in the united states district court -...
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Case: 1:14-cr-00447-JRA Doc #: 1 Filed: 12/17/14 1 of 55. PageID #: 1
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED ST A TES OF AMERICA,
Plaintiff,
v.
PHYSICIANS SURGICAL GROUP, LLC, CHRISTOPHER LIV A, EDWARD LIV A, CAROLYN VIA, aka CAROYLN LIV A, MARK FRITZ, JOHN NICKELS, JOHN FORTUNA, and ANTHONY SIMONE,
Defendants ..
The Grand Jury charges:
) INDICTMENT ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
1: 14CR4471 Title 18, Sections 1343, 1347, 1349, 1956, United States Code
JUDGE ,l\DAMS
I. GENERAL ALLEGATIONS
At all times material to this Indictment, except where otherwise noted:
A. Defendants, Businesses, and Bank Accounts
I. Defendant PHYSICIANS SURGICAL GROUP, LLC (hereinafter "PSG") was a
Florida Limited Liability Company (hereinafter "LLC") with its principal place of business at 40
SE 5th Street, Suite 406, Boca Raton, Florida. PSG was formed in 2006, and was primarily a
billing company for medical services. PSG was owned by CHRISTOPHER LIV A (hereinafter,
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"CHRIS LIV A"), EDWARD LIVA (hereinafter, "ED LIV A"), and CAROLYN VIA aka
CAROLYN LIV A (hereinafter, "CAROL VIA").
2. 7431 Surgical Group (hereinafter "7431," and together with PSG, the "PSG
Entities") was a Florida LLC with its principal place of business at 40 SE 5th Street, Suite 406,
Boca Raton, Florida. 7431 was formed in 2008 and was in the business of providing payroll and
billing services. 7431 was voluntarily dissolved on August ], 2012. 7431 was owned by
CAROL VIA.
3. Liva Associates was a Florida LLC with its principal place of business at 6418 La
Costa Drive, Apt 101, Boca Raton, Florida 33433. Liva Associates was formed in 2007. Liva
Associates was owned by CHRIS LIVA and others known and unknown to the Grand Jury.
4. Physician's Marketing & Management was a Florida LLC with its principal place
of business at 40 SE 5th Street, Suite 406, Boca Raton, Florida. It was owned by CAROL VIA.
5. Shaker Heights Surgical Center (hereinafter "SHSC") was an Ohio corporation
with its principal place of business at 3235 Lee Road, Shaker Heights, Ohio. SHSC was formed
on or about December 19, 2007, and operated an ambulatory surgical center licensed by the State
of Ohio. SHSC was owned by CHRIS LIV A, ED LIV A, CAROL VIA, John K., David N.,
Arthur H., and Michael A.
6. Anesthesia Company of America (hereinafter "ACA") was a Florida LLC with its
principal place of business at 201 Montgomery A venue, Sarasota, Florida. ACA was formed in
2007 and was in the business of providing billing services related to medical procedures
involving anesthesia. ACA was owned by Carl. N. ACA employed JOHN NICKELS to serve
as the anesthesiologist at SHSC.
7. ECSC III (hereinafter "ECSC," and together with ACA, the "ACA Entities") was
a Florida LLC with its principal place of business at 20 I Montgomery Street, Sarasota, Florida
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34243. ECSC was formed in 2008. According to its articles of incorporation, ECSC's managing
members were Carl N., Bradley W., and E&C Consultants of Boca Raton. ACA, ED LIVA, and
CHRIS LIV A formed ECSC, which was defined as "Edward Chris Spine Care." Ownership in
ECSC was split between ACA, ED LIV A, and CHRIS LIV A.
8. E&C Consultants of Boca Raton (hereinafter "E&C") was a Florida LLC with its
principal place of business at 280 Royal Palm Way, Boca Raton, Florida 33431. E&C was
formed in 2008. According to its articles of incorporation, E&C's managing members were
CHRIS LIV A and CAROL VIA.
9. Defendant CHRIS LIVA was a resident of Boca Raton, Florida.
10. Defendant ED LIV A was a resident of Boca Raton, Florida.
11. Defendant CAROL VIA (together with CHRIS LIV A and ED LIV A, the
"LIV AS") was a resident of Boca Raton, Florida.
12. The LIV AS were de facto, if not actual, owners of SHSC and PSG during some or
all of the period PSG and SHSC submitted claims for manipulation under anesthesia ("MUA'')
procedures to the Insurers (described below) arid received the bulk of distributions of profits
from PSG for the MUA procedures.
13. Defendant MARK FRITZ (hereinafter "FRITZ") was a resident of Coral Springs,
Florida, and was the manager and Chief Financial Officer of PSG.
14. Defendant JOHN NICKELS (hereinafter "NICKELS") was a licensed medical
doctor and anesthesiologist in the State of Ohio and a resident of Ohio.
15. Defendant JOHN FORTUNA (hereinafter "FORTUNA") was a licensed
chiropractor in the State of Ohio and a resident of Avon, Ohio.
16. Defendant ANTHONY SIMONE (hereinafter "SIMONE"), was a licensed
chiropractor in the State of Ohio and a resident of Cleveland, Ohio.
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17. On or about July 8, 2008, CAROL VIA opened and caused to be opened bank
account number x8947 at Northern Trust in the name of Physician's Marketing & Management.
CAROL VIA was listed on the signature card for this account.
18. On or about October 21, 2008, CAROL VIA and CHRIS LIVA opened and
caused to be opened bank account number x2853 at Northern Trust in the business name of
E&C. CAROL VIA and CHRIS LIV A were listed on the signature card for this account.
19. On or about June 24, 2008, Arthur H. and CHRIS LIV A opened and caused to be
opened bank account number x2735 at Northern Trust in the business name of SHSC. Arthur H.
and CHRIS LIV A were listed on the signature card for this account. On or about March 30,
2009, CAROL VIA was also added as an account signer for bank account number x2735.
20. On or about August 16, 2007, CAROL VIA opened and caused to be opened bank
account number x9303 at Northern Trust in the name of CAROL VIA. CAROL VIA was listed
on the signature card for this account.
21. On or about August 11, 2006, CAROL VIA opened and caused to be opened bank
account number x8936 at Northern Trust in the name of CAROL VIA. CAROL VIA was listed
on the signature card for this account.
22. On or about September 13, 2007, CHRIS LIVA opened and caused to be opened
bank account number x9046 at Northern Trust in the business name of Liva Associates. CHRIS
LIV A was listed on the signature card for this account.
B. Private Insurers
23. Medical Mutual of Ohio (hereinafter "MM") was an Ohio corporation with its
principal place of business in Cleveland, Ohio. MM provided health care benefits and insurance
to its subscribers under individual and group health insurance plans, and provided this insurance
under a variety of coverage options set forth in the benefit plans.
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24. Anthem Blue Cross and Blue Shield ("Anthem") provided health care benefits
and insurance to its subscribers under individual and group health insurance plans, and provided
this insurance under a variety of coverage options set forth in the benefit plans.
25. United Healthcare ("United") provided health care benefits and insurance to its
subscribers under individual and group health insurance plans, and provided this insurance under
a variety of coverage options set forth in the benefit plans.
26. Aetna provided health care benefits and insurance to its subscribers under
individual and group health insurance plans, and provided this insurance under a variety of
coverage options set forth in the benefit plans.
27. MM, Anthem, United, and Aetna (collectively, the "Insurers") were health care
benefit programs under Title 18, United States Code, Section 24(b ).
C. Reasonable and Necessary Services
28. The Insurers prohibited payment for items and services that were not reasonable
and necessary to diagnose and treat an illness or injury. The Insurers required providers to
certify that services were medically necessary. In the area of chiropractic care, diagnosis, and
treatment, a chiropractor and the hospital where the chiropractor performed procedures, could
submit claims for reimbursement to the Insurers, but they were required by law to accurately
report the medical condition underlying the claim and only claims that were medically necessary
were entitled to reimbursement.
D. Manipulation Under Anesthesia
29. Manipulation under anesthesia was a medical procedure allegedly used to treat
spinal dysfunction and to restore freedom of movement to extremity joints, such as knees and
shoulders. The purported medical rationale for MUA was that fibrotic adhesions (i.e., scar
tissues) could form in and around the spine, shoulder, or other extremities, which hindered
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natural range of motion and caused pain. MU A supposedly broke up these fibrotic tissues
through the sudden manipulation of the affected areas, which theoretically increased joint
function and reduced pain.
30. Because these adjustments could be extremely painful, patients were put under
conscious sedation, known as twilight anesthesia, often through IV administration of the drug
propofol, for the entire MUA procedure.
31. MUA was recognized as a surgical procedure by the American Medical
Association (the "AMA") and was designated as such in the AMA's Current Procedural
Terminology manual. MUA was an aggressive form of therapy and was typically reserved for
patients who had failed conservative chiropractic care.
32. There were serious risks of complications associated with MUA, including
internal bleeding, unintended tearing of other soft tissue structures, detachment of ligaments and
tendons, bone fractures, dislocation of joints, herniation of spinal discs, and spinal cord or neural
decompression with resulting paralysis. There were also inherent risks associated with
undergoing general anesthesia, namely, aspiration, changes in blood pressure or heart rate, heart
attack, stroke, or even death.
E. MUA Billing and Codes
33. Due to these risks, including the risks of anesthesia, MUA was not performed in
an office setting but rather was typically performed in an outpatient surgical facility, commonly
known as an ambulatory surgical center ("ASC"). Consequently, an MUA procedure typically
generated three sets of claims to the insurance company: (I) a claim for professional fees; (2) a
claim for facility fees submitted by the surgical facility to cover its costs, including supplies
associated with the MU A and maintaining a sterile surgical and recovery room; and (3) a claim
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for anesthesia services, which covered the anesthesiologist's professional services and the
anesthesia supplies.
34. The AMA assigned five digit codes to medical procedures performed by health
care professionals. The Current Procedural Terminology ("CPT") codes were a listing of
descriptive terms for reporting medical services and procedures, providing a uniform language to
describe medical, surgical, and diagnostic services. CPT codes provided reliable nationwide
communication among physicians, patients, and insurers. All claims to insurers were submitted
using CPI codes. The procedures and services represented by the codes were health care
benefits, items, and services within the meaning of 18 U.S.C. 24(b). They included codes for
office visits, diagnostic testing and evaluation, and other services, based on complexity, severity,
and the average time required to perform each service. Health care providers and health care
benefit programs were required to use CPT codes to describe and evaluate the services for which
they claimed and to decide whether to issue or deny payment. Each health care benefit program
established a fee reimbursement for each procedure or service described by a CPT code.
35. Health care facilities submitted a revenue code along with the CPT code when
billing for services. Revenue codes were similar to CPT codes in that they represented a certain
procedure or service.
36. Health care providers typically used a standard health insurance claim form, or its
electronic equivalent, referred to as a CMS-1500 (formerly, HCFA-1500) when submitting
claims to insurers. The CMS-1500 required providers to accurately describe the services
provided to members using a specific CPI code. Health care facilities claimed reimbursement
from insurance carriers on a UB-92 or UB-04 form. On these forms, the provider identified itself
by Provider Identification Number ("PIN"), identified the beneficiary who received the services,
described the illness or injury that made the services medically necessary, identified the services
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by revenue code and CPT code, and verified the truth of the claim to the carrier for payment. In
response to each claim, the insurance carrier issued payment or denial accompanied by an
Explanation of Medical Benefits (the "EOB").
37. Insurance carriers relied on the representations contained on the claim forms
submitted and paid claims based on those representations. Insurers relied upon providers to
honestly and accurately describe the services rendered for which payment was sought and the
actual charge to the member for providing such service.
3 8. SHSC and PSG were non-contracted and non-participating providers for the
Insurers. As a result, the Insurers reimbursed beneficiaries who obtained services from non-
participating providers based on formulas specified in their benefit plans. Beneficiaries who
chose to see non-participating providers remained responsible for charges above the amount the
Insurers paid. Beneficiaries who chose to see non-participating providers typically faced higher
out-of-pocket expenses.
39. The Insurers required patients who received services or supplies from SHSC and
PSG to satisfy all deductible and co-insurance requirements for out-of-network benefits. A non-
participating provider could seek reimbursement directly from the Insurers if an individual
participant assigned to the provider his or her right to payment on the claim. In that case, the
non-participating provider submitted a health service claim form to the Insurers. The Insurers
had no way to monitor whether a provider actually collected the required patient responsibility
amounts from the member. As such, the Insurers relied on the honesty and integrity of the
providers to collect those amounts. A provider's failure to properly reduce the submitted charges
or to collect the deductible, co-insurance, or similar amount before submitting a claim was a
misrepresentation of the charge.
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40. The billing codes associated with the MUA procedure consisted of procedure
codes and diagnosis codes.
41. The MUA procedure codes consisted of the following:
a. 23700. Manipulation under anesthesia, shoulder joint. In this procedure,
the provider manipulated a patient's shoulder joint with the patient under anesthesia. The
provider made no incision. When the patient was appropriately prepped, the provider evaluated
the patient and then passively moved or stretched the shoulder joint in the direction of the
restricted range of motion. The manipulation consisted of passive movement and stretching of
the shoulder joint with an aim to break up the fibrous and scar tissue to relieve pain and improve
range of motion.
b. 27194. Closed treatment of pelvic ring fracture, dislocation, diastasis or
subluxation, with manipulation, requiring more than local anesthesia. The pelvic ring was a ring
of bones that connected the tnmk to the legs, also known as the pelvic girdle. Diastasis was the
abnormal separation of body parts held together by the muscles. Subluxation was the partial
dislocation of a joint. Treatment included manipulation, or adjustment, of the fractured bone.
The provider manually adjusted the bones by exerting a pushing or pulling force on the area to
bring the pelvis back to normal alignment. After the MUA, the provider may perform an X-ray
examination of the pelvic bone to confirm the reduction of the fracture or dislocation.
c. 27275. Manipulation, hip joint, requiring general anesthesia. In this
procedure, the provider performed manipulation of the hip joint under anesthesia. Manipulation
consisted of passive movement and stretching of the hip joint with an aim to break up the fibrous
and scar tissue to relieve pain and improve range of motion. The provider used general
anesthesia to reduce pain, spasm, and reflex muscle guarding. The provider was able to break
the joint adhesions and soft tissue adhesions, resulting in improved range of motion of the joint.
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d. 22505. Manipulation of spine requiring anesthesia, any region. The
provider manipulated the spine under general anesthesia to treat spinal dysfunction and to
alleviate acute and chronic neck and back pain. The provider made no incision. When the
patient was appropriately prepped and anesthetized, the provider manipulated the spine in the
area of discomfort. When the provider performed a manipulation of the spine, it encompassed
the manipulation performed on the spine, pelvis, and hips.
42. The diagnosis codes, also referred to as the ICD-9 codes, consisted of the
following:
a. 726. Adhesive capsulitis or frozen shoulder. This was a condition
characterized by pain and significant loss of both active range of motion and passive range of
motion of the shoulder.
b. 726.5. Enthesopathy of hip region, e.g., Bursitis of hip Gluteal tendinitis,
Iliac crest spur, Psoas tendinitis, Trochanteric tendinitis. Enthesopathies were disorders of
peripheral ligamentous or muscular attachments.
c. 728.85. Spasm of muscle.
d. 729.1. Unspecified Myalgia and myositis, e.g., muscle ache, muscle
inflammation not specific to any region.
F. Insurer MUA Policies
43. Anthem had a medical policy regarding MU As. MUA was considered medically
necessary for only adhesive capsulitis (frozen shoulder) and in the treatment of vertebral fracture,
complete dislocation of the spine, or acute traumatic incomplete dislocation (subluxation) of the
spine. It was investigational and not medically necessary for all other diagnoses. MUA of any
other joint was not medically necessary except for the knee.
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44. MM considered MUA (CPT Codes 22505, 23700, 24300, 25259, 26340, 27570
and 27860) medically necessary and eligible for reimbursement provided that at least one of the
following medical criteria was met:
Reduction of acute traumatic cervical facet dislocation; or
Shoulder joint adhesive capsulitis (i.e., frozen shoulder) refractory to standard, conventional medical management, including pharmacologic therapy (with or without articular or bursa injections) and physical therapy; or
Arthrofibrosis of the knee following trauma or knee surgery (e.g., total knee replacement, anterior cruciate ligament repair); or
Chronic extremity contracture(s) refractory to standard, conventional medical management, including failure of, intolerance to or unable to undergo physical therapy including a range of motion exercise program;
and at least one of the following clinical conditions, as indicated by ICD-9 diagnosis code, was
present: 718.41, 718.42, 718.43, 718.44, 718.46, 718.47, 718.51, 718.56, 722.0, 723.3, 726.0,
726.60, or 839.
45. United had a medical policy regarding MUAs. CPT code 22505 (spinal
manipulation) was never considered to be proven to be effective treatment and therefore was not
a covered service. CPT code 23 700 (shoulder manipulation) was considered to be proven to be
effective treatment and therefore a covered service only for a diagnosis of adhesive capsulitis
(otherwise known as frozen shoulder). If that diagnosis was not present, the shoulder
manipulation was not a covered service. CPT code 27194 (pelvic manipulation, requiring more
than local anesthesia) was considered to be effective treatment and therefore a covered service
only for a diagnosis of acute traumatic fracture, dislocation, diastasis or subluxation. If those
diagnoses were not present, the pelvic manipulation was not a covered service.
46. Aetna had a medical policy regarding MUAs. CPT code 22505 (spinal
manipulation) .was never considered to be proven to be effective treatment and therefore was not
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a covered service. CPT code 23700 (shoulder manipulation) was considered to be proven to be
effective treatment and therefore a covered service only for a diagnosis of adhesive capsulitis.
Aetna did not provide coverage for CPT codes 27194 or 27275.
II. FACTUAL ALLEGATIONS
4 7. ED LIV A and CHRIS LIV A formed PSG in Florida and hired MARK FRITZ to
handle, among other things, the billing for the professional and facility fees for MUA procedures
performed at SHSC. FRITZ was the manager and Chief Financial Officer of PSG, ran the day to
day operations, and was involved in providing the guidelines for company procedures. FRITZ
was responsible for PSG' s accounting and bookkeeping.
48. To recruit and identify chiropractors to steer patients to SHSC for MUA
procedures, CHRIS LIV A partnered with John K., a chiropractor from Northern Ohio, who
owned several chiropractic practices and knew many chiropractors in the area.
49. CHRIS LIV A recruited an osteopathic physician, Joseph M., to serve as the
"attending" surgeon for the MUA procedure. CHRIS LIV A and MARK FRITZ needed an
osteopathic physician, a "D.O.," such as Joseph M., to perform the MU As at SHSC because they
wanted to conceal the use of chiropractors, which would cause the Insurers to scrutinize the
claims. Joseph M. was paid on a flat-fee basis of$1,500 per day. After Joseph M. stopped
performing MU As, SHSC hired Ben 0., M.D., to perform MU As.
50. CHRIS LIV A recruited NICKELS to participate in the scheme by purportedly
serving as a "second assist" in the MUA. PSG submitted claims to the Insurers representing that
NICKELS was the "co-attending" surgeon for the MUA procedures. CHRIS LIVA paid
NICKELS on a flat-fee basis of$1,000 per day, even though NICKELS had a contract with ACA
to provide only the anesthesia services during an MUA. At no time did NICKELS actually assist
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in the MUA procedure itself. And at no time was it ever contemplated that NICKELS would
actually assist in the MUA procedure -that was the silent role of the referring chiropractor.
A. Marketing to and Training of Chiropractors
51. Beginning in or around 2008, CHRIS LIV A and others known and unknown to
the Grand Jury began marketing SHSC and the MUA procedure to chiropractors in Northern
Ohio. The marketing meetings typically occurred at restaurants in downtown Cleveland or the
Youngstown area. Attendees were invited through a mailing list of chiropractors in the Northern
Ohio area.
52. At or around the time of the marketing meetings, CHRIS LIVA and others known
and unknown to the Grand Jury entered into oral agreements with chiropractors under which, in
exchange for referring their patients to SHSC for MUA, the chiropractors would receive a flat
fee of approximately $4,000 for each patient they referred for a three-day session of MU A
procedures. Although the majority of chiropractors were paid $4,000 per patient, there were
times when a chiropractor was paid $2,000 for a patient receiving something less than the full
MU A. FRITZ, ED LIV A, and CHRIS LIV A determined the amount the referring chiropractors
were paid.
53. The flat fee was a fixed amount and did not vary based on the degree of
involvement by the chiropractor in the MUA procedure. These flat-fee referral agreements
induced the chiropractors to refer their patients to SHSC. Although the referring chiropractors
would ostensibly assist in performing the actual MUA procedures, these payments were not
designed to reimburse the referring chiropractors for services they rendered. Instead, the
payments were made to induce referrals of the chiropractors' patients to enable the PSG Entities,
SHSC, the ACA Entities to submit inflated charges for professional fees, facility fees, and
anesthesia for the MUA procedures. Indeed, a fee of $4,000 for assisting in a brief procedure
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lasting only a few minutes over three days was significantly more than a chiropractor could ever
receive for three chiropractic office visits by a single patient.
54. Before referring a patient to SHSC for the MUA procedure, the chiropractor was
required to participate in an MUA "certification course." The certification purported to apply the
following national chiropractic standards as set forth by the National Association ofMUA
Physicians ("NAMUAP") to determine whether the person was an appropriate candidate for the
MUA procedure:
a. The patient had responded sub-optimally to conservative chiropractic
treatment, often with medical co-management, and continued to experience intractable pain or
biomechanical dysfunction.
b. The patient received sufficient care prior to recommending MUA, usually
lasting a minimum period of four to six weeks, but exceptions could apply depending on the
patient's individual needs. Manipulation procedures had been used in a clinical setting during
this period prior to recommending MUA.
c. The patient's level of reproduced pain interfered with activities of daily
living or caused disability and the diagnosed conditions fell within the recognized categories of
conditions responsive to MUA.
d. The patient's treatment of choice was manipulation of the spine or other
articulation, however, the patient's pain threshold, injury mechanism, chronicity of the problem,
or the fibrous tissue adhesions present, inhibited the effectiveness of conservative manipulation.
55. In contrast to the guidelines purported to apply to chiropractors, the following
osteopathic guidelines, which applied to D.O.s like Joseph M., provided that the MUA could be
appropriate in cases ofrestrictions and abnormalities of function, including recurrent muscle
spasm, range of motion restrictions, persistent pain secondary to injury, and repetitive motion
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trauma. The osteopathic guidelines also provided that MUA was an alternative approach after
the patient's failure to significantly improve with conservative treatment, including but not
limited to, osteopathic manipulative treatment ("OMT"), physical therapy, and medication. In
general, MUA was limited to patients who had somatic dysfunction, which:
a. failed to respond to conservative treatment in the office or hospital that
had included the use of OMT, physical therapy, and medication;
b. was so severe that muscle relaxant medication, anti-inflammatory
medication, or analgesic medications were of little benefit; or
c. resulted in biomechanical impairment which could be alleviated with the
use of the procedure.
56. Failure may be defined as a lack of significant response in 3-6 weeks in the acute
phase, 6-12 weeks in the post-acute phase, and greater than 12 weeks in the chronic phase. In
the chronic pain patient, these criteria may be met at the initial evaluation by an osteopathic
physician.
57. Under the osteopathic guidelines, MUA was usually a single dose procedure. As
with other OMT procedures, patients occasionally reported post-treatment reactions. The
reaction could last 24-48 hours and included musde soreness usually relieved by rest, warm
bath, and mild anti-inflammatory or analgesic medication. In some cases, a follow-up MUA
could be indicated after a three week interval. If a follow-up MUA was indicated with less than
a three week interval, a second opinion was recommended. After a second or follow-up MUA,
any additional MUA considerations should be with the consensus of appropriate consultants.
58. One MUA certification course was offered by Robert G. through his company,
Cornerstone Professional Education, Inc., ("Cornerstone"), which was sponsored primarily by,
and targeted to, chiropractors. Cornerstone marketed and taught MUA certification courses
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around the country. Robert G.'s MUA course involved a didactic lecture component, typically
held at a hotel conference room, with observation and proctorship components that were held at a
local ASC. Participants in the course could obtain their certification only after they performed
actual MUA procedures on at least one live patient, which the course participant was required to
provide.
59. While Robert G. taught his MUA course in several locations, in the fall of2008,
Robert G. taught at least one course in Cleveland, Ohio, and used SHSC's facility for the
observation and proctorship components. Participants at the course received template language
for use in documenting the clinical justification for MUA in their own chiropractic treatment
records, sample "letters of medical necessity," and template operative reports for the actual
MUA procedure.
60. CHRIS LIV A and others known and unknown to the' Grand Jury told the referring
chiropractors that PSG would handle all of the billing for the procedures. Neither PSG nor
SHSC provided copies of the MUA operative reports or other procedure records to the referring
chiropractors so that they could bill insurers for performing the MUA procedures, either as a co-
attending provider, otherwise known as a "second assist," or otherwise.
61. CHRIS LIV A and others known and unknown to the Grand Jury explained t? the
referring chiropractors that they would only receive their payment after the Insurers paid the
professional fees for the MUA procedures, which could often take several weeks or months.
PSG paid the chiropractors their referral fees by checks sent through the mail, which were issued
by one of the PSG Entities and typically signed by CHRIS LIV A or CAROL VIA.
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B. Inducements to Patients
62. PSG advised referring chiropractors that patients did not have to pay anything for
the procedure. In turn, the referring chiropractors, including SIMONE and FORTUNA,
informed their patients that they would not have to pay for the MUA. FRITZ instructed SHSC
employees not to take any money from the patients.
63. SHSC paid for the patients' hotel lodging during the three-day MUA procedure as
well as the patients' transportation to and from the hotel.
C. Insurance Verification for MUA Candidates
64. Employees at SHSC and PSG processed several documents to verify the existence
of insurance coverage from the Insurers before they scheduled patients for the MUA procedure.
a. SHSC MUA Patient Registration Form. The chiropractors were
instructed to execute and fax to PSG an SHSC "MUA Patient Registration Form." The top part
of this form, which was to be completed by the referring chiropractor's office, requested
information regarding the patient's insurance, including the insurance ID number, group number,
phone number, address, and name. The bottom part of this form was to be completed by PSG
upon receipt from the chiropractor. The form sought from the insurer the patient's deductible
and, among other things, which MUA CPT codes the insurer covered. Written on the form were
the numbers 22505, 27194, 23700, and 27275. The PSG employee then circled which codes
were covered by the insurer. In most cases, the insurer would cover only 27194, 23700, and
27275. CPT code 22505 was virtually never covered without pre-certification, and therefore,
virtually never circled.
b. Comprehensive Medical History. Another form the referring
chiropractor was instructed to fax to PSG before the MUA could be scheduled was the SHSC
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"Comprehensive Medical History" form. This form was typically completed by the patient. It
did not request the chiropractor's diagnosis.
c. Insurance Company Payment Policy. Because the MUA procedure at
SHSC was almost always out-of-network for the patients, the patients' insurer routinely sent the
payment on the claims submitted by the PSG Entities and the ACA Entities to the patient
directly. To ensure payment, the co-conspirators required the patients to sign the Insurance
Company Payment Policy form (the "Payment Form"). The Payment Form provided that the
patient "affirm[ ed] and attest[ ed] that I am in no way entitled to this reimbursement for medical
procedures, and I understand that this money is intended to pay [SHSC, PSG, and others]. ...
[I]n the event I receive a check or checks from the responsible insurance company as payment
for my procedure(s) or the insured's procedure(s), I will immediately or within forty eight hours
contact the appropriate party (Doctor or Surgical Center) about the check and return these funds
to the appropriate party(ies). I understand that I am ultimately responsible for all medical bills if
my insurance company fails to pay, and I will assist PSG or any entity with the collection of any
funds."
d. Referring Chiropractors' notes (referred to as "SOAP notes"). PSG
purported to require approximately six to eight weeks of patient care notes from the patient's
doctor before approving the patient for MUA. PSG also purported to require notes pertaining to
any follow-up care provided by the doctor after the MUA was performed. PSG purportedly
instructed the referring chiropractors to email or fax their SOAP notes to PSG before the MUA.
FRITZ instructed employees at PSG with no medical background to complete pre-approvals
based on medical necessity.
65. FRITZ made interstate wire calls from Florida to Ohio to convince the referring
chiropractors to add additional codes to their diagnoses in order to obtain insurance coverage.
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66. To secure payment for the MUA procedures, PSG employees placed telephone
calls to the Insurers using referral forms, supplied by the chiropractors, which listed the patients'
name, contact information, and insurance information. PSG's billing staff, which worked from
the PSG billing office in Boca Raton under the supervision of PSG employee MARK FRITZ,
used the forms to call the Insurers to inquire whether the patients had coverage for certain CPT
codes. For example, PSG's billing staff would indicate on these forms whether CPT code 22505
(spinal MUA) was covered, and if not, notate that the procedure should not be billed. These
worksheets were thus a critical component of the scheme, as they enabled Defendants to bill only
procedure codes that were unlikely to trigger further review, and thus conceal the scheme's
existence.
67. If the patient's insurance company did not provide coverage for MUA, PSG and
SHSC instructed Referring Chiropractors to "continue care as indicated." PSG and SHSC did
not permit MU As in the absence of insurance coverage, so Referring Chiropractors did not even
discuss the benefits of MU A with patients who might be interested in paying for the procedure
with their own money. The scheme focused on obtaining insurance money, not on providing a
medical benefit to patients.
D. Performance of the MUA Procedure
68. After PSG verified the patient's insurance coverage for the MUA, the patient was
scheduled for the three-day MUA procedure at SHSC, typically on a Thursday, Friday, and
Saturday. SHSC scheduled the patients on each day in 15-minute increments and could see up to
25 patients in one day.
69. CHRIS LIV A, FRITZ, and others known and unknown to the Grand Jury were
sometimes at SHSC on days when the MUA was being performed. On the first morning of the
MUA, typically Thursday morning, all of the chiropractors were gathered in the doctors' lounge
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at SHSC. There, CHRIS LIV A and others known and unknown to the Grand Jury distributed a
document referred to as the MUA Fee Routing Slip to the chiropractors. The MUA Fee Routing
Slip (hereinafter, the "Fee Routing Slip") was executed by the referring chiropractor at SHSC on
the first day of the patient's MUA. The Fee Routing Slip required the chiropractor to provide the
patient's name, the chiropractor's name, and the date. The Fee Routing Slip also listed a series
of CPT codes, under which were diagnosis codes, descriptions, and boxes for the chiropractor to
check. The chiropractors were supposed to sign their names to the Fee Routing Slips after they
were executed. An SHSC employee faxed a copy of the Fee Routing Slip to PSG.
70. CHRIS LIV A and others known and unknown to the Grand Jury at times rushed
the chiropractors into completing the Fee Routing Slips and instructed the chiropractors to
diagnose "pelvic ring fracture."
71. Before receiving anesthesia, Joseph M. interviewed each patient in the company
of the referring chiropractor, though Joseph M. did not ask specific questions about prior care.
During the interview, Joseph M. executed the following forms:
a. The MUA Routing Slip (hereinafter, the "Routing Slip"). The Routing
Slip required Joseph M. to list the patient's name, date, doctor (always himself), and "assistant,"
who he designated as the referring chiropractor. For "Day I" of the MUA, the Routing Slip
required Joseph M. to ask the patient about the pain level on a scale of I to 10. The Routing Slip
also required Joseph M. to circle on the form the patient's complaint in the categories of cervical
spine, thoracic spine, and lumbar spine only. The second page of the Routing Slip contained
sections for "Day 2" and "Day 3" of the MUA and required Joseph M. to again ask about the
patient's pain level on a scale of I to I 0 and the status of the patient's pain and range of motion.
Upon receipt, SHSC Administrator Leslie S. faxed the Routing Slip to Tess D. at PSG.
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b. The Optimization Letter. Joseph M. also executed a one sentence
document that the patient "has been evaluated by me preoperatively, I have reviewed the
patient's medical and social history, and the patient is optimized for the planned manipulation
under anesthesia." This letter was solely an evaluation of whether the patient could safely be
anesthetized.
c. The SHSC Patient History and Physical Form (hereinafter, the "History
Form"). The History Form listed the patient's name and the procedure that patient was to
receive. While there was some variety among the patients' History Forms, namely the patient's
medications and allergies, certain sections of the History Form were pre-completed for every
patient. Namely, the procedure for every patient was pre-completed as being "Manipulation
under anesthesia" and the "history of present illness" for every patient, regardless of actual
patient complaints, was "[p ]atient complaining of pain to neck, shoulders, arms, back, hips and
legs." The History Form was already part of the patients' charts before the MUA procedures.
72. Regardless of the patients' complaints or treatment history, the MUA procedure at
SHSC was the same for virtually every single patient: a full, spinal MUA, including the spine,
pelvis, and hips; the procedure also typically included manipulation of both shoulders.
73. After Joseph M. interviewed the patient, an anesthesiologist, typically NICKELS,
or a nurse anesthetist, Linda P., administered the anesthesia to the patient. Each day of the MUA
generated several operating room documents, including the following:
a. The SHSC Operating Room Record (hereinafter, the "Op Notes"). The
Op Notes indicated the length of time the patient was in the operating room, which for patients
receiving the MUA at SHSC was approximately ten minutes or less. The Op Notes listed the
"MD/DO," the chiropractor, the anesthesiologist and the CRNA (almost always NICKELS and
Linda P., respectively). The Op Notes described the procedures as "Manipulation under
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Anesthesia" only, without further detail. The Op Notes also required a "Pre Op Diagnosis" and a
"Post Op Diagnosis," which evolved over time and in almost every case was completed with the
phrase, "chronic pain."
b. The MUA Flowsheet (hereinafter, the "Flowsheet"). The Flowsheet
provided information such as medications, monitors, and vital signs, but also had a section for
"Preop Notes." Occasionally, the "Preop Notes" section would indicate that the patient received
a "full spinal MU A."
74. The procedure itself consisted of the D.O., Joseph M., performing the full, spinal
MUA while the referring chiropractor assisted. The procedure included manipulating the
patient's shoulders, for instance, regardless of whether the patient complained of shoulder pain.
The whole procedure, including anesthesia and the manipulation, typically took less than 10
minutes.
75. After the MUA was completed and the anesthesia had worn off, the patient was
interviewed, discharged from SHSC, and transported by SHSC to the hotel. In most instances,
the patient was not evaluated by the referring chiropractor. In almost every instance, the
identical procedure was repeated on the second and third days.
E. Insurance Billing
76. The next step in the scheme was for PSG to submit claim forms to the Insurers
that would maximize the probability of payment and minimize the detection of their fraud. PSG
billed the lnsurers for MUA procedures performed at SHSC on approximately 400 patients. As
discussed above, at least the vast majority of these procedures were in fact performed by the
referring chiropractors and the osteopathic physician, Joseph M.
77. To maximize the probability of payment and minimize detection of their fraud,
Defendants compartmentalized the operational and billing functions: the MUA procedures were
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performed at SHSC in the Northern District of Ohio, and the billing was performed at PSG, in
Boca Raton, Florida.
78. After the MUA procedures, SHSC transmitted via interstate wire from the
Northern District of Ohio to PSG in Florida several documents to further document the file.
Among the documents sent to PSG were the Fee Routing Slips, the Routing Slips, and the Op
Notes. With this information, FRITZ directed the staff at PSG to create the Operation Reports
(hereinafter, the "Op Reports"), which were faxed or emailed back to SHSC. The Op Reports
were created from templates using the Routing Slips that purported to document what happened
in the operating room. PSG sometimes sent the Op Reports to the Insurers as well as back to
SHSC for entry into the patients' files.
79. Part of the Op Reports' template that virtually never changed from patient to
patient was the "Procedures Performed" section and the "Pre-op Diagnosis Section." Virtually
every patient's Op Report stated the following:
"PROCEDURES PERFORMED:
1. Manipulation under pelvis requiring more than local anesthesia, RIGHT & LEFT
2. Manipulation under anesthesia, shoulder joint, RIGHT & LEFT
3. Manipulation of the spine requiring anesthesia, CERVICAL, THORACIC, & LUMBAR regions.
PRE-OP DIAGNOSIS:
I. Myalgia and Myositis; cervical, thoracic, lumbar, bilateral shoulder/peri-scapular musculature, pelvic girdle musculature, and bilateral hip regions (!CD( 729.1)
2. Spasm of muscle/muscle hypertonicity; cervical thoracic, lumbar, bilateral shoulder/peri-scapular musculature, pelvic girdle musculature, and bilateral pelvic regions (ICD-9 728.85)
3. Adhesive capsulitis of shoulder (ICD-9 726.0)."
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80. The Op Reports contained the D.0.'s name, Joseph M., at the end, providing that
Joseph M. "dictated" the Op Report but did not read it, when in truth and in fact, Joseph M. did
not dictate the report and never made the diagnoses contained in the Op Report. A separate Op
Report was generated for each day the patient received the MUA procedure.
81. FRITZ, CHRIS LIV A, and ED LIV A were responsible for determining what
ailment to list in the patients' notes. When PSG employees questioned this practice, they were
told to mind their own business.
82. As PSG papered its file, as was customary at all relevant times in this Indictment,
PSG used either the electronic equivalent of a standard CMS-1500 (formerly HFCA-1500) health
insurance claim form (hereinafter, the "Claim Forms") that required providers to accurately
describe the services provided to members using a specific Current Procedural Terminology code
(a "CPT Code") or an electronic UB-04 or UB-92 form that required the use of revenue codes for
certain facility services.
83. To fraudulently induce the Insurers to provide reimbursement for MU As that
were not covered (such as spinal MUA), PSG submitted Claim Forms using CPT or revenue
codes that masked and concealed the spinal MUA services actually provided. For example, PSG
used codes that described such procedures as "Treatment of Pelvic Ring Fracture or
Subluxation," "Manipulation of Hip Joint," and "Fixation of Shoulder" to submit claims for what
were, in reality, spinal MUA procedures.
84. For virtually every patient who received the MUA at SHSC, PSG described the
patients' diagnosis on the Claim Forms as being the following: 728.85 for muscle spasms, 726.0
for adhesive capsulitis, and 729. l for myalgia and myositis.
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85. For virtually every patient, PSG billed the Insurers for manipulation of the
shoulder under anesthesia using the CPT code 23700, and they did so bilaterally (i.e., both right
and left shoulders). PSG also included CPT codes for 27194, and if the Insurer would pay it,
22505.
86. On the Claim Forms for professional services, PSG submitted two forms: one
Claim Form for the primary doctor performing the MUA and a second Claim Form for the
secondary doctor performing the MUA. PSG listed Joseph M., the D.O., as the primary doctor.
PSG listed NICKELS, an M.D., on the Claim Forms as the secondary doctor, when they then
well knew that NICKELS, the anesthesiologist, administered the anesthesia and did not perform
the MUA. At no time did PSG list on the Claim Forms any of the Referring Chiropractors;
virtually all Claim Forms instead falsely listed Joseph M. as the "Referring Physician."
Defendants then well knew that including only the D.O. and the M.D. on the Claim Forms, and
concealing the Referring Chiropractors' roles on the Claim Forms, would maximize the
probability of payment and minimize detection of the fraud.
87. The Claim Forms were mailed to or filed electronically with the Insurers.
88. The electronic UB-04 or UB-92 forms for the SHSC facility services were
similarly billed using Joseph M.'s name and NPI number only.
89. PSG's bills for the MUA ranged from the tens of thousands to more than one
hundred thousand dollars.
90. The ACA Entities billed the insurers for the anesthesia component of the MUA
procedure. In turn, the ACA Entities split the proceeds from the MUA procedures performed at
SHSC with ED LIVA, CHRIS LIVA, and CAROL VIA through payment to one or more of their
entities, including ECSC and E&C.
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91. Insurance claims checks were sent directly to the patients because SHSC was out-
of-network for virtually all the patients' policies. The patients were instructed to endorse the
checks and send them to PSG or to their referring chiropractor. PSG took the money from the
patient's insurance company, and FRITZ wrote off the rest of the payment to make the patient
balance zero.
92. 7431 paid the referring chiropractors only if PSG was paid by the Insurers.
Likewise, PSG paid SHSC only if the Insurers paid PSG. FRITZ and ED LIV A determined the
amount the referring chiropractors were paid. CAROL VIA and CHRIS LIVA signed the checks
to the chiropractors and were the account holders on all of the PSG bank accounts used in
furtherance of the scheme.
F. Appeals of Denied Claims
93. If the Insurer denied the claim, then PSG called the insurers to convince them to
pay. If that did not work, PSG wrote appeal letters, which sometimes included documentation
regarding treatment of the patients. In connection with this process, PSG called the patients to
urge them to contact their insurance company, which PSG employees believed would enhance
the chance that the Insurers would pay.
94. If the Insurers finally refused payment, FRITZ caused PSG employees to contact
the patients and told them to pay and contact their insurance provider, despite assurances to the
contrary before the MUA procedures. PSG employees brought collections problems to FRITZ.
95. The ACA Entities also pursued appeals of denied claims for anesthesia related
billings.
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III. STATUTORY VIOLATIONS
COUNT! (Conspiracy to Commit Wire Fraud, 18 U.S.C. 1343 and Health Care Fraud, 18 U.S.C. 1347,
in violation of 18 U.S.C. 1349)
The Grand Jury charges:
96. The Grand Jury realleges and incorporates b)! reference the allegations set forth in
paragraphs 1 through 95 of the Indictment as if fully set forth herein.
97. From in or around December 2007, and continuing until at least approximately
September 2010, the exact dates being unknown to the Grand Jury, in the Northern District of
Ohio, Eastern Division, and elsewhere, Defendants PSG, CHRISTOPHER LIV A, EDWARD
LIV A, MARK FRITZ, JOHN NICKELS, JOHN FORTUNA, and ANTHONY SIMONE did
knowingly and intentionally combine, conspire, confederate and agree with each other, and with
others both known and unknown to the Grand Jury, to commit federal offenses, to wit:
a. To knowingly and willfully execute and attempt to execute a scheme and
artifice to defraud a health care benefit program, and to obtain, by means of false and fraudulent
pretenses, representations and promises, money owned by, and under the custody and control of,
a health care benefit program, namely, the Insurers, in connection with the delivery of or
payment for health care benefits, items and services, in violation of Title 18, United States Code,
Section 134 7 (Health Care Fraud); and
b. To devise and intend to devise a scheme and artifice to defraud the
Insurers, and to obtain money from the Insurers by means of false and fraudulent pretenses,
representations and promises, and for the purpose of executing such scheme and artifice, to
transmit and cause the transmission by means of wire communications in interstate commerce
any writing, sign, signal, and picture, in violation of Title 18, United States Code, Section 1343
(Wire Fraud).
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OBJECTS OF THE CONSPIRACY
98. The objects of the conspiracy were to unlawfully (1) induce patients to receive the
MUA procedure at SHSC; (2) defraud the Insurers; (3) obtain payments on claims to which the
conspirators knew they were not entitled; and ( 4) enrich the conspirators.
MANNER AND MEANS OF THE CONSPIRACY
99. To attain the objects of the conspiracy, Defendants employed the following
manner and means:
a. It was a part of the conspiracy that persons known and unknown to the
Grand Jury contacted the Insurers prior to the MUA procedures to inquire about what MUA
codes were covered services under the patients' insurance and then billed only those codes even
when non-covered manipulations were performed.
b. It was a part of the conspiracy that persons known and unknown to the
Grand Jury disregarded the actual diagnoses and procedure codes provided by some Referring
Chiropractors on the MUA Fee Routing Slips or otherwise and instead submitted claims for
adhesive capsulitis and pelvic ring fracture or subluxation.
c. It was a part of the conspiracy that persons known and unknown to the
Grand Jury used false diagnoses and procedure codes in, among other things, Claim Forms and
to populate patient files with false Op Reports.
d. It was a part of the conspiracy that persons known and unknown to the
Grand Jury submitted false claims and other records to reflect that the patients were diagnosed
by a D.O. and M.D. with conditions warranting MUA when, in fact, the D.O. and M.D. never
made such diagnoses.
e. It was a part of the conspiracy that persons known and unknown to the
Grand Jury falsely represented on professional and facility claim forms that the MUA procedures
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were performed by a D.O. and an M.D., when, in truth and in fact, the procedures were actually
performed by a D.O. and the Referring Chiropractor.
f. It was a part of the conspiracy that persons known and unknown to the
Grand Jury falsely represented on professional claim forms that Joseph M. was the Referring
Physician, when, in truth and in fact, the Referring Chiropractor was the Referring Physician.
g. It was a part of the conspiracy that the D.O. failed to apply recognized
osteopathic guidelines when performing MUA procedures.
h. It was a part of the conspiracy that persons known and unknown to the
Grand Jury attempted to obtain reimbursement for spinal MUA services by falsely representing
that other procedure codes were performed.
I. It was a part of the conspiracy that the ACA Entities and persons known
and unknown to the Grand Jury attempted to collect on claims for anesthesia services for
medically urmecessary MU As.
j. It was a part of the conspiracy that persons known and unknown to the
Grand Jury routinely waived the patients' required co-payments, deductibles, and other forms of
patient responsibility payments to induce the patients to undergo the MUA procedures.
k. It was a part of the conspiracy that persons known and unknown to the
Grand Jury failed to disclose to the Insurers that patients received incentives to increase the
number ofMUA procedures at SHSC, including payment of travel and lodging expenses and
waiver of co-payments, deductibles and other forms of patient responsibility.
I. It was a part of the conspiracy that persons known and unknown to the
Grand Jury appealed the denial of MUA claims by making interstate phone calls and submitting
interstate wire faxes to the Insurers.
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m. It was a part of the conspiracy that persons known and unknown to the
Grand Jury appealed the denial ofMUA claims by mailing appeal letters to the Insurers.
n. It was part of the conspiracy that PSG, CHRIS LIVA, FRITZ, and others
known and unknown to the Grand Jury marketed the profitability ofMUA procedures to JOHN
FORTUNA, ANTHONY SIMONE .and other chiropractors known and unknown to the Grand
Jury by offering up to $4,000 for the referral of patients for MUA procedures that would require
only approximately 10 minutes of the Referring Chiropractor's time for three consecutive days,
which was significantly more than a chiropractor could ever receive for three chiropractic office
visits by a single patient.
o. It was part of the conspiracy that as a result of the inducements offered by
PSG, CHRIS LIV A, FRITZ, and others known and unknown to the Grand Jury, JOHN
FORTUNA, ANTHONY SIMONE, and other chiropractors known and unknown to the Grand
Jury recommended to their patients that they undergo MUA procedures that were not medically
necessary.
p. It was part of the conspiracy that JOHN FORTUNA, ANTHONY
SIMONE, and other chiropractors known and unknown to the Grand Jury assured their patients
that they would not have to pay anything for the MUA procedure.
q. It was part of the conspiracy that PSG, CHRIS LIVA, FRITZ, and others
known and unknown to the Grand Jury agreed not to collect any payment from patients to induce
them to undergo the MUA procedure.
r. It was part of the conspiracy that PSG, CHRIS LIVA, FRITZ, and others
known and unknown to the Grand Jury sometimes paid for the patients' travel and lodging
expenses to induce them to undergo the MUA procedure.
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s. It was part of the conspiracy that JOHN FORTUNA, ANTHONY
SIMONE, and other chiropractors known and unknown to the Grand Jury failed to disclose to
their patients that they received $4,000 for referring the patient for each three-day MUA
procedure.
t. It was part of the conspiracy that as a result of the inducements offered by
PSG, CHRIS LIVA, FRITZ, and others known and unknown to the Grand Jury, JOHN
FORTUNA, ANTHONY SIMONE, and other chiropractors known and unknown to the Grand
Jury falsely diagnosed their patients as suffering from medical conditions they did not have in
order to obtain insurance coverage of the MUA procedure, which was crucial to later obtaining
compensation from the PSG entities.
u. It was part of the conspiracy that as a result of the inducements offered by
PSG, CHRIS LIV A, FRITZ, and others known and unknown to the Grand Jury, JOHN
FORTUNA, ANTHONY SIMONE, and other chiropractors known and unknown to the Grand
Jury arranged for and performed medically unnecessary MUA procedures on their patients.
v. It was part of the conspiracy that JOHN FORTUNA, ANTHONY
SIMONE, and other chiropractors known and unknown to the Grand Jury sought and received
compensation from the PSG entities for the medically unnecessary MUA procedures they
performed on their patients.
ACTS IN FURTHERANCE OF THE CONSPIRACY
100. In furtherance of the conspiracy and to effect its unlawful object, Defendants
committed, and caused to be committed, the following acts in furtherance of the conspiracy in
the Northern District of Ohio, and elsewhere:
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a. In the sunnner of2008, FRITZ informed patient Carol W. that it was
appropriate to bill MM for an MUA with a pelvic ring fracture or subluxation diagnosis even
though Carol W. did not have any problems with her pelvic ring.
b. In the summer of2008, patient Carol W. discussed PSG's billing of an
MUA with a pelvic ring fracture or subluxation diagnosis with CHRIS LIV A, and he told her
that she did not know what she was talking about and that she better not make any trouble.
c. In the summer of 2008, patient Carol W. discussed PSG' s billing of an
MUA with a pelvic ring fracture of subluxation diagnosis with CHRIS LIVA, and ED LIV A
stated that he would pay to have someone kill Carol W.
d. On or about February 20, 2009, FORTUNA identified patient John M. as a
candidate for MUA.
e. On or about March 11, 2009, FORTUNA wrote a letter of medical
necessity for patient John M. that included false diagnoses relating to the shoulders and pelvis.
f. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient John M., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 12, 2009.
g. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient John M., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 13, 2009.
h. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
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patient John M., billing CPT codes 27194, 23 700 RT, and 23 700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 14, 2009.
1. On or about February 16, 2009, SIMONE identified patient Jerome P. as a
candidate for MUA.
J. On or about March 2, 2009, SIMONE falsely diagnosed patient Jerome P.
with pelvic ring subluxation.
k. On or about March 11, 2009, SIMONE wrote a letter of medical necessity
for patient Jerome P. that included false diagnoses relating to the shoulders and pelvis.
l. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Jerome P., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 12, 2009.
m. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Jerome P., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 13, 2009.
n. On or about May 7, 2010, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Jerome P., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 14, 2009.
o. On or about October 10, 2008, PSG caused the U.S. Postal Service to send
by certified mail to MM a CMS-1500 for patient Michelle B-1, billing CPT codes 27194 RT,
27194 LT, 27275 RT, 27275 LT, 23700 RT, and 23700 LT, listing diagnosis codes 728.85,
726.5, and 726.0 for services performed by Joseph M. at SHSC on or about July 24, 2008.
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p. On or about October 10, 2008, PSG caused the U.S. Postal Service to send
by certified mail to MM a CMS-1500 for patient Michelle B-1, billing CPI codes 27194 RT,
27194 LT, 27275 RT, 27275 LT, 23700 RT, and 23700 LT, listing diagnosis codes 728.85,
726.5, and 726.0 for services performed by Joseph M. at SHSC on or about July 25, 2008.
q. On or about October 10, 2008, PSG caused the U.S. Postal Service to send
by certified mail to MM a CMS-1500 for patient Michelle B-1, billing CPI codes 27194 RT,
27194 LT, 27275 RT, 27275 LT, 23700 RT, and 23700 LT, listing diagnosis codes 728.85,
726.5, and 726.0 for services performed by Joseph M. at SHSC on or about July 26, 2008.
r. On or about December 31, 2008, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM for patient Jennifer
T., billing CPT codes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, listing diagnosis codes of
728.85 and 726.0 for services performed by Joseph M. at SHSC on or about December 18, 2008.
s. On or about December 31, 2008, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM for patient Jennifer
T., billing CPT codes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, listing diagnosis codes of
728.85 and 726.0 for services performed by Joseph M. at SHSC on or about December 19, 2008.
t. On or about December 31, 2008, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM for patient Jennifer
T., billing CPTcodes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, listing diagnosis codes of
728.85 and 726.0 for services performed by Joseph M. at SHSC on or about December 20, 2008.
u. On or about April 29, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Hadley C., billing CPTcodes 27194, 23700 RT, 23700 LT, and 22505, and listing
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diagnosis codes 728.85, 726.0, and 729.1 for services performed by NICKELS on or about April
23, 2009.
v. On or about April 29, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Hadley C., billing CPT codes 27194, 23700 RT, 23700 LT, and 22505, and listing
diagnosis codes 728.85, 726.0, and 729. l for services performed by NICKELS on or about April
24, 2009.
w. On or about April 29, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS- I 500 for
patient Hadley C., billing CPT codes 27194, 23 700 RT, 23 700 LT, and 22505, and listing
diagnosis codes 728.85, 726.0, and 729.1 for services performed by NICKELS on or about April
25, 2009.
x. On or about June 26, 2009, the ACA Entities caused the U.S. Postal
Service to send by regular mail to MM, a CMS-1500 for patient Hadley C., billing for anesthesia
services performed by NICKELS beginning on or about April 23, 2009.
y. On or about December 8, 2009, the ACA Entities caused the U.S. Postal
Service to send by regular mail to MM, appeal documents in connection with patient Hadley C.,
billing for anesthesia services performed by NICKELS beginning on or about April 23, 2009.
z. On or about January 9, 2010, the ACA Entities caused the U.S. Postal
Service to send by regular mail to MM, appeal documents in connection with patient Hadley C.,
billing for anesthesia services performed by NICKELS beginning on or about April 23, 2009.
aa. On or about January 21, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Karline L., billing CPT codes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, and listing
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diagnosis codes 728.85 and 726.0 for services performed by Joseph M. on or about January 15,
2009.
bb. On or about January 21, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Karline L., billing CPT codes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, and listing
diagnosis codes 728.85 and 726.0 for services performed by Joseph M. on or about January 16,
2009.
cc. On or about January 21, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Karline L., billing CPT codes 27194 RT, 27194 LT, 23700 RT, and 23700 LT, and listing
diagnosis codes 728.85 and 726.0 for services performed by Joseph M. on or about January 17,
2009.
dd. On or about February 23, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Norman E., billing CPT codes 27194 62 RT, 27194 62 LT, 23700 62 RT, and 23700 62
LT, and listing diagnosis codes 728.85 and 726.0 for services performed at SHSC by NICKELS
on or about February 12, 2009.
ee. On or about February 23, 2009, Defendants transmitted,.and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
patient Norman E., billing CPT codes 27194 62 RT, 27194 62 LT, 23700 62 RT, and 23700 62
LT, and listing diagnosis codes 728.85 and 726.0 for services performed at SHSC by NICKELS
on or about February 13, 2009.
ff. On or about February 23, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to MM, a CMS-1500 for
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patient Norman E., billing CPTcodes 27194 62 RT, 27194 62 LT, 23700 62 RT, and 23700 62
LT, and listing diagnosis codes 728.85 and 726.0 for services performed at SHSC by NICKELS
on or about February 14, 2009.
gg. On or about March 13, 2009, Defendants transmitted, and caused to be
transmitted, a wire communication from PSG in Boca Raton, Florida to Aetna in El Paso, Texas,
a CMS-1500 for patient Robert P., billing CPT codes 27194 62 RT, 27194 62 LT, 23700 62 RT,
and 23700 62 LT, and listing diagnosis codes of728.85 and 726.0 for services performed by
NICKELS at SHSC on or about February 26, 2009.
hh. On or about July 9, 2009, PSG caused the U.S. Postal Service to send by
certified mail to United in Atlanta, Georgia, medical documents for patient Pamela H. for
services performed at SHSC by Joseph M. on or about May 28, 2009, through May 30, 2009.
11. On or about November 12, 2009, PSG caused the U.S. Postal Service to
send by certified mail to Salt Lake City, Utah, medical documents for Pamela K. for services
performed by Joseph M. at SHSC on or about January 15, 2009, through on or about January 17,
2009.
JJ. On or about October 6, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Darrell E., billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for services
performed by Joseph M. at SHSC on or about September 25, 2008.
kk. On or about October 6, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Darrell E., billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for services
performed by Joseph M. at SHSC on or about September 26, 2008.
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II. On or about October 6, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Darrell E., billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for services
performed by Joseph M. at SHSC on or about September 27, 2008.
mm. On or about November 12, 2008, PSG caused the U.S. Postal Service to
send by certified mail to Anthem, a CMS-1500 for patient Denise H., billing CPT codes 27194
RT, 27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about November 6, 2008.
nn. On or about November 12, 2008, PSG caused the U.S. Postal Service to
send by certified mail to Anthem, a CMS-1500 for patient Denise H., billing CPT codes 27194
RT, 27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about November 7, 2008.
oo. On or about November 12, 2008, PSG caused the U.S. Postal Service to
send by certified mail to Anthem, a CMS-1500 for patient Denise H., billing CPT codes 27194
RT, 27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes 728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about November 8, 2008.
pp. On or about October 3, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Michelle B-2, billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes of728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about September 25, 2008.
qq. On or about October 3, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Michelle B-2, billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes of728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about September 26, 2008.
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rr. On or about October 3, 2008, PSG caused the U.S. Postal Service to send
by certified mail to Anthem, a CMS-1500 for patient Michelle B-2, billing CPT codes 27194 RT,
27194 LT, 23700 RT, and 23700 LT, and listing diagnosis codes of728.85 and 726.0 for
services performed by Joseph M. at SHSC on or about September 27, 2008.
ss. On or about June 4, 2009, NICKELS transmitted, and caused to be
transmitted, a wire communication, an email to CHRIS LIV A, demanding payment for "second
assist fees" in the approximate amount of $18,000.
tt. On or about September 7, 2009, NICKELS transmitted, and caused to be
transmitted, a wire communication, an email to CHRIS LIV A, demanding payment for "second
assist fees" in the approximate amount of$15,000.
uu. On or about August 9, 2010, NICKELS caused the U.S. Postal Service to
send by mail a letter to CHRIS LIV A, negotiating the terms of a position at SHSC as Medical
Director and demanding payment in the approximate amount of$19,000.
LOSSES ATTRIBUTABLE TO THE CONSPIRACY
101. From in or around July 2008, to approximately September 2010, the co-
conspirators caused the submission of approximately $20 million in false and fraudulent claims
to the Insurers.
102. From in or around July 2008, to approximately September 2010, the co-
conspirators caused the Insurers ~o pay through mailed checks and wire transfers approximately
$3 million as the result of the submission of false and fraudulent claims.
All in violation of Title 18, United States Code, Section 1349.
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COUNT2 (Wire Fraud- 18 U.S.C. 1343)
The Grand Jury further charges:
103. The Grand Jury realleges and incorporates by reference the allegations set forth in
paragraphs 1 through 95 and the factual allegations contained in paragraph 99 of the Indictment
as if fully set forth herein.
104. From in or around December 2007 through at least approximately September
2010, in the Northern District of Ohio, Eastern Division, and elsewhere, Defendants PSG,
CHRISTOPHER LIV A, EDWARD LIVA, MARK FRITZ, JOHN NICKELS, JOHN
FORTUNA, and ANTHONY SIMONE, devised and intended to devise a scheme and artifice to
defraud the Insurers, and attempting to do so, and for obtaining money and property by means of
false and fraudulent pretenses, representations, and promises. On or about May 7, 2010, in the
Northern District of Ohio, Eastern Division, and elsewhere, for the purpose of executing the
above-described scheme and artifice, Defendants transmitted, and caused to be transmitted, by
means of wire communication in interstate commerce any writing, sign, signal and picture, to
wit, a CMS-1500 for patient John M., billing CPT codes 27194, 23700 RT, and 23700 LT, listing
diagnosis codes 728.85 and 726.0 for services performed by NICKELS on or about March 12,
2009, from PSG in Boca Raton, Florida, to Medical Mutual in Cleveland, Ohio.
All in violation of Title 18, United States Code, Section 1343.
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COUNT3 (Health Care Fraud- 18 U.S.C. 1347)
The Grand Jury further charges:
105. The Grand Jury realleges and incorporates by reference the allegations set forth in
paragraphs! through 95 and the factual allegations contained in paragraph 99 of the Indictment
as if fully set forth herein.
I 06. From in or around July 2008, through at least approximately September 2010, in
the Northern District of Ohio, Eastern Division, and elsewhere, Defendants PSG,
CHRISTOPHER LIV A, EDWARD LIVA, MARK FRITZ, JOHN NICKELS, JOHN
FORTUNA, and ANTHONY SIMONE knowingly and willfully executed, and attempted to
execute, a scheme and artifice to defraud the Insurers' health care benefit programs, and to
obtain, by means of false and fraudulent pretenses, representations and promises described
herein, money and property owned by, and under the custody and control of, the Insurers' health
care benefit programs, in connection with the delivery of and payment for health care benefits,
items and services, in violation of Title 18, United States Code, Section 1347. On or about May
7, 2010, in the Northern District of Ohio and elsewhere, Defendants, having knowingly and
willfully executed and attempted to execute the scheme and artifice to defraud the Insurers, and
to obtain money from the Insurers, by means of the false and fraudulent pretenses,
representations and promises described above, did execute and attempt to execute the scheme by
transmitting, and causing to be transmitted from PSG to Medical Mutual, a CMS-1500 for
patient John M., billing CPT codes 27194, 23700 RT, and 23700 LT, listing diagnosis codes
728.85 and 726.0 for services performed by NICKELS on or about March 12, 2009.
All in violation of Title 18, United States Code, Section 1347.
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COUNT4 (Conspiracy to Commit Money Laundering- 18 U.S.C. l 956(h))
The Grand Jury further charges:
107. The Grand Jury realleges and incorporates by reference the factual allegations set
forth in paragraphs 1 through 95 and the factual allegations contained in paragraph 99 of the
Indictment as if fully set forth herein.
108. From in or around December 2007, and continuing until at least approximately
September 20 I 0, the exact dates being unknown to the Grand Jury, in the Northern District of
Ohio, Eastern Division, and elsewhere, Defendants CHRISTOPHER LIV A, EDWARD LIV A,
CAROLYN VIA, MARK FRITZ, JOHN NICKELS, JOHN FORTUNA, ANTHONY SIMONE,
and others both known and unknown to the Grand Jury, did knowingly and intentionally
combine, conspire, confederate and agree together and with diverse other persons both known
and unknown to the Grand Jury to knowingly and intentionally conduct and attempt to conduct a
series of financial transactions affecting interstate commerce, which transactions involved the
proceeds from a specified unlawful activity; that is, violations of Title 18, United States Code,
Sections 1343 (Wire Fraud) and 1347 (Health Care Fraud), knowing that the transactions
involved the proceeds of some form of unlawful activity, and knowing that they were engaging
in a monetary transaction in criminally derived property of a value greater thiill $10,000 derived
from said unlawful activity, in violation of Title 18, United States Code, Section 1957.
ACTS IN FURTHERANCE OF THE CONSPIRACY
A. Diamond Purchase
109. On or about December I 0, 2008, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check 1016 in the amount of$100,000.00 in the business name ofECSC
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Anesthesia Services, LLC, into the Northern Trust account number x2853 in the business name
of E&C.
110. On or about December 12, 2008, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check I 004 in the amount of $33,000.00, drawn on Northern Trust
account number x2853 in the business name of E&C, into the Northern Trust account number
x8947 in the name of Physician's Marketing & Management.
111. On or about January 9, 2009, CAROL VIA and CHRIS LIVA deposited and
caused to be deposited check 1023 in the amount of$100,000.00 from ECSC Anesthesia
Services, LLC, into the Northern Trust account number x2853 in the business name of E&C.
112. On or about January 10, 2009, CHRIS LIVA, CAROL VIA and ED LIVA issued
and caused to be issued check 1007 in the amount of $33,000.00, drawn on Northern Trust
account number x2853 in the business name of E&C, payable to "ECJ" (known as East Coast
Jewelers) to purchase 4.18 karat diamond stud earrings for CAROL VIA and ED LIVA.
113. On or about January 29, 2009, CAROL VIA and ED LIV A issued and caused to
be issued check 1469 in the amount of$30,000.00, drawn on Northern Trust account number
x8947 in the name of Physician's Marketing & Management, payable to ECJ to purchase 4.18
karat diamond stud earrings for CAROL VIA and ED LIV A.
B. CHRIS LIV A's Residence Purchase
114. On or about October 23, 2008, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check 1093 in the amount of$12,500.00, drawn on Northern Trust
account number x2735 in the business name of SHSC, into the Northern Trust account number
x9303 in the name of CAROL VIA.
115. On or about November 4, 2008, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check 1113 in the amount of$37,406.83, drawn on Northern Trust
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account number x2735 in the business name of SHSC, into the Northern Trust account number
x9303 in the name of CAROL VIA.
116. On or about August 31, 2009, CAROL VIA and CHRIS LIV A wire transferred
and caused to be wire transferred the amount of$250,000.00, from the Northern Trust account
number x9303 in the name of CAROL VIA, to Shore to Shore Title Inc., which purchased
CHRIS LIV A's real property located at 863 Enfield Street, Boca Raton, Florida, deeded in the
name CHRIS LIV A.
C. CAROL VIA's Residence Purchase
117. On or about April 16, 2009, CAROL VIA and CHRIS LIVA deposited and
caused to be deposited check 1049 in the amount of$60,000.00, from ECSC Anesthesia Services
LLC, into Northern Trust account number x2853 in the business name of E&C.
118. On or about April 16, 2009, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check I 072 in the amount of $40,000.00, from ECSC, into Northern Trust
account number x2853 in the business name of E&C.
119. On or about April 17, 2009, CAROL VIA and CHRIS LIV A deposited and
caused to be deposited check I 073 in the amount of $12,500.00, from ECSC, into Northern Trust
account number x2853 in the business name of E&C.
120. On or about April 22, 2009, CAROL VIA and CHRIS LIVA deposited and
caused to be deposited check 1015 in the amount of$13,000.00, drawn on Northern Trust
account number x2853 in the business name of E&C, into Northern Trust account number x8936
in the name of CAROL VIA.
121. On or about April 22, 2009, CAROL VIA and CHRIS LIVA deposited and
caused to be deposited check 1016 in the amount of$30,000.00, drawn on Northern Trust
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account number x2853 in