Indian-Origin Psychiatrist Busted in $149M US Scam

An Indian-origin psychiatrist and founder of an addiction treatment network in the US was arrested last week on charges of orchestrating a healthcare scam worth $149 million. Tonmoy Sharma, 61, was taken into custody at Los Angeles International airport on May 29 after he landed from an India-US flight. He visited India to see his ailing mother.

Sharma, once a practicing psychiatrist in the UK, reached the US after his medical licence was revoked. He had been on his heels since 2017.

After resurfacing in the US, he launched Sovereign Health Group, a chain of mental health and addiction treatment centres headquartered in San Clemente, California, with branches across multiple states. Sovereign projected itself as a beacon for those suffering from substance abuse and psychological disorders. However, the federal prosecutors allege that behind the glossy brochures and toll-free helplines was a multi-pronged fraud scheme, driven by greed.

A federal grand jury indictment stated that between 2014 and 2020, Sharma and his staff had reportedly submitted more than $149 million in false claims to private insurance companies. Of that, over $29 million was reportedly billed for unnecessary urinalysis tests, routine drug screenings, conducted at labs owned by the company. The urine tests were only part of the puzzle.

Prosecutors say Sharma paid more than $21 million in illegal kickbacks to body brokers who were individuals or organisations paid to send patients to Sovereign Health’s treatment centres. Though the payments looked like regular marketing or consulting fee, they were in fact, bribes used to recruit vulnerable people, many of them battling addiction, so the company could make money by charging their insurance for costly treatment programmes.

Significantly, the scheme involved an elaborate call centre operation where prospective patients were misled into believing that their treatments would be fully funded by a donation-backed foundation, which in reality never existed. The Foundation was simply a ruse to enrol clients and keep insurance dollars flowing.

Federal charges

Now, Sharma faces eight federal charges, including four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for referrals to clinical treatment facilities. A day after his arrest, he pleaded not guilty during a court appearance and the case is still under federal scrutiny.

Along with Sharma, one Paul Jin Sen Khor, 45, of Irvine, is also indicted. He worked as Sovereign’s cash management and accounts payable supervisor. Khor, who is also arrested, is charged with one count of conspiracy and one count of illegal remuneration for referrals. He too pleaded not guilty and was released on $20,000 bond. The trial proceedings would begin on July 29.

The arrest and charges are the latest development in the investigation which began in June 2017, when the FBI raided Sovereign’s offices, its San Clemente headquarters, and also Sharma’s home in San Juan Capistrano. Following the raid, Sovereign Health officially shut down in 2018.

However, Sharma did not sever his ties with the treatment industry. Investigation revealed that he continued operating a licensed residential treatment facility in the name of Dana Shores Recovery in San Juan Capistrano, even when federal investigation was not complete.

The US Attorney’s Office said the case is an example of exploitation in America’s fragmented addiction treatment sector with loopholes in the related insurance wing.