13 arrested in medical kickback scheme that generated hundreds of thousands in profit

The owner of a network of New Jersey diagnostic imaging centers was arrested for allegedly leading a criminal enterprise that provided hundreds of thousands of dollars in illegal kickbacks to doctors and chiropractors in exchange for referring patient referrals to his testing facilities.Acting Attorney General John J. Hoffman on Thursday announced the arrest of Rehan “Ray” Zuberi, owner of Diagnostic Imaging Affiliates (DIA) of Hackensack; 12 others were also charged. According to the Office of the Insurance Fraud Prosecutor, Medicaid Fraud Control Unit, the defendants allegedly submitted fraudulent applications to the New Jersey Medicaid program and Department of Health, evaded paying income and franchise taxes, and generated millions of dollars in illegal profits.

According to the Attorney General’s office, Zuberi was arrested on Tuesday and his bail was set at $1 million by Superior Court Judge Stuart A. Minkowitz in Morris County.  
 
The AG’s office said DIA is an umbrella corporation that manages numerous diagnostic imaging facilities in northern and central New Jersey.

It is alleged that, under Zuberi’s direction, the organization paid more than $300,000 in illegal kickbacks to multiple medical practitioners in return for patient referrals to DIA testing centers for expensive diagnostic tests such as MRIs.

In the course of executing the search warrants, the Office of the Insurance Fraud Prosecutor seized the Zuberi enterprise’s assets, including more than $100,000 in cash, a Lamborghini and a Ferrari sports car, placed liens on the imaging equipment and Zuberi’s 9,000-square-foot mansion in Boonton Township.

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“This alleged criminal enterprise wove its web of deception through a governmental program and at least two agencies,” Hoffman said.  “This enterprise allegedly bilked millions of dollars from Medicaid, a program designed to help New Jersey’s most vulnerable population. This type of criminal activity impacts not just the agencies defrauded, but also law-abiding, tax-paying residents of New Jersey who are forced to cover the costs of the fraud.”
 
“Kickbacks are a bane of the insurance market,” Acting Insurance Fraud Prosecutor Ronald Chillemi said. “We will not tolerate greed dictating where doctors refer their patients for testing, treatment or other services. Instead, medical practitioners should base their decisions solely on their patients’ medical needs.”

David Knowlton, chief executive of the New Jersey Health Care Quality Institute, said federal and state laws bar kickback to clinicians for patient referrals.

“Why this is bad is really clear on its face. You want your doctor making referrals for procedures because they are in your interest, not because they are incented to do so.”
He said, “Every treatment brings with it some risk, from x-rays that expose the patient to additional radiation to biopsies that carry infection risk. An unnecessary procedure is an assault on the patient.”

He said unnecessary treatment is a serious problem because most patients don’t have the knowledge and expertise to evaluate whether or not they should undergo a procedure recommended by a doctor.

“It goes right to the trust factor in medical care and it’s an important issue,” he said.

The Attorney General’s announcement Thursday did not include charges against medical practitioners alleged to have been involved in the scheme. Rachel Goemaat, spokeswoman for the AG’s office, said she could not comment further on the investigation, which is ongoing.

Attorney Riza Dagli, chair of Brach Eichler’s criminal defense and government investigations practice, has been retained as criminal counsel for Rehan Zuberi. 

“We know the charges are very serious and at this point it is not clear what evidence the state is relying on,” Dagli said. “We do know that they seized a large amount of records and computers so there’s obviously a lot that the state has to go through and review.  We have to wait until the dust settles, and Mr. Zuberi is confident that once the dust settles and the facts come out it will be clear that he didn’t do anything illegal and he’ll be exonerated.”

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