A CEO of several medical imaging companies has received five years in jail for defrauding the California Workers’ Compensation System out of more than $250 million.

U.S. District Judge Cynthia Bashant sentenced Sam Sarkis Solakyan, 40, of Glendale, to 60 months in federal prison for submitting fraudulent claims for medical services that he obtained by bribing and providing kickbacks to physicians. She also ordered Solakyan to pay $27,937,175 in restitution to the victim insurers and banned him from working in healthcare and workers compensation industries for three years upon his release from prison.

Solakyan ran diagnostic imaging facilities in the Bay Area, Los Angeles and Orange counties, and San Diego and was the CEO of Vital Imaging in Glendale and San Diego MRI Institute. From mid-2013 to November 2016, he bribed and provided kickbacks to doctors in exchange for referrals of workers’ compensation patients. He would either pay cash or refer patients himself in a scheme known as cross-referral.

“[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 MR images that were totally medically unnecessary. [Solakyan] devised, and through his kickbacks fueled, a cross-referral scheme that incentivized [co-conspirators] to herd patients to physicians who over-prescribed ancillary services in exchange for cash and other economic benefits,” said the prosecution in a sentencing memorandum.

Solakyan worked with recruiters to obtain referrals, including chiropractor Steven Rigler; Fermin Iglesias, the former CEO of patient-scheduling company, MedEx Solutions; and Carlos Arguello. They required physicians to refer a minimum number of patients for “cross-referrals” and would send any referrals back if the physicians failed to meet the minimum quota.

The bribes amounted to a total of $8.6 million and were made in volume-based payments per MR scan. Payments were concealed from patients and health insurers by disguising them as part of sham contracts for marketing, administrative services and scheduling. Solakyan, for instance, hid his cash payments to Rigler for referrals by calling them “reports,” according to a September 2018 federal grand jury indictment

Following an investigation by the FBI and the California Department of Insurance, Fraud Division, Solakyan was arrested and charged. Rigler pleaded guilty in November 2015 and received six months in federal prison. Iglesias received five years after pleading guilty in December 2016, and Arguello received four years after pleading the same in August 2016.

An eight-day trial in July ended with a jury finding him guilty of one count of conspiracy to commit honest services mail fraud and healthcare fraud and 11 counts of honest services mail fraud. He faced a statutory maximum sentence of 240 years in federal prison at the time.

Solakyan was originally scheduled to be sentenced on October 4, but this was pushed back.

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