$700,000 settlement is a “slap-on-the-wrist sweetheart deal” says consumer advocate

U.S. Attorney Philip R. Sellinger announced on Thursday, February 22, 2024, that a Ramsey-based doctor and his medical practice have agreed to pay nearly $700,000 to settle allegations of violating the False Claims Act.

Dr. Arun Sehgal and his practice, Preventive & Diagnostic Medical Center P.A., have reached a settlement totaling $693,490 plus interest to resolve accusations of fraudulent billing practices related to Medicare claims.

The allegations against Dr. Sehgal and his practice include upcoding physician services, billing for services beyond what could reasonably be provided in a single day, and billing for services that were never rendered.

These practices, commonly referred to as fraudulent medical billing, not only exploit government healthcare programs but also compromise patient care and trust.

Sehgal is the former medical director at the New Jersey Veterans Memorial Home in Paramus, one of two state-run facilities that had been providing residents with inadequate care before the start of the COVID-19 pandemic in 2020, according to a scathing report issued by the U.S. Department of Justice.

The Paramus veteran’s home had one of the highest death rates of all long-term care facilities in the state during the first months of the COVID-19 omicron variant outbreak.

Consumer advocate Lisa McCormick, known for her vocal stance against white-collar crime and corporate impunity, expressed strong objections to such settlements.

The settlement resolves allegations spanning from January 1, 2017, to June 1, 2022, involving various fraudulent billing practices, including upcoding and billing for services not provided.

The Bergen County doctor and former medical director of the New Jersey Veterans Memorial Home in Paramus said he treated Medicaid patients when he was not even in the United States and on one single day, he billed for services that would have exceeded 43 hours to provide.

The government, represented by Assistant U.S. Attorney Robert L. Toll and Trial Attorney Daniel Meyler, views this settlement as a productive effort to combat healthcare fraud, using tools such as the False Claims Act to pursue justice.

Describing it as a “slap-on-the-wrist sweetheart deal,” McCormick criticized the leniency afforded to white-collar criminals compared to the harsh consequences faced by individuals committing street crimes.

McCormick’s criticism extends beyond this specific case, emphasizing the broader issue of accountability for those in positions of power.

McCormick, who challenged Senator Robert Menendez in the 2018 Democratic primary election, highlighted similar instances such as Goldman Sachs’ multi-billion-dollar settlement for misleading investors, which represented a fraction of the bank’s assets under management, and the lack of criminal charges against Purdue Pharma’s Sackler family despite their role in the opioid crisis.

McCormick said that the U.S. Attorney was a major campaign contributor to both President Joe Biden and Senator Bob Menendez and the top donor to her 2018 opponent’s legal defense fund.

“I agree with those who say the real division in this country is not between left and right; but between the powerful and the powerless. I believe we must do more about holding those with power accountable, regardless of what party with which they identify,” said McCormick. “Crime is a serious problem that includes corporate polluters, government corruption, and white collar fraudsters, to violent street crime and gangs. Tough-talking politicians have failed to address these concerns.”

“This great country of ours is full of ingenuity, aspiration & possibility,” said McCormick. “Most problems we face are linked to our flawed political system, which puts too much power in the hands of too few people, and many of those are so wealthy and powerful that they may as well live in a different world than the rest of us.”

In one of his final acts as president, Donald Trump pardoned and commuted the sentences of 143 people, including US Senator Bob Menendez’s benefactor Salomon Melgen, the Florida eye doctor who was convicted of defrauding elderly patients on Medicare out of $73 million and sentenced to 17 years in prison.

The latest available case-by-case records from the Department of Justice (DOJ) show that the prosecution of white-collar offenders in FY 2022 reached a new all-time low since tracking began during the Reagan administration. 

“Settlement agreements, sometimes known as deferred prosecution agreements or nonprosecution agreements, which stop short of requiring corporate guilty pleas, let businesses off the hook from crimes that would land most people in prison,” said McCormick.

She lamented the disparity in justice between the wealthy and powerful and ordinary citizens, calling for more stringent measures to hold corporations and individuals accountable for their actions.

“Americans are frustrated when they see that justice for the wealthy and powerful is very different than justice for everybody else,” said McCormick. “A bank teller who takes a handful of bills from the cash drawer is likely to face charges for theft and prison time, but a doctor who robs from taxpayers simply has to return the money.”

A Passaic County couple who owned and worked at Jamaica Meat Market, a medium-sized grocery store in Paterson, were sentenced to prison on May 4, 2021, for engaging in a food stamps fraud scheme. Ibrahim Zughbi, of Wayne, New Jersey, was 67 when he got sentenced to 41 months in a federal penitentiary, and his wife, Miriam Zughbi, was 63 when she got sent to prison for two years.

When Goldman Sachs agreed to pay more than $5 billion in a 2016 settlement with the Justice Department and other regulators for misleading investors, it represented a small fraction of the Wall Street bank’s $2.81 trillion in assets under management.

However, McCormick’s objections underscore a growing concern about the efficacy of such settlements in deterring fraudulent behavior and holding perpetrators accountable. She argues that these agreements often allow offenders to evade meaningful consequences and continue their activities with impunity.

Prosecutions of white-collar offenders have been steadily declining.

The number of prosecutions over the last two decades peaked during the Obama administration during FY 2011. In that year, white-collar prosecutions had climbed to 10,162. This is nearly two and a half times the current levels.

“Allowing thieves to pay off the government and then going back to business as usual is simply not justice,” said McCormick, who has advocated for a corporate death penalty law.

In light of ongoing ethical and judicial challenges, McCormick’s advocacy calls for a reevaluation of the mechanisms in place to address corporate misconduct and uphold accountability.

The highest likelihood of prosecution was 96 percent for immigration offenses, followed by drug offenses at 73 percent and crimes involving weapons at 68 percent. The odds of prosecution for white-collar offenses during 2022 were 38 percent. 

The majority of criminal referrals for white-collar offenses that federal prosecutors receive are closed without prosecution.

Corporations and other business organizations are rarely prosecuted, so those low odds apply primarily to individuals.

“During FY 2022 out of the 4,180 prosecutions for white-collar offenses, fewer than one percent or only 31 of these defendants were businesses or corporate entities,” said McCormick. “That is the same number of dog-fighting convictions reported by the Justice Department during FY 2022.”

Coincidentally, 14 men were charged on February 22, 2024, for participating in an April 2022 dog fighting event that occurred in Donalsonville, Georgia.

The Justice Department reported 6,216 prosecutions and 5,715 convictions during FY 2023 for 08 USC 1324 – Bringing in and harboring certain aliens, compared with 7 prosecutions for violating 08 USC 1324a – Unlawful employment of aliens, which resulted in 4 convictions that same year.