Insurer sues provider: claims he committed fraud

August 25, 2003 WOODLAND HILLS, Calif. - Zenith Insurance Company announced last week that it has sued Yorba Linda based N-Care, and its owner, Robert Bohacs, for allegedly charging too much for DME. Filed with the Orange County Superior Court, the lawsuit alleges that N-Care and Bohacs conspired with physicians and others to misrepresent durable medical equipment dispensed to injured workers and circumvent California law regulating the amounts that can be charged for such equipment. Generally, injured workers obtain canes, supports and other durable medical equipment from their physicians or else purchase such equipment directly from manufacturers or distributors. Under California's workers' compensation laws, a physician may seek reimbursement for durable medical equipment dispensed to injured workers for the physician's cost plus an additional 50% of the physician's cost not to exceed $25. The complaint alleges that N-Care and Mr. Bohacs entered into a scheme with physicians whereby: (i) the physicians used N-Care and Mr. Bohacs as "middlemen" to dispense and bill for durable medical equipment; (ii) N-Care and Mr. Bohacs misrepresented the durable medical equipment that was dispensed; and (iii) N-Care and Mr. Bohacs billed exorbitant amounts far in excess of the amounts that the physicians could lawfully bill. Examples alleged in the complaint include N-Care and Bohacs billing Zenith $995 for a purported "Bio-Care Home Cervical Kit" that was in fact nothing more than an orthopedic pillow that sells for $14 to $16. The complaint also alleges that N-Care and Bohacs billed Zenith $995 for a "Bio-Care Therma-Stim" that was actually an electric moist heat pack that sells for $62-$75. The complaint further alleges that, in order to conceal the fact that defendants had purchased these items for a fraction of the amounts billed to Zenith, N-Care and Bohacs falsely represented to Zenith that N-Care had manufactured, rather than purchased, the durable medical equipment. The complaint alleges that these acts not only are deceptive, misleading and unfair, but they also are illegal. According to the complaint, the defendants have violated various criminal and civil statutes prohibiting insurance fraud. The complaint alleges that by these deceptive, misleading, unfair and illegal acts and practices, defendants committed unfair competition in violation of California's Unfair Competition Law. The complaint seeks a permanent injunction as well as restitution for monies paid to N-Care. Zenith is a specialty workers compensation insurer headquartered in Woodland Hills, California.