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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:

Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. 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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