Justice Department flag in Washington
Justice Department flag in Washington. File photo

The former CEO of several Southern California medical imaging companies was sentenced Friday to five years in federal prison for orchestrating a scheme in which more than $250 million in claims for medical services were fraudulently submitted through the state workers’ compensation system.

Sam Sarkis Solakyan, 40, of Glendale, was found guilty by a San Diego federal jury last year of running a “cross-referral” scheme in which physicians received money or new patient referrals in exchange for the referral of workers’ compensation patients, according to the Department of Justice.

In addition to custody, U.S. District Judge Cynthia Bashant ordered Solakyan to pay nearly $30 million in restitution to various insurers and banned him from working in the healthcare and workers compensation industries during a three-year period of supervised release that will begin once he’s released from prison.

Prosecutors say patients were referred to Solakyan’s companies for examinations that were billed to insurance companies. Defendants then entered into “various sham agreements” to conceal the true nature of the bribes and kickbacks, such as contracts for various services like marketing, administrative services and scheduling.

The DOJ said Solakyan’s recruiters required physicians to refer a minimum number of patients in order to receive money and/or “cross-referrals.” If physicians didn’t meet the quota, the bribes and referrals stopped.

“[Solakyan] paid some $9 million in kickbacks in order to generate over $250 million in fraudulent medical billings, the vast majority of which were for MRIs [magnetic resource images] that were…totally medically unnecessary,” prosecutors wrote in a sentencing memorandum.

“[Solakyan] devised, and through his kickbacks fueled, a cross-referral scheme that incentivized [co-conspirators] to herd patients to physicians who overprescribed ancillary services in exchange for cash and other economic benefits.”

Solakyan was the CEO of San Diego MRI Institute and also operated diagnostic imaging facilities throughout the state, including in the Bay Area, as well as San Diego, Los Angeles and Orange counties, the DOJ said.

Following an eight-day trial, he was convicted of one count of conspiracy to commit honest services mail fraud and health care fraud and 11 counts of honest services mail fraud.