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LA podiatrist arrested for alleged inflated billing and kickback scheme

News: 2019 Press Release

For Release: February 13, 2019
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LA podiatrist arrested for alleged inflated billing and kickback scheme
More than $360,000 loss to the insurer

LOS ANGELES, Calif. — Licensed podiatrist, Schlomo Schmuel, 53, of Sherman Oaks, self-surrendered to California Department of Insurance detectives on two felony counts of fraud after allegedly inflating bills and billing for services not rendered or not medically necessary. The resulting loss to an insurer totaled more than $360,000.


“This medical professional allegedly used his position of trust to have unneeded medical treatment prescribed to patients in order to scam hundreds of thousands from insurers,” said Insurance Commissioner Ricardo Lara. “My department will continue to investigate fraud and work with our law enforcement partners to ensure California consumers and insurers are protected.”


Schmuel operated two businesses, Innovative Orthopedic Solutions and Diamond Orthopedic Services. While running these two businesses, Schmuel allegedly billed for a hot/cold water unit, also known as a Vital Wrap System, using two combined Healthcare Common Procedure Coding Systems (HCPCS) codes. The hot/cold unit, used to reduce pain and swelling after undergoing surgery, is a single component and requires only one HCPCS code. By using the two different codes, Schmuel allegedly inflated the invoices and billed for services not rendered.


Department investigators allege Schmuel was also involved in an unlawful kickback scheme where he paid to have the hot/cold water unit prescribed to injured workers, despite it not being medically necessary. Schmuel allegedly paid a “marketer” $100 for each unit that was prescribed by another medical provider who treated the injured workers with the unit provided by Schmuel.


Schmuel was booked into the Clara Shortridge Foltz Criminal Justice Center. The Los Angeles County District Attorney’s Office is prosecuting this case.


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Media Note:

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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