U.S. Department of Labor Investigation Results in Federal Court Sentencing Long Beach Spa Owner for Maritime Union Healthcare Plan Fraud
LOS ANGELES, CA – After an investigation by the U.S. Department of Labor's Employee Benefits Security Administration (EBSA), the U.S. District Court for the Central District of California has sentenced Erica Carey – former owner of Long Beach Medi-Spa in Long Beach, California – to three years' probation and ordered her to pay $366,740 in restitution for defrauding a maritime union welfare plan.
EBSA investigators found that Carey submitted fraudulent medical claims, and allowed co-conspirators and brothers Barry and Dalibor Kabov – who owned and operated Global Compounding Pharmacy in West Los Angeles – to use office space at the spa where they wrote prescriptions for members of the International Longshore and Warehouse Union-Pacific Maritime Association Welfare Plan.
EBSA investigators found that Carey helped the Kabovs to bill the plan using participants who did not know of, or otherwise, authorize the prescriptions. Carey also provided blank prescription forms to the Kabovs that they used to generate prescriptions falsely billed to the plan. In return, they made more than $360,000 in kickback payments to Carey between January and July 2015.
"These individuals appallingly used and harmed a union-sponsored health plan to further their drug trafficking schemes," said Employee Benefits Security Administration Regional Director Crisanta Johnson, in Los Angeles, California. "The Employee Benefits Security Administration will continue to work diligently with our investigative partners to bring justice to such bad actors and protect the health benefits that hard-working families count on."
EBSA, the Department's Office of the Inspector General, the U.S. Drug Enforcement Administration and the IRS jointly investigated the case; and the U.S. Attorney's Office in the Central District of California prosecuted the case.
In January 2017, after a three-week jury trial, the U.S. District Court for the Central District of California convicted the Kabovs of illegally selling oxycodone, hydromorphone and hydrocodone. The U.S. Department of Justice reported that their wide-ranging conspiracy, which also illegally imported anabolic steroids, earned them more than $3 million and included their failure to report $1.5 million in earnings to the IRS. On March 13, 2019, District Judge Dolly M. Gee sentenced the brothers to each serve more than 10 years in prison.
Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at https://www.dol.gov/agencies/ebsa
EBSA's mission is to assure the security of the retirement, health and other workplace related benefits of America's workers and their families. EBSA will accomplish this mission by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.
The mission of the Department of Labor is to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.