Two weight-loss surgeons falsified records, defrauded patients, insurers out of $250 million, prosecutors allege

For years, it was hard to miss the billboards and radio jingles for a weight-loss surgery center that promised, “Let your new life begin, call 1-800-GET-THIN.”

But on Wednesday, federal prosecutors charged that the Lap-Band surgery operation was at the center of a massive fraud scheme that forced patients to undergo unnecessary tests, falsified medical tests to justify surgeries and cheated insurers and patients out of $250 million.

Authorities arrested two Southern California doctors after a federal grand jury indicted the pair for allegedly creating fraudulent medical bills. The arrests of Julian Omidi, 49, of West Hollywood and Mirali Zarrabi, 55, of Beverly Hills are the culmination of more than five years of federal investigation into the Lap-Band enterprise, which included in 2014 the seizure of about $110 million in assets.

They also come after a Times investigation found that five patients died after surgery at clinics affiliated with the ad campaign between 2009 and 2011, according to lawsuits, autopsy reports and other public records.

A 37-count indictment unsealed Wednesday accuses the pair of mail fraud, wire fraud, false statements, money laundering and aggravated identity theft. The charges stem from 1-800-GET-THIN’s Lap-Band surgeries and sleep study programs between May 2010 and March 2016. The indictment alleges that sleep studies with false results were used to get insurance companies to fork over millions of dollars.

“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,” acting U.S. Atty. Sandra R. Brown said in a statement.

Neither Omidi nor Zarrabi could be reached for comment.

Kamille Dean, an attorney for Omidi, said in a statement that the case filed against her client was unfounded.

“The indictment against my clients is based on false claims. The charges do not have any legitimacy. The passage of time has shown the government claims are untrue,” Dean said. “This case is fraught with government misconduct.”

Dean attached two letters to the U.S. Department of Justice that take issue with the use of certain witnesses and accuse the prosecutors of widespread misconduct related to witnesses. The letters “demonstrate that the government’s claims are meritless,” she said.

In addition, two corporations controlled in part by Omidi, OmidiSurgery Center Management LLC and Independent Medical Services Inc., are named in the indictment.

The business was built on a weight-loss procedure in which doctors placed a silicone ring implant around a patient’s stomach to discourage overeating.

Prosecutors allege that Omidi, whose medical license was revoked in 2009, established procedures requiring prospective Lap-Band patients to have at least one sleep study, even if it was not covered by insurance. Employees were given commissions to make sure the studies occurred, according to the indictment.

Prosecutors allege that the purpose of the sleep studies was to justify the surgeries by showing that the patients suffer from sleep apnea due to their weight. Employees would often falsify the results to reflect that the patient had moderate or severe sleep apnea, and that they suffered from severe daytime sleepiness, according to the indictment.

Insurance companies relying on the false sleep studies and false information about the patient then authorized payment for some of the proposed Lap-Band surgeries.

The indictment alleges that 1-800-GET-THIN received at least $38 million for the Lap-Band procedures. In cases where the insurance company did not authorize the surgery, 1-800-GET-THIN still submitted bills for about $15,000 for each sleep study and received millions of dollars in payments for these claims, prosecutors said.

According to the indictment, Zarrabi allowed his electronic signature to be used by 1-800-GET-THIN to make it “falsely appear” that he had reviewed and interpreted the falsified sleep studies. Zarrabi did not review the prescriptions, authorities said.

Omidi and Zarrabi “victimized countless patients when they allegedly provided medically unnecessary treatment in order to boost their own profits to the tune of tens of millions of dollars,” California Insurance Commissioner Dave Jones said in a statement. “Medical provider fraud is a multi-billion dollar problem that drives up health insurance premiums and creates a drain on our economy.”

The indictment is just the latest problem for the surgery enterprise. The 1-800-GET-THIN campaign was pulled in 2012 after the Food and Drug Administration warned the companies that the advertisements failed to include adequate warnings about the potential risks of Lap-Band surgery.

In 2014, the government seized about $110 million in funds and securities from accounts held by individuals and entities related to the firm. Prosecutors are seeking forfeiture of some or all of those funds in the criminal case, and also intend to pursue civil forfeiture of some or all of the assets.

If convicted, the two men face decades in federal prison, including a statutory maximum penalty of 20 years in prison for each of the 31 mail fraud and wire fraud counts alleged in the indictment.

Attorney Louis Shapiro, who has represented clients facing medical fraud allegations, said a key to the case is what evidence prosecutors have to prove the sleep studies were falsified. He suspects prosecutors have developed witnesses who they believe will help prove that charge in court.

“It will be interesting to see who are cooperating witnesses,” he said.

richard.winton@latimes.com | Twitter: @LAcrimes

UPDATES:

March 1, 3:00 p.m.: This article was updated with a statement from Omidi’s attorney.

3:25 p.m.: This article was updated throughout with new details.

This article was originally posted Feb. 28 at 2:25 p.m.