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Financial Crimes
06/14/2011

LA-area psychologist, 2 ex-postal employees indicted in medical fraud scheme

Doctor allegedly billed the government for nearly $1 million in bogus treatment costs

SANTA ANA, Calif. – A Whittier, Calif., psychologist was arrested Tuesday morning following his indictment for allegedly orchestrating a scheme to bill the federal government for close to $1 million in costs involving fabricated psychological conditions and related medical treatments investigators say never took place.

The indictment handed down June 8 charges clinical psychologist Arnold P. Nerenberg, 69, co-founder of the Whittier-based World Legion of Power bodybuilding organization, with seven counts of mail fraud.

Also charged in the case are two ex-postal workers, Lois L. Washington, 47, of Inglewood, Calif., and Cetric T. Fletcher, 51, of Long Beach, Calif. Washington and Fletcher are each charged with two counts of mail fraud, and are also each accused of two counts of making false statements to obtain federal employee's compensation.

Like Nerenberg, Fletcher was taken into custody Tuesday morning by federal agents and both men are expected to be arraigned on the indictment in federal court Tuesday afternoon. Washington will be summoned to appear in federal court at a later date.

The indictment is the result of a joint federal probe involving the following agencies: U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the U.S. Postal Service's Office of Inspector General (OIG), the Office of Personnel Management's (OPM) OIG, and the Department of Labor's OIG. The case is being prosecuted by the U.S. Attorney's Office for the Central District of California.

The indictment alleges that from June 2000 through April 2008, the defendants submitted fraudulent paperwork to obtain compensation for psychological conditions that were never diagnosed, and they were reimbursed for medical expenses that were never incurred. According to court documents, Nerenberg billed the U.S. Postal Service for nearly $1 million in bogus medical fees and received about $500,000 of that money. It is alleged former postal worker Fletcher pocketed more than $200,000 as a result of the scheme while Washington purportedly made more than $145,000.

"This indictment marks a significant effort in the on-going battle against fraudulent workers' compensation claims," said U.S. Postal Service Inspector General David C. Williams. "The workers' compensation program benefits thousands of postal employees who have received legitimate on-the-job injuries. But false claims by postal employees like these two, and by health care providers like Mr. Nerenberg, undermine the system."

"Per the indictment, Mr. Nerenberg fraudulently billed not only workers' compensation, but also other insurers, including the Federal Employees Health Benefits Program," said OPM Inspector General Patrick E. McFarland. "This case is an excellent example of how cooperation among federal law enforcement agencies can bring perpetrators of fraud to justice."

"This indictment demonstrates that safeguarding the workers' compensation program remains a priority for the OIG and that fraudulent claims by individuals and healthcare providers will not be tolerated," said Abel Salinas, special agent in charge for the Los Angeles Regional Office of the U.S. Department of Labor, Office of Inspector General. "We will continue to work with our law enforcement partners to combat schemes intended to defraud DOL programs."

In some instances, investigators say Nerenberg billed the government for treatment sessions with Washington and Fletcher when records indicate the psychologist was out of the area or out of the country. According to court documents, one of his "patients" was actually an ICE HSI undercover agent posing as a postal worker for whom Nerenberg secured disability pay from the Department of Labor based upon his claimed acute fear of dogs.

"Fraud schemes like this contribute to escalating healthcare and workers' compensation costs and, in the end, it's the American public that pays the price," said Claude Arnold, special agent in charge for ICE HSI in Los Angeles. "As this indictment makes clear, those suspected of exploiting the system to enrich themselves face serious consequences, including significant prison time if the charges are upheld."

According to the indictment, defendant Washington submitted fraudulent paperwork to the Department of Labor's worker compensation program claiming she was unemployed and had no income, when, in fact, she held various jobs, including loan officer, notary and real estate agent. The two ex-postal employees are also accused of seeking reimbursement for travel to medical appointments that never took place.

Each count of mail fraud carries a maximum statutory penalty of 20 years in prison. If convicted of the mail fraud charges in the indictment, Nerenberg faces up to 140 years in federal prison, while Washington and Fletcher could be sentenced to as much as 40 years. Additionally, both Washington and Fletcher face two counts of making false statements to obtain federal employee's compensation, charges that add an additional six years to the maximum penalty for each defendant.