In a previous post about health insurance fraud we wrote, “These fraudulent activities take a wide variety of forms, bearing witness to the inventiveness of those bent on health insurance fraud.” https://www.videntpartners.com/blog/2024/many-faces-health-insurance-fraud. The fraudulent scheme in today’s case, U.S. v. Julian Omidi (9th Cir. 1/16/2025), bears witness to that inventiveness. Perhaps this astonishing (to me) scheme will not seem exceptional to prosecutors and defense counsel who work in this particular field, but I’ve read a lot of health insurance fraud cases and I’ve never seen anything like it. Note: The scheme was carried out in the 2010s, before Ozempic was approved for weight loss.
What follows is the court’s summary of the facts and the procedural history. A review of the court’s discussion of the legal issues is unnecessary for present purposes, as it agreed with the district court analysis of those issues.
Julian Omidi and his business, Surgery Center Management, LLC (“SCM”), appeal from the district court’s forfeiture judgment of nearly $100 million, which came after a lengthy criminal health insurance fraud trial and years of litigation. . . .
. . . . Omidi helmed a massive health insurance fraud scheme called “Get Thin.” Omidi’s scheme promised dramatic weight loss through Lap-Band surgery and other medical procedures. Using catchy radio jingles and ubiquitous billboard ads, Omidi urged potential patients to call 1-800-GET-THIN and “Let Your New Life Begin.”
Through the 800 number and an associated call center, Get Thin funneled patients to a network of consultants whom Omidi tasked to “close a sale.” Omidi instructed these consultants, who lacked any medical credentials, to schedule patients for expensive medical tests and procedures, irrespective of medical need, to unearth comorbidities that could help get the lucrative Lap-Band surgery pre-approved by insurers. When patients opted out of the surgery or insurers declined coverage, consultants pushed other costly treatments that could still be billed, such as tummy tucks or nutritional advising. Consultants were trained to prioritize customers with the most generous insurance plans and follow up incessantly to ensure they attended their preoperative appointments. Omidi carefully tracked patients’ show rate and paid consultants commissions when their customers underwent procedures. . . .
Once patients were successfully recruited, Omidi directed his employees to falsify patient data, fabricate diagnoses, and misrepresent the extent of physician involvement in their treatments to deceive insurance companies into paying for thousands of sleep studies, endoscopies, Lap-Band insertions, and other costly treatments. . . .
. . . . In a nutshell, the government alleged that Omidi and SCM defrauded insurance companies by submitting false claims for reimbursement. The claims included, among other misrepresentations, fraudulent patient test results and false assertions that a doctor had reviewed and approved the medical procedures at issue. After three-and-a-half years of pretrial litigation and a 48-day jury trial, the jury convicted Omidi and SCM of all charges. The district court sentenced Omidi to 84 months’ imprisonment and fined SCM over $22 million.
At a subsequent hearing, the district court considered forfeiture for both defendants. The government argued that the total proceeds of Get Thin’s business during the fraud period—$98,280,221—should be forfeited because the whole business was “permeated with fraud.” In other words, even if some parts of Get Thin seemed legitimate, the government argued that “all proceeds of that business are forfeitable,” as “the proceeds of that so-called ‘legitimate’ side of the business would not exist but for the ‘fraudulent beginnings’ of the entire operation” (namely, the call center). . . .
[T]he district court agreed with the government. Reviewing the relevant statutes and persuasive out-of-circuit authority, it agreed that the $98,280,221 in proceeds were directly or indirectly derived from the fraudulent Get Thin scheme. The district court reasoned that because patients “were recruited through the call center as part of the overall fraudulent billing scheme . . . proceeds from all services at least indirectly resulted from the scheme.” This was true even though some patients were redirected to less invasive, cheaper procedures than the high-priced Lap-Band surgery, and even though some procedures may have been medically appropriate in individual cases.
After a full discussion of the legal issues and the application of the law to the facts, the court of appeals concluded its opinion as follows:
[A]ll Get Thin proceeds were derived from a single intake process that, by design, disregarded medical necessity in favor of profit as part of the larger fraudulent billing scheme. Accordingly, we follow our sister circuits to conclude that in a forfeiture case seeking proceeds of a fraud scheme under § 981(a)(1)(C), there is no so-called “100% Fraud Rule.” All proceeds directly or indirectly derived from a health care fraud scheme like Get Thin—even if a downstream legitimate transaction conceivably generated some of those proceeds—must be forfeited. The district court did not err in so concluding.
