Four More Charged in Elaborate Capping Scheme

Four more people have been charged in a capping scheme, including two QMEs accused of running a clinic that paid $1.8 million+ for patient referrals. Center for Better Health, a medical corporation operating as Southland Spine and Rehabilitation Center Inc., is the latest embroiled in this elaborate scheme. The clinic paid up to $2 million in kickbacks for patient referrals from three companies operating as legal advertisers. One of those companies, Providence Scheduling (“Providence”), has been convicted of a federal conspiracy and is implicated in additional criminal cases filed in Orange, Riverside and San Diego counties. The 38-count complaint alleges one count of conspiracy, one count of filing false and fraudulent claims, three kickback charges and 33 counts of insurance fraud.
The complaint names chiropractor Jeffrey Catanzarite, who incorporated Center for Better Heath/Southland Spine, and Veronica Martin and Ronald Martin (of Priority One Health Resources), who ran the marketing department for the clinic. Catanzarite also made Dr. Max Matos, a treating physician at the clinic, his vice president and medical director. The Division of Workers’ Compensation’s online database lists both Catanzarite and Matos as active QMEs.
The Orange County criminal complaint alleges that Matos was identified as the majority owner, controlling 51% of the clinic.
“Despite Max Matos’ listed ownership interest, Jeffrey Catanzarite was the sole actual owner of Center for Better Health/Southland Spine, controlling its finances, and being responsible for making all substantive decisions,” according to the complaint.
The complaint goes on to describe a MD-DC scheme, used to evade a California law that prohibits chiropractors from owning more than 49% of a professional medical corporation. In the scheme, the physician is identified as the owner while it is being run by the chiropractor. However, Catanzarite and Matos are not facing charges for allegedly operating an illegal clinic.
According to the complaint, over a four year span starting in 2011, Catanzarite, Matos, Veronica Martin and Ronald Martin paid Grupo MedLegal LA, and later Medlegal Network Inc., $1,000 for each patient sent to the clinic for services to be billed to workers’ compensation carriers. Prosecutors allege that Catanzarite paid Grupo MedLegal LA and Medlegal Network Inc. $4,000 per week for four patient referrals, using a sophisticated tracking system. Prosecutors allege Catanzarite paid $92,014 to Grupo MedLegal LA, and $1.32 million to Medlegal Network Inc., for unlawful patient referrals during that time period.
Catanzarite allegedly had a similar arrangement to pay Providence between $10,000 and $15,000 every 45 days for patient referrals. Between 2011 and 2016, Catanzarite reportedly paid Providence $402,000 for referrals.
Providence has been in hot water before. A federal grand jury indicted it in 2014, and Providence pleaded guilty to a single count of conspiracy (and was fined $100,000) to commit mail fraud in 2017. Carlos Arguello and Fermin Iglesias, who were also indicted in 2014 and identified as controlling Providence, both pleaded guilty to federal conspiracy charges in 2016 and are awaiting sentencing.
Two years ago, Orange County prosecutors charged 16 people, including Arguello and 10 applicants’ attorneys, with paying illegal referral fees to Providence. Last year, the Orange County District Attorney’s Office accused four chiropractors of paying Providence for patients. Further, OC prosecutors filed a five-count felony complaint against Iglesias in 2018 accusing him of conspiring with the four chiropractors in a scheme that cost carriers $3.4 million in payment on fraudulent bills. Also last year, the Riverside County District Attorney’s Office accused chiropractor Curtis W. Montgomery of paying illegal referral fees to Providence.