FWA (CA)- Pain clinic chain to pay $11.4M to settle Medicare and Medicaid fraud claims

MM Curator summary

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[MM Curator Summary]: Lots of painful, unnecessary procedures done on Medicaid patients in CA and OR. You paid $11.4M to make it happen.





SACRAMENTO, California—The owner of one of California’s largest chains of pain management clinics has agreed to pay nearly $11.4 million to California, Oregon, and the federal government to settle allegations of Medicare and Medicaid fraud.

The U.S. Department of Justice and the states’ attorneys general say Francis Lagattuta, a physician, and his Lags Medical Centers performed—and billed for—medically unnecessary tests and procedures on thousands of patients over more than five years. It was “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,” Phillip Talbert, U.S. attorney for the Eastern District of California, said in a statement this month.

The federal Medicare program suspended reimbursements to Lags Medical in June 2020, and Medi-Cal, California’s Medicaid program, followed in May 2021. Lags Medical shut down the same day the state suspended reimbursements. The company, based in Lompoc, California, had more than 30 pain clinics, most of them in the Central Valley and the Central Coast.

KFF Health News review last year found the abrupt closure left more than 20,000 California patients—mostly working-class people on government-funded insurance—struggling to obtain their medical records or continue receiving pain prescriptions, which often included opioids.

Lagattuta and Lags Medical did not admit liability under the settlement. Lagattuta denied the governments’ claims, saying in a statement he was “pleased” to announce the settlement of a “long-standing billing dispute.” As part of the agreement, Lagattuta will be barred for at least five years from receiving Medicare and Medicaid reimbursements.

“Since the Centers have been closed for a couple of years, it made sense for Dr. Lagattuta to settle the dispute and continue to move forward with his other business interests and practice,” Malcolm Segal, an attorney for Lagattuta and the centers, said in the statement.

According to state officials, the federal government will receive the bulk of the money, about $8.5 million. California will receive about $2.7 million, and an additional $130,000 will go to Oregon. The settlement amount is based in part on Lagattuta’s and Lags Medical’s “ability to pay.” It does not cover the governments’ full losses, which the U.S. attorney’s office in Sacramento said are not public record.

A nearly four-year investigation by federal officials and the California Department of Justice found that from March 2016 through August 2021, Lagattuta and his company submitted reimbursement claims for unneeded skin biopsies, spinal cord stimulation procedures, urine drug tests, and other tests and procedures. Lagattuta began requiring all his clinics to perform various medical procedures on every patient, the officials said, no matter if they were needed or requested by patients’ medical providers. Patients who refused were told they would have their pain medication reduced and could suffer adverse medical consequences.

U.S. and California investigators piggybacked on a federal claim filed in late 2018 by a whistleblower, Steven Capeder, Lags Medical’s former operations and marketing director, who will receive more than $2 million of the settlement.

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