DOJ joins lawsuit against Arizona medical clinics that alleges kickbacks and fraud

A national chain of vascular clinics based in the Phoenix area was accused in a federal civil complaint of paying illegal kickbacks and performing unnecessary medical procedures.

In recent years, Modern Vascular spread across the country from Mesa to 17 locations in 10 states, marketing minimally invasive treatments for a narrowing of the arteries in the legs known as peripheral artery disease.

In court documents unsealed by a judge Friday, two outside doctors made claims against Modern Vascular and its constellation of related entities:

• Modern Vascular sold shares to investing doctors and paid them “kickbacks” in the form of dividends.

• It was these investing doctors who provided the company’s clinics with most of their referrals.

• Modern Vascular founder and board chairman Yury Gampel pressured doctors at the clinics to “perform invasive procedures on as many referred patients as possible.”

• Gampel ensured the clinics treated patients “according to the procedures that received the highest Medicare reimbursement,” without regard to medical necessity, charging as much as $17,000 to $30,000 per procedure.

• The relationship with investors increased the amount spent by federal health care programs like Medicare, which is a violation of federal law.

The doctors who filed the original complaint were joined Thursday by the U.S. Department of Justice, which said in a court document that it will be filing its own claims against Gampel and Modern Vascular within 90 days.

Reached by phone Friday, Gampel said his company faced an "inquiry" from the Department of Justice. He added that he did not know the people making the claims against him and his company, and that he and his team needed time to digest the recently unsealed complaint before they could comment at length.

In the meantime, he denied the claims.

“There is zero truth to any of the allegations,” he said.

Gampel described how Modern Vascular is focused on salvaging limbs that would otherwise be amputated.

“We do a lot of amazing work,” he said. “We save limbs every single day in all of our clinics.”

The complaint against Gampel focuses in part on claims about his actions when opening a Modern Vascular clinic in San Antonio in 2019. It says he held a conference call that included 16 podiatrists in the area and explained the terms, promising the investment was legal and $15,000 would turn into more than $1 million in less than five years.

Gampel told the potential investors they would receive “as much as $80,000 to $100,000 per year, an absurdly high return on their $15,000 investment,” the complaint claims.

Gampel added he planned to sell the firm in three to five years and the $15,000 investment could cash out for $800,000 to $1 million.

“This return seems too good to be true for a legitimate investment because it is not a legitimate investment; it is an illegal kickback scheme,” the recently unsealed complaint says. “Gampel repeatedly explained to the San Antonio potential investors that this was not a passive investment, and that the money they were investing was not important, but that the only important thing was that the investors refer patients and influence other doctors to refer patients to the OBL so the investors could enjoy these ludicrous profits.”

By law, doctors aren’t supposed to get paid for referring patients to specialists in federal health care programs. That’s known as an illegal “kickback.” There’s an exception to the law banning kickbacks called “safe harbor,” but the complaint against Modern Vascular claims the chain doesn't qualify.

One investor doctor who sent patients to Modern Vascular in Mesa felt they were getting poor care, the complaint claims. He stopped sending them, and when he did, according to the complaint, Gampel kicked him out.

The complaint also states that a doctor could try to address the disease Modern Vascular treats, by asking a patient to exercise, stop smoking, improve their diet or take medication. But investing doctors are incentivized to send patients to Modern Vascular instead, “ensuring that every patient … has an invasive procedure performed.”

The disease treated by Modern Vascular tends to afflict older people who may rely on Medicare, federal health care primarily for those older than 65.

By causing doctors to refer to Modern Vascular clinics excessively, the company increases the risk of inappropriate treatments and increases the cost to Medicare, the complaint claims.

The federal government chose to join the case under the False Claims Act, which incentivizes whistleblowers to come forward, according to Cory Fein, one of the attorneys who brought the case in January 2020. The case was kept secret from that time, until the government decided it was “righteous” and announced it would participate, according to Fein. The people who brought the complaint are entitled to a portion of money that might be recovered, Fein said.

If you know more about Modern Vascular, contact Republic investigative reporter Andrew Ford at 480-387-0506 or aford@arizonarepublic.com.

This article originally appeared on Arizona Republic: Arizona medical clinics accused of performing unnecessary surgeries