(CN) — The chief executive officer of a chain of medical imaging businesses was sentenced to five years in federal prison Friday following his conviction in what prosecutors said was the biggest workers' compensation fraud scheme in the history of Southern California.
Sam Solakyan, 40, was also ordered to pay $30 million in restitution to the defrauded insurers, according to a statement Friday from the U.S. attorney's office in Los Angeles.
Solakyan, of Glendale, California, was found guilty in July of conspiracy to commit health care fraud, conspiracy to commit honest services mail fraud and 11 counts of honest services mail fraud. Prosecutors argued that he paid $9 million in kickbacks to doctors to send patients to him for medically unnecessary MRIs that were billed to the California Workers' Compensation System. The scheme generated $250 million in fraudulent claims, according to the government.
According to the California Department of Insurance, workers' comp fraud costs the state between $1 billion to $3 billion a year. In the U.S. the amount is $30 billion a year. Workers can defraud the system by exaggerating or fabricating on-the-job injuries, and doctors and lawyers can conspire to create false or exaggerated claims, over treating and over prescribing drugs.
Federal prosecutors had sought more than 15 years in prison for Solakyan, who they said had devised a cross-referral scheme that incentivized "cappers" to herd patients to physicians who overprescribed ancillary services. All but one of Solakyan's co-conspirators have pleaded guilty, they said.
"Despite overwhelming evidence of his criminality and the myriad fraudulent and unnecessary services that he generated, defendant refused to accept such responsibility and instead proceeded to trial, where he obstructed justice by testifying falsely time and again," lawyers for the Justice Department said in their sentencing memorandum.
Lawyers representing Solakyan didn't immediately respond to an email seeking comment on the sentence.
In their sentencing request, his lawyers had asked for a prison term of no more than six months. They said that Solakyan had come with his family to California as refugees from Armenia when he was a boy and had become the main provider for his family by the time he was 17.
His lawyers also cited Solakyan's trauma for sexual abuse as a child, his mental health issues, marital problems and his drug addiction in their request for leniency.
"The Court might recall that his eventual arrest on the instant charges was executed at a hotel where he had been staying, and while Sam was in the throes of his addiction," his lawyers said. "This was the unequivocal 'bottom' for Mr. Solakyan, from which he has building ever since."
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