U.S. Attorney's Office
Southern District of California
(619) 557-5610
April 6, 2015

Mastermind of $1 Million Medicare Fraud Sentenced to 30 Months

SAN DIEGO—Gevorg “George” Kupelian was sentenced today to 30 months in custody for his role in a fraud scheme that involved billing Medicare for medical tests on unsuspecting seniors that were either medically unnecessary or were never performed.

U.S. District Judge Cynthia Bashant ordered Kupelian to repay Medicare $964,011 in restitution.

According to court documents, Gevorg Kupelian and others operated the El Centro Clinic, located at 485 Broadway Street, Suites C and D, in El Centro, California, as a Medicare-billing mill. Kupelian admitted that he set up the clinic and found a doctor to act as the official physician of record. But, as Kupelian acknowledged, the doctor served primarily as a “front” so that Kupelian could use his Medicare billing number to submit Medicare claims.

Kupelian has further admitted that he recruited and paid “cappers,” individuals whose sole task was to find senior citizens in El Centro and convince them to go to the Clinic. In exchange for providing their Medicare beneficiary numbers, the senior citizens received a free pair of shoes and/or a free buffet lunch. Once they arrived at the Clinic, the beneficiaries were subject to a pre-determined gauntlet of tests, which were not based on the patient’s medical needs and were provided without proper supervision by a physician. In some cases, the clinic billed Medicare despite the fact that the tests were not provided at all.

“This defendant had no regard for the medical needs or well-being of patients,” said U.S. Attorney Laura Duffy. “He exploited vulnerable seniors—even giving them unnecessary tests without a doctor’s approval—in order to get rich quick on the backs of taxpayers.”

“Medicare fraud schemes such as this undermine our health care system and can jeopardize a patient’s health,” said FBI Special Agent in Charge, Eric S. Birnbaum. “Today’s sentencing reaffirms the FBI’s commitment to aggressively pursue those who seek to become unjustly enriched by stealing money from the pockets of American taxpayers.”

“To anyone plotting fraud against government health programs and U.S. taxpayers today’s sentencing sends a crystal clear message,” said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. “These offenders will be brought to justice and will pay for their crimes.”

Kupelian also arranged for a so-called Physician Assistant (“PA”) to see patients (in lieu of the “front” doctor, who was often absent), write progress notes, and order tests. As detailed in today’s court proceedings, the so-called PA hired by Kupelian was, in fact, unlicensed to practice medicine in any capacity in California.

Many of the tests that the Clinic claimed to have administered to beneficiaries required either that a physician administer the test or that a physician be within the Clinic during testing. On over 800 occasions, the Clinic billed Medicare for these tests despite cell phone location records showing that the doctor was not in Imperial County at all during the times these tests were allegedly administered. The Clinic also submitted reimbursement from Medicare for allergy tests despite evidence showing that these tests were never performed in the Clinic—by a doctor or anyone else.

The co-conspirators operated the El Centro Clinic in a manner designed to maximize Medicare reimbursements without regard to the medical needs of its patients. For example, they staffed the clinic, either by being personally present or arranging for others to be, in order to give the impression to the recruited Medicare beneficiaries and outside observers that the beneficiaries were being seen by qualified medical professionals. In fact, oftentimes the recruited beneficiaries would never see a doctor or other qualified medical professional during a particular visit to the El Centro Clinic. They also caused tests to be performed on recruited Medicare beneficiaries without regard to their medical necessity, including breathing tests, bladder tests, EKGs, and ultrasounds, for the primary purpose of generating billings to Medicare.

Kupelian also admitted creating “sample” lab sheets and billing forms with certain tests and diagnoses checked. He instructed the clinic’s employees to duplicate the checked boxes from the sample forms on patients’ actual forms, without regard to the patients’ actual medical conditions or what tests they actually needed or received. Moreover, Kupelian instructed the clinic’s employees that all patients were to undergo all of the tests offered by the clinic, without regard to the patients’ actual diagnoses or what tests they actually needed.

After the unnecessary tests were conducted, Kupelian inserted false test results into patient files to make it appear that tests had been done and results were appropriately generated, when in fact they had not. After the sham tests were conducted and false test results were generated, Kupelian and his co-conspirators submitted fraudulent bills to Medicare. The bills were fraudulent for one or more of the following reasons:

  • Office visits or “evaluation and management” services were billed for instances when no physician ever saw the beneficiary, in contravention of Medicare rules.
  • Tests were billed when no physician recommended the test as medically necessary, in violation of Medicare rules.
  • Tests, in particular, allergy tests, were billed when no test was ever performed.
  • Tests were billed when Kupelian and others knew that there was no medical justification for the tests, and under circumstances in which Medicare would prohibit reimbursement for the tests.

Using these tactics, the El Centro Clinic generated over $2.7 million in claims to Medicare, which resulted in payments of approximately $1.3 million to the doctor, 75% of which the doctor immediately transferred into Kupelian’s bank account. Out of his proceeds, Kupelian paid the other co-conspirators, including the cappers and the fake PA.

Kupelian was ordered to surrender on July 8, 2015.

DEFENDANT

  • GEVORG KUPELIAN Age 41 North Hollywood, CA
  • Criminal Case No.
  • 14CR3419-BAS

SUMMARY OF CHARGES

  • Count 1: Conspiracy to Commit Health Care Fraud, in violation of 18 U.S.C. § 371.
  • Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

AGENCIES

  • Federal Bureau of Investigation, El Centro Division
  • Department of Health and Human Services, Office of the Inspector General
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