Hiltzik: 1-800-GET-THIN debacle ends with a fraud conviction

By Michael HiltzikBusiness Columnist

Dec. 17, 2021 11:49 AM PT

The ancient Greeks had a phrase often rendered as: The wheels of justice grind slowly, but exceedingly fine.

If you’re looking for a modern example, consider Julian Omidi, once the promoter of the 1-800-GET-THIN campaign that dominated the Southern California media landscape about a decade ago.

On Thursday, a federal jury found the defrocked physician guilty on 31 counts of fraud, two counts of making false statements relating to healthcare matters, one of identity theft, two of money laundering and one of conspiracy to commit money laundering.

Patients were harmed as a result of this fraud scheme when they were subjected to unnecessary medical procedures, and insurance providers were harmed when they paid out tens of millions of dollars after receiving fraudulent bills.

— Federal prosecutor Sandra Brown in 2018

The charges were related to the GET-THIN weight-loss business, which involved the Lap-Band, a silicon loop implanted around the stomach to discourage overeating.

Although insurers typically didn’t cover the procedure except under limited conditions, prosecutors alleged that the business faked medical results so customers would appear to be suitable candidates.

Federal prosecutors estimated that Omidi and his company submitted $355 million in fraudulent billings to health insurers, including the Tricare program covering military service members.

Omidi is scheduled to be sentenced on April 26. He’s facing a maximum of 20 years in federal prison for the fraud and money-laundering counts, and a mandatory consecutive two-year sentence for identity theft.

The government is also seeking to keep some or all of more than $110 million in funds and securities seized in 2014 from accounts held by Omidi and others it says were associated with the scheme.

“Patients were harmed as a result of this fraud scheme when they were subjected to unnecessary medical procedures, and insurance providers were harmed when they paid out tens of millions of dollars after receiving fraudulent bills,” prosecutor Sandra Brown said when Omidi was arrested in 2018.

Lawyers for Omidi didn’t respond to a request for comment. Co-defendant Mirali Zarrabi, who had been charged with allowing his electronic signature to be used to certify falsified medical reports, was acquitted of all charges.

Calling the prosecution of Omidi “slow” barely does it justice. My first columns exposing the truth behind the GET-THIN campaign appeared in 2010.

I and my former colleague Stuart Pfeifer established that at least five patients had died following Lap-Band procedures at clinics affiliated with 1-800-GET-THIN, according to lawsuits, autopsy reports and other public records. The indictment on which the jury passed judgment Thursday had been handed up in 2017.

One doesn’t need a long memory to recall the time when ads for 1-800-GET-THIN were all but inescapable. Billboards stating that the surgery was a “safe” one-hour procedure and implying that it was covered by insurance blanketed the Southland like a layer of adipose. Its radio jingle burrowed into listeners’ brains like an earworm.

Beneath the uplifting commercial pitch, however, was a grimmer reality. Julian’s medical license had been revoked in 2009. His brother Michael, a physician who was also associated with the campaign, had been placed on probation for three years by the California Medical Board in 2008.

One of the locations where the Lap-Band surgeries were performed, a ground-floor office on Wilshire Boulevard in Beverly Hills, had lost an important federal certification in 2009 after government inspectors determined that conditions there posed “immediate jeopardy to the health and safety” of patients. That judgment was aired in a grisly 22-page inspection report that makes nauseating reading.

On the whole, however, the GET-THIN saga is a story of the breakdown of the medical regulatory system at the state and federal levels, and of heedless corporations in the medical device and health insurance fields. They all largely twiddled their thumbs as accusations mounted that much was unhealthy in the GET-THIN campaign.

One problem was a loophole preventing the California Medical Board and Department of Public Health from taking action.

In 2007, a state appeals court had stripped the Department of Public Health of its authority over outpatient clinics owned by doctors and handed it over to the Medical Board. But the Medical Board had no expertise in overseeing medical facilities; the DPH, which did, couldn’t do anything about clinics owned by doctors.

Inspectors had shut down that Beverly Hills clinic — for a day. But the DPH couldn’t take further action because the owner of the facility was listed in its records as Michael Omidi, a doctor. Nor did the Medical Board move to shut down the location permanently.

Responsible regulators would have screamed from the rooftops about a loophole that prevented them from doing their jobs. Not the Medical Board, which complacently allowed the loophole to go unfilled. The board outsourced its supervision of surgical clinics to four independent accreditation agencies, which were expected to perform inspections and hold the clinics to professional standards.

The problem there was that when one agency revoked a clinic’s accreditation, the clinic could simply reapply with one of the others and start again from scratch. (That accreditation-shopping ceased after 2011, when state law decreed that an accreditation denial or revocation by one agency must be honored by the others.)

Then there was the lure of profits, such as those flowing to Allergan, the leading manufacturer of Lap-Bands. Entities affiliated with 1-800-GET-THIN were among Allergan’s biggest customers for the devices.

Allergan continued to sell Lap-Bands to those affiliates even after local, state and federal agencies began to raise questions about the advertising, surgery-related deaths and accusations of insurance fraud. Allergan initially told me that it had no legal right to stop selling its product to the 1-800-GET-THIN affiliates, and had no control over the ad campaign underplaying the dangers of the surgery.

Only in 2012, long after these issues surfaced, did Allergan stop selling to these providers. At that time, Allergan refused to explain its decision to cut the providers off. Allergan exited the Lap-Band business in 2013.

Health insurers, which often brag about their role in monitoring medical claims to make sure doctors are acting ethically and appropriately, waved claims from GET-THIN affiliates through. In 2014, the giant insurer UnitedHealth sued the 1-800-GET-THIN associates for what it asserted were claims for unnecessary or unperformed procedures and inflated bills threefold or more, totaling $43 million.

The company said in its lawsuit that it got rooked because it placed “justifiable reliance upon ... this false billing.” It implies it had no choice but to “rely on the veracity” of the bills, and woke up only belatedly.

But how could a leading health insurance company allow $43 million to go out the door without realizing that it was being systematically cheated? As I asked at the time, wasn’t it more likely that United took the easy way out by not scrutinizing the medical claims when they came in?

That brings us to the federal case against Julian Omidi.

As outlined in the 2017 indictment and the outcome of the 48-day trial in Los Angeles federal court, the government focused on Omidi’s practice of requiring prospective patients to undergo a “sleep study.” The goal, according to prosecutors, was to produce evidence of “co-morbidity” — that is, obstructive sleep apnea — “that GET THIN would use to convince the patient’s insurance company to pre-approve the Lap-Band procedure.”

The sleep study results were certified by an unidentified co-conspirator who often didn’t even review the results, the prosecutors said. Omidi sometimes instructed the co-conspirator to alter the test results to make it seem that the subjects had obstructive sleep apnea when they did not, or to make it seem that they had more severe conditions than the test results indicated.

Falsified claims were submitted to Anthem Blue Cross, UnitedHealth, Aetna and Health Net, in addition to Tricare and others.