients were Medicaid recipients who were unaware that their blood was being subjected to the unnecessary tests.
Zuberi was ordered to pay $10,000 in fines and more than $50,000 in restitution and was prohibited from participating in Medicaid. Three years ago, he was reinstated, records show
After he was released from prison, Zuberi “used nominees to submit more than a dozen fraudulent applications for provider status to the Medicaid program and more than 30 fraudulent licensing applications to the Department of Health,” Hoffman said.
In doing so, they hid the fact that he was an owner from the Medicaid program and the Department of Health.
DIA, which Zuberi owns and uses to manage his business, is “an umbrella corporation that manages numerous subsidiary diagnostic imaging facilities” in North and Central Jersey, Hoffman said.
“By concealing his ownership of the facilities, Zuberi and others in the organization were allegedly able to fraudulently obtain provider status and submit more than 30,000 claims to Medicaid and thousands more to other healthcare insurance companies,” he said.
“The Zuberi enterprise disguised the payment of kickbacks by providing doctors services (e.g. patient transportation),” Hoffman said.
The defendants also made “numerous structured cash withdrawals to circumvent the statutory reporting requirements that are triggered by large cash withdrawals,” he added. READ MORE….
According to Hoffman’s office, the doctors arrested yesterday include:
Simon B. Santos-Arias , 71, of Guttenberg, who has a practice in Union City – From 2008 to present, Santos-Arias referred several thousand scans valued at more than a million dollars to Zuberi-owned facilities. It is alleged that a Zuberi employee made payments on Zuberi’s behalf to Dr. Santos-Arias in the amount of approximately $18,800. In exchange for Santos-Arias’ cooperation in the scam, a relative of the doctor is also alleged to have received a free CT scan at one of Zuberi’s imaging centers.
Alexander G. Salerno , 46, of West Orange – An internist who practices in East Orange, Salerno allegedly referred thousands of scans to Zuberi imaging centers from 2009-2013. Zuberi’s organization billed insurance carriers more than a million dollars for those scans and allegedly paid Salerno approximately $105,000 for cooperating in the scheme. Salerno’s first kickbacks were in the form of four checks totaling $8,000 that were made out to his medical practice: Salerno Medical Associates in East Orange. After that, Salerno allegedly received payment from Zuberi’s organization in several different ways including through: a shell company registered in his name; Salerno’s charity, the Urban Healthcare Initiative Program; and through “sham rental agreements”, the terms of which provided that Zuberi’s organization paid to rent space at Salerno’s medical offices, though the arrangement was contrived to conceal the kickbacks.
William M. Steck, Sr., 70, of West Orange – Steck, a gynecologist/obstetrician in West Orange, received his first alleged kickback from the Zuberi organization, a check for $1,000, in January 2010. Prior to that time, Steck had referred fewer than 100 tests to Zuberi’s imaging centers. Following that initial payment, and continuing through November 2011, Steck allegedly referred hundreds of scans to DIA imaging centers and received an estimated amount of $55,000 as compensation from Zuberi shell companies.
Alan P. Epstein , 45, of Manalapan – Epstein allegedly referred dozens of scans valued at several thousand dollars to Zuberi-owned medical imaging centers. In exchange, Zuberi allegedly paid approximately $2,000 for architectural services and permits that were meant to expand Epstein’s practice, Epstein Chiropractic in Elizabeth. During certain points of Epstein’s work with the Zuberi organization from September 2012 to December 2013, it is also alleged that the organization spent an average of approximately $4,000 per month to pay for Epstein’s patient transportation expenses.
Guillermo A. Munoz , 49, of Union – In 2013, Munoz allegedly received approximately $13,000 in kickbacks from the Zuberi organization in exchange for referring to it dozens of scans. He was allegedly compensated, among other ways, via sham rental agreements, which provided that Zuberi’s organization pay monthly “rent” to use space at two locations of Munoz’ Elizabeth offices. It is alleged that the “rental agreement” was a sham designed to conceal the kickbacks from Zuberi’s organization.
Deputy Attorney General Christopher Ruzich and Detectives Anthony Correll and Jason Volpe coordinated the investigation with assistance from Detectives Kevin Gannon and Yevgeny Gershman, according to the attorney general’s office.
They worked closely with Special Agent William Makar from the Division of Taxation. Analyst Terri Drumm of the Office of the Insurance Fraud Prosecutor assisted in the investigation.
MUGSHOTS: Courtesy NJ ATTORNEY GENERAL’S OFFICE
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