This article will be updated and expanded.
A sophisticated high-volume Medicaid fraud scheme that extended into Oregon has ended in an $11.4 million settlement, authorities say.
The scheme allegedly involved the submission of millions of dollars in false claims to government health programs — including the Oregon Health Plan — by doctors and management of Lags Spine & Sportscare Medical Centers Inc., a now-defunct California-based business known for pain management that was owned and directed by Dr. Francis Lagattuta. One of its clinics was located in East Portland, records show.
The procedures involved skin biopsies, spinal cord stimulation surgeries, and urine drug testing that were all medically unnecessary, according to a statement released by the U.S. Department of Justice that alleged patients were, at times, pressured to agree to unnecessary procedures with the threat that they would be tapered off their pain meds.
“Lagattuta created what he named an ‘Artificial Intelligence Team’ of non-provider staff who were required to order at least 150 skin biopsies per week for patients without the consent of the patients’ treating providers at Lags Medical,” according to the federal announcement. Lagattuta and Lags Medical also acknowledged as part of this settlement that, if a patient refused a skin biopsy, Lags Medical told the patient that they would reduce their opioid medication and instructed the patient’s provider to immediately taper the patient’s medication.”
The case began with a federal whistleblower lawsuit brought by a former employee.
The chain abruptly closed in 2021 while under investigation, according to an article published by Kaiser Health News that chronicled Lags Medical Centers’ business tactics and the outsized role it played in filing claims for certain procedures. The closure left patients suffering from chronic pain without a caregiver, prompting an alert from California authorities.
Asked for comment, the Oregon Department of Justice credited the work of its Medicaid Fraud Control Unit. “This settlement was a result of excellent coordination between Oregon’s Medicaid Fraud Control Unit, the federal government and California’s Attorney General’s Office. We are proud of the work that MFCU does and grateful for the collaboration with our federal partners and the State of California.”
Federal authorities took the opportunity to warn against the alleged behavior.
“Health care providers, including physicians, who perform medically unnecessary procedures to boost profits undermine the public’s trust in the health care system and exploit taxpayer-funded programs,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of Inspector General, in a statement. “Working with our law enforcement partners, HHS-OIG is committed to protecting the health of patients and the integrity of federal health care programs serving them.”
Lagattuta’s Oregon medical license has lapsed, according to Oregon Medical Board records. According to the settlement, he has agreed to a voluntary five-year exclusion from federal programs like Medicaid and Medicare.
