Alleged scams cost California doctor, pain clinics $11.4 million in settlement

A California physician and his medical practice, which once operated 29 pain clinics statewide, have agreed to pay nearly $11.4 million to resolve allegations of false claims being submitted to federal and state health insurance programs for medically unnecessary procedures and care, a U.S. Attorney in Sacramento said Tuesday.

Lags Spine & Sportscare Medical Centers Inc., and Dr. Francis P. Lagattuta, the owner and medical director of Lags Medical, agreed to settle allegations that they violated the False Claims Act by submitting millions of dollars in bogus claims to Medicare, Medi-Cal and the Oregon Medicaid programs for skin biopsies, spinal cord stimulation surgeries and urine drug testing, Phillip A. Talbert, the U.S. Attorney for the Department of Justice’s Eastern District of California, stated in a press release.

Of the three-part settlement, Talbert said it resolves allegations  from 2016 to 202 that  Lagattuta and Lags Medical performed medically unnecessary skin biopsies to test patients for small-fiber neuropathy.

As part of the settlement, Lagattuta and Lags Medical acknowledged that Lagattuta created what he called an “Artificial Intelligence Team” of non-provider staff “who were required to order at least 150 skin biopsies per week for patients without the consent of the patients’ treating providers at Lags Medical,” Talbert added in the prepared statement.

Additionally, Lagattuta and Lags Medical acknowledged that if a patient refused a skin biopsy, Lags Medical staffers told the patient that they would reduce their opioid medication and told the patient’s provider to immediately “taper” the patient’s medication.

Secondly, the settlement resolves allegations from 2018 to 2021 that Lagattuta and Lags Medical performed medically unnecessary surgeries to implant spinal cord stimulators, an invasive surgery of last resort for the treatment of chronic pain.

Lagattuta, according to Talbert, paid a psychiatrist to tell Medicare and Medicaid insurers that the psychiatrist had performed a necessary psychological evaluation on each patient before the surgery and that the patient did not have any preexisting psychological or active substance abuse disorders that would adversely affect their response to the procedure.

But Lagattuta and Lags Medical knew that the psychiatrist did not perform in-person psychological evaluations of any patients and ignored indications that many patients suffered from psychological or substance use disorders before receiving spinal cord stimulation surgery, Talbert noted.

Lastly, of the drug testing, the settlement resolves allegations that from 2017 to 2021 that Lagattuta and Lags Medical performed medically unnecessary definitive urine drug testing, which identifies the concentration of specific medications, illegal substances, and metabolites, or substances formed in or necessary for metabolism, in urine samples. Blanket orders of urine drug testing — identical orders for all patients without regard to each patient’s individualized medical necessity for the test — are not covered by Medicare.

Talbert said Lagattuta and Lags Medical acknowledged that they made identical orders of urine drug tests for all patients to be tested every four months, saying is should be a “big money maker,” and ordered the maximum number of drug panels for each patient, using Healthcare Common Procedure Coding System Code G0483.

The settlement amount of $11,388,887 is based on Lagattuta and Lags Medical’s ability to pay and includes proceeds from Lagattuta’s sale of a remotely operated underwater vehicle. As part of the settlement. Lagattuta, who once operated pain clinics from Los Angeles and Monterey to Fresno and Sacramento counties, among many others, has also agreed to a voluntary exclusion from federal health care programs for five years. It is unclear if any Solano County residents sought care and pain relief from Lagattuta and Lags Medical.

“Dr. Lagattuta and Lags Medical engaged in a brazen scheme to defraud Medicare and Medicaid of millions of dollars by inflicting unnecessary and painful procedures on patients whom they were supposed to be relieving of pain,”  Talbert stated.

Added California Attorney General Rob Bonta: “Thousands of Medi-Cal patients trusted Dr. Lagattuta to take away their pain. Instead he exploited their trust by carrying out arrays of unnecessary tests and billing for them over the objections of the doctors he employed. Billing for services that providers know are unnecessary undermines the quality of care that patients receive and increases the costs to the Medi-Cal program.”

“Health care providers, including physicians, who perform medically unnecessary procedures to boost profits undermine the public’s trust in the health care system and exploit taxpayer-funded programs,” stated Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of Inspector General.”

The civil settlement includes the resolution of claims brought under the qui tam, or whistleblower, provisions of the False Claims Act by Steven Capeder, Lags Medical’s former operations director and marketing director. As part of the settlement announced Tuesday, Capeder will receive about $2.1 million.

The settlement capped an investigation by the U.S. Department of Health and Human Services, Office of the Inspector General; the FBI and the U.S. Department of Defense, Defense Criminal Investigative Service.