Clad in prison scrubs and shackled at the waist, Fresno Chiropractor John Arakelian plead not guilty Tuesday morning to 21 felony counts.
The district attorney alleges Arakelian was among a team of chiropractors paid kickbacks to refer patients for fraudulent or unnecessary medical tests. Aside from the criminal charges, Allstate Insurance is suing for $4 million.
Allstate says Dr. Rios and Fresno Chiropractor Dolphus Pierce ran P&R Medical and enlisted a team of medical doctors to see patients at chiropractic clinics.
Allstate says they did it because chiropractors can't prescribe drugs and because the medical groups would undergo less scrutiny for doling out unnecessary and excessive treatments.
State fraud investigators say the chiropractors were paid $350 dollars to refer between seven and thirty patients per month to P&R for a one day medical consultation.
P&R hired doctors on a per diem basis to examine the patients--usually for less than twenty minutes and dispense a pre-packaged bag of pain medications. Investigators say P&R would then overbill for the visit and often refer the patients for a pricey MRI scan.
To help prop up the scheme investigators allege office staff at P&R Medical like Maria Cabangangan helped generate lengthy, detailed medical reports that were submitted to the insurance companies.
Tuesday morning, she too pleaded not guilty to 21 felony counts. "Whether it's a million here or a million there it all adds up. It all comes out of the pocket of the honest people," says Jim Klapthor, Allstate Insurance.
Outside of court, family members and attorneys for both defendants declined to comment. The prosecutor estimates they've collected more than a million pages of evidence and if the case goes to trial, it could last up to 4 months.