Page 1
Ninth Circuit:
Near-$100 Million Forfeiture Is Proper in ‘Get Thin’ Scheme
Opinion Says All Proceeds of Surgical Center, Advertising as ‘1-800-Get-Thin,’ Were Subject to Taking Following Convictions Because Entire Business Was Permeated With Fraud Even if Some Procedures Were Legitimate
By Kimber Cooley, associate editor
The Ninth U.S. Circuit Court of Appeals held yesterday that all proceeds derived, directly or indirectly, from a healthcare fraud scheme must be forfeited even if such amounts may be downstream from some legitimate transactions, affirming a forfeiture judgment of $98,280,221 against a surgery center aggressively marketed in Southern California as “1-800-Get-Thin.”
Criminal forfeiture is governed by two statutes: 18 U.S.C. §981(a) and 28 U.S.C. §2461(c). Sec. 981(a) governs civil forfeiture actions and §28 U.S.C. §2461(c) provides that the government “may seek criminal forfeiture whenever civil forfeiture is available and the defendant is found guilty of the offense.”
Under §981(a)(1)(C), any property which “is derived from proceeds traceable to” a wire fraud scheme is subject to forfeiture. Subdivision (a)(2)(A) provides that, “[i]n cases involving…health care fraud schemes, the term ‘proceeds’ means property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.”
Criminal Convictions
The Beverly Hills-based Surgery Center Management LLC (“SCM”) and its founder, former doctor Julian Omidi, were convicted in 2023 of wire fraud and related charges arising from their involvement with the “Get Thin” campaign. They were charged with defrauding insurance companies by submitting false claims for reimbursement.
According to prosecutors, Omidi created a process that turned “patients into profits” by directing employees to, among other things, falsely diagnose patients with sleep disorders in order to have them qualify for a lap-band surgery—in which a ring is secured to the top of the stomach to induce the feeling of satiety—under insurance rules which provided coverage for the $100,000 procedure only if the insured suffered from ailments like sleep apnea.
All patients were obtained through the 1-800-Get-Thin call center, where operators were encouraged to falsify patient data, fabricate other diagnoses, and misrepresent the extent of physician involvement in their treatments.
Operators were trained to prioritize customers with the most generous insurance plans and follow up incessantly to ensure they attended their pre-operative appointments.
Following a post-conviction hearing, District Court Judge Dolly M. Gee (now chief judge) of the Central District of California found that all of the nearly $100 million in proceeds of the business was subject to forfeiture as all patients “were recruited through the call center as part of the overall fraudulent billing scheme.”
In an opinion authored by Circuit Judge John B. Owens, the court agreed, saying that “there is no precise Ninth Circuit law on point” but finding that the governing statutes indicated an intent to require forfeiture of any proceeds deriving from the fraudulent scheme even if the particular profits were not directly traceable to illegitimate transactions.
Senior Circuit Judge Richard A. Paez and Chief District Court Judge Richard Seeborg of the Northern District of California, sitting by designation, joined in the opinion.
Weight Loss Wizard
Owens wrote:
“For Southern California residents in the 2010s (especially those stuck in traffic and staring at billboards), the Wizard of Loss was Dr. Julian Omidi…. Using catchy radio jingles and ubiquitous billboard ads, Omidi urged potential patients to call 1-800-GET-THIN and ‘Let Your New Life Begin.’ ”
Looking to the statutory language of §981(a)(2)(A), he reasoned that, “said…simply, any proceeds that directly or indirectly derive from the fraudulent scheme must be forfeited, even if particular proceeds were not profits from the offense itself.”
Applying this rule to the present case, he remarked:
“[T]he district court found that to the extent certain proceeds derived from legitimate medical procedures, those proceeds still ‘were indirectly the result of the fraudulent portions of the business,’ and were thus subject to forfeiture. In other words, even though some patients who called 1-800 GET-THIN were ultimately redirected to non-Lap-Band treatments or could have qualified for Lap-Band surgery without Omidi’s chicanery, the proceeds from those patients would never have existed but for Get Thin’s fraudulent billing scheme, which began with the call center through which all patients were recruited. Our independent review of the extensive record confirms that the evidence supporting the district court’s finding was overwhelming….”
100% Fraud Rule
The jurist was unpersuaded by the defendants’ assertion that the 1997 Ninth Circuit decision of United States v. Rutgard— a case in which the government was required to prove that the entire ophthalmology practice was fraudulent in order to convict the defendant of money laundering—established a so-called “100% Fraud Rule” requiring the court to find that the entirety of the medical practice was fraudulent before all proceeds could be subject to forfeiture.
Disagreeing with this premise, Owens said:
“This argument overreads Rutgard, which concerned money laundering convictions and an entirely different forfeiture statute—18 U.S.C. § 982(a)(1)….[T]he district court correctly concluded that Rutgard’s strict…money laundering analysis— featuring very different facts and statutes—had no application here.”
He added:
“[A]lthough there is no precise Ninth Circuit law on point, our sister circuits (which, unlike the court in Rutgard, have analyzed forfeiture in the fraud context) reject Omidi’s proposed ‘100% Fraud Rule’ and support the district court’s approach….We reach the same conclusion in this case, in which all Get Thin proceeds were derived from a single intake process that, by design, disregarded medical necessity in favor of profit as part of the larger fraudulent billing scheme.”
Owens declared:
“Accordingly, we follow our sister circuits to conclude that in a forfeiture case seeking proceeds of a fraud scheme under § 981(a)(1)(C),….[a]ll proceeds directly or indirectly derived from a health care fraud scheme like Get Thin—even if a downstream legitimate transaction conceivably generated some of those proceeds—must be forfeited.”
The case is U.S. v. Omidi, 23-1719.
Omidi lost his medical license in 2009 after state authorities found that he had engaged in dishonesty and unprofessional conduct in his licensure application.
Copyright 2025, Metropolitan News Company