Racketeering & Conspiracy Case Against Liann Gohari

Case 2:20-cv-04112 Document 1 Filed 05/05/20 Page 1 of 30 Page ID #:1
1 Lisa S. Kantor, State Bar No. 110678

lkantor@kantorlaw.net
2 Timothy J. Rozelle, State Bar No. 298332
trozelle@kantorlaw.net
3 KANTOR & KANTOR, LLP
19839 Nordhoff Street
4 Northridge, CA 91324
Tel: (818) 886-2525; Fax: (818) 350-6272
5
Steven C. Dawson, Arizona State Bar No. 006674 (pro hac vice pending)
6 sdawson@dawsonandrosenthal.com
Anita Rosenthal, Arizona State Bar No. 006199 (pro hac vice pending)
7 arosenthal@dawsonandrosenthal.com
Dawson & Rosenthal, P.C.
8 25 Schnebly Hill Road
Sedona, AZ 86336
9 Tel: (928) 282-3111; Fax: (928) 282-3126
10 Sander R. Dawson, State Bar No. 302431
sander@dawsonandrosenthal.com
11 Dawson & Rosenthal, P.C.
402 West Broadway, Suite 2100
12 San Diego, CA 92101
Tel: (619) 354-1652; Fax: (928) 282-3126
Northridge, California 91324
13
KANTOR & KANTOR LLP
Attorneys for Plaintiffs, Dual Diagnosis Treatment Center, Inc.,

(818) 886 2525
14 Satya Health of California, Inc., Adeona Healthcare, Inc.,

Sovereign Health of Florida, Inc., Sovereign Health of Phoenix,
15 Inc., Sovereign Health of Texas, Inc, Shreya Health of Florida,
Inc., Shreya Health of Arizona, Inc., Vedanta Laboratories, Inc.
16
UNITED STATES DISTRICT COURT
17
CENTRAL DISTRICT OF CALIFORNIA
18
DUAL DIAGNOSIS TREATMENT ) Case No.:
19 CENTER, INC., a California corporation; )
SATYA HEALTH OF CALIFORNIA, ) COMPLAINT FOR
20 INC., a California corporation; ADEONA )
HEALTHCARE, INC., a California ) 1. VIOLATION OF RICO, 18
21 corporation; SOVEREIGN HEALTH OF ) U.S.C. § 1962(c)
FLORIDA, INC., a Delaware corporation; )
22 SOVEREIGN HEALTH OF PHOENIX, ) 2. CONSPIRACY TO VIOLATE
INC., a Delaware corporation; ) RICE, 18 U.S.C. §1962 (d)
23 SOVEREIGN HEALTH OF TEXAS, INC., )
a Delaware corporation; SHREYA ) 3. INTENTIONAL
24 HEALTH OF FLORIDA, INC., a Florida )
corporation; SHREYA HEALTH OF ) INTERFERENCE WITH
25 ARIZONA, INC. an Arizona corporation, ) PROSPECTIVE ECONOMIC
and VEDANTA LABORATORIES, INC., a ) ADVANTAGE
26 Delaware corporation, )
) 4. VIOLATION OF UNFAIR
27 Plaintiffs, ) COMPETITION LAW
)
28 vs. ) 5. SLANDER
COMPLAINT
)
1 CENTENE CORPORATION, a Delaware ) DEMAND FOR JURY TRIAL
corporation; MICHAEL NEIDORFF, an )
2 individual; HEALTH NET LIFE )
INSURANCE COMPANY, a California )
3 corporation; MANAGED HEALTH )
NETWORK, INC., a Delaware corporation; )
4 LIANN GOHARI, an individual; )
KENNETH B. JULIAN, an individual; )
5 JOHN M. LEBLANC, an individual; )
ILEANA HERNANEZ, an individual; )
6 OPTUM SERVICES, INC., a Delaware )
corporation, )
7 )
Defendants. )
8 )
9
10
PLAINTIFFS
11
1. Plaintiff Dual Diagnosis Treatment Center, Inc. (“Dual Diagnosis”) is a
12
corporation organized and existing under the laws of California. Dual Diagnosis does
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business as “Sovereign Health of California” and on occasion under other names as

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permitted by law. Until July 2018, Dual Diagnosis operated and maintained mental
15
health and substance treatment facilities in California.
16
2. Plaintiff Satya Health of California, Inc. (“Satya”) is a corporation duly
17
organized and existing under the laws of California. Satya does business as “Sovereign
18
by the Sea II,” and on occasion under other names as permitted by law. Until July
19
2018, Satya operated and maintained mental health treatment facilities in California,
20
providing detoxification treatment, residential treatment (RTC), partial hospitalization
21
program (PHP), intensive outpatient treatment (IOP), and outpatient treatment (OP).
22
Satya was licensed to treat patients with mental health and/or substance use disorders.
23
3. Plaintiff Adeona Healthcare, Inc. (“Adeona”) is a corporation duly
24
organized and existing under the laws of California. Adeona does business as
25
“Sovereign Health Rancho/San Diego.” Until July 2018, Adeona operated and
26
maintained mental health treatment facilities in El Cajon California, providing RTC,
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2
COMPLAINT
1 PHP and IOP treatment for children ages 12 through 17. Adeona was licensed to treat
2 patients with mental health and/or substance use disorders.
3 4. Plaintiff Sovereign Health of Florida, Inc. (“Sovereign Florida”) is a
4 corporation duly organized and existing under the laws of Delaware. Until July 2018,
5 Sovereign Florida operated and maintained a mental health treatment facility in Fort
6 Myers, Florida, providing detox, RTC, PHP, IOP and OP treatment. Sovereign Florida
7 was licensed to treat patients with mental health and substance use disorders.
8 5. Plaintiff Sovereign Health of Phoenix, Inc. (“Sovereign Phoenix”) is a
10 Sovereign Phoenix operated and maintained a mental health facility in Chandler,
11 Arizona providing RTC, PHP, IOP and OP treatment. Sovereign Phoenix was licensed
12 to treat patients with mental health and/or substance use disorders.
13 6. Plaintiff Sovereign Health of Texas, Inc. (“Sovereign Texas”) is a

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15 Sovereign Texas operated and maintained a mental health facility in El Paso, Texas
16 providing detoxification treatment, RTC, PHP and IOP. Sovereign Texas was licensed
17 to treat patients with mental health and/or substance use disorders.
18 7. Plaintiff Shreya Health of Florida, Inc. (“Shreya Florida”) is a corporation
19 duly organized and existing under the laws of Florida. Until July 2018, Shreya Florida
20 was a billing entity for ancillary services rendered to patients treating at Sovereign
21 Florida.
22 8. Plaintiff Shreya Health of Arizona, Inc. (“Shreya Arizona”) is a
23 corporation duly organized and existing under the laws of Arizona. Until July 2018,
24 Shreya Arizona was a billing entity for ancillary services provided to patients treating
25 at Sovereign Phoenix.
26 9. Vedanta Laboratories, Inc. (“Vedanta”) is a corporation duly organized
27 and existing under the laws of Delaware. Vedanta was authorized to provide laboratory
28 services by COLA (formerly the Commission on Office Laboratory Accreditation), an
3
COMPLAINT
1 accreditation organization for clinical laboratories under the Clinical Laboratory

2 Improvement Amendments (CLIA) program. Until July 2018, Vedanta conducted
3 laboratory testing services for the plaintiffs.
4 10. Collectively plaintiffs are referred to as “Sovereign” or “Plaintiffs.”
5
6 DEFENDANTS
7 11. Defendant Centene Corporation (“Centene”) is a corporation duly
8 organized and existing under the laws of Delaware, and a Fortune 500 company, with
9 its headquarters in St. Louis, Missouri. Centene is the parent company of Health Net.
10 Centene also has an office in Woodland Hills, California.
11 12. Defendant Michael Neidorff (“Neidorff”) is, and at all relevant times was,
12 the CEO of Centene.
13 13. Defendant Health Net Life Insurance Company (“Health Net”) is a

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14 California corporation with its principal place of business at 21281 Burbank

15 Boulevard, Building B3, Woodland Hills, California. Health Net sells individual health
16 insurance policies in California.
17 14. Defendant Managed Health Network, Inc. (“MHN”) is a Delaware
18 corporation with a principal place of business at 11931 Foundation Place, Building D,
19 Rancho Cordova, California 95670. MHN is the behavioral health subsidiary of
20 Health Net.
21 15. Defendant Liann Gohari (“Gohari”) is Vice President and Deputy General
22 Counsel at Health Net.
23 16. Defendant Kenneth B. Julian (“Julian”) is a partner at Orange County
24 Office of Manatt, Phelps & Phillips, LLP (“Manatt”), a law firm which advertises itself
25 as a “multidisciplinary, integrated national professional services firm,” with offices in
26 Los Angeles, Orange County, Palo Alto, San Francisco, Sacramento, New York,
27 Albany, Chicago and Washington, D.C. Immediately prior to becoming a partner at
28
4
COMPLAINT
1 Manatt, Julian was a deputy chief in the Orange County office of the U.S. attorney for
2 the Central District of California.
3 17. Defendant John M. LeBlanc (“LeBlanc”) is a partner at the Los Angeles
4 Office of Manatt and a co-chair of the firm’s national healthcare litigation practice.
5 18. Defendant Ileana Hernandez (“Hernandez”) is a partner at the Los
6 Angeles Office of Manatt.
7 19. Defendant Optum Services, Inc. (“Optum”) is a Delaware corporation
8 with its principal place of business at 11000 Optum Circle, Eden Prairie, Minnesota.
9 Optum is a health services business serving the health care marketplace, including
10 payers and health care providers, and provides shared claim handling and processing
11 services. Optum sometimes operates as Optum and Optum Shared Solutions.
12 20. Collectively Centene, Neidorff, Health Net, Gohari, Julian, LeBlanc,
13 Hernandez and Optum are referred to as “Defendants.”

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14
15 JURISDICTION AND VENUE
16 21. Jurisdiction is based on 18 U.S.C. §§1962, 1965 (Racketeer Influenced
17 and Corrupt Organizations) and 28 U.S.C. § 1367 (Supplemental Jurisdiction).
18 22. Venue is proper in this judicial district pursuant to 28 U.S.C. §1391(b)(2)
19 and (c)(2). Health Net and MHN reside in this judicial district, all of the Defendants do
20 business in this judicial district, and much of the conduct that is the subject of this
21 lawsuit occurred within this judicial district.
22
23 PLAINTIFFS WERE AWARD-WINNING
24 MENTAL HEALTH PROVIDERS
25 23. Plaintiffs offered specialized treatment for mental health, substance abuse
26 and dual diagnosis disorders for adults and adolescents. In operation from 2009
27 through 2018, Plaintiffs had nine licensed treatment facilities in five states and
28 employed approximately twelve hundred (1,200) people in the United States, including
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COMPLAINT
1 approximately sixty professionals with M.D. or PhD degrees. Plaintiffs have treated
2 thousands of patients across the country, with an independently verified track record of
3 success which far exceeds the industry average.
4 24. Plaintiffs’ California facilities were licensed by the California Department
5 of Healthcare Services (DHCS) since 2009 for detoxification and residential treatment
6 and by the California Department of Social Services (DSS), since 2012, for Mental
7 Health Treatment. Similarly, Plaintiffs’ facilities in Arizona, Florida, Texas and Utah
8 were licensed by the appropriate agencies for treatment of mental health and substance
9 abuse disorders.
10 25. Plaintiffs’ approach to addiction and mental health treatment was
11 consistent with best practices in the industry. Its facilities earned The Gold Seal of
12 Approval from The Joint Commission, an independent not-for-profit organization that
13 is the nation’s oldest and largest standard setting and accrediting body in health care.
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14 The National Alliance of Mental Illness recognized Sovereign for providing “The Gold
15 Standard for Mental Health Treatment for patients in Orange County and throughout
16 the country.” Studies conducted in 2016 and 2017 by Harvard Medical School
17 Affiliate, McLean Hospital, consistently found that Plaintiffs’ residential patients were
18 up to two times sicker than those typically admitted to other accredited behavioral
19 healthcare providers and that Plaintiffs’ programs produced clinical outcomes up to
20 three times better than these comparable institutions.
21 26. Plaintiffs were widely recognized behavioral health educators. Since
22 2015, the American Psychological Association authorized Plaintiffs and their staff to
23 train licensed doctoral psychologists. The California Board of Behavioral Health
24 Sciences, the California Association of Alcohol/Drug Educators, the National
25 Association of Alcoholism and Drug Abuse Counsel and the Association for
26 Psychology, Post-Doctoral and Internship Centers approved Plaintiffs to provide
27 continued education to licensed professionals in the substance abuse field. The
28 University of Southern California sent its Master of Social Work students to receive
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COMPLAINT
1 training at Sovereign facilities. Plaintiffs also provided continued education to lawyers

2 for the substance abuse requirement of MCLE.
3 27. In 2015, Plaintiffs received an offer to purchase their business for $625
4 million.
5 28. At all relevant times, Plaintiffs were “out-of-network” health care
6 providers with respect to Health Net. In other words, none of the Plaintiffs contracted
7 with Health Net to provide mental health or substance use disorder treatment to
8 patients with Health Net health insurance at a discounted rate pursuant to what is
9 commonly referred to as an “in-network” contract.
10
11 HEALTH NET ENTERS THE ACA EXCHANGE
12 29. Effective 2014, the Affordable Care Act (“ACA”) required health
13 insurance policies to provide ten categories of “essential health benefits,” including

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14 mental health and substance abuse treatment. 42 U.S.C. § 18022. In addition, under the
15 ACA, states established on-line “exchanges,” where the new ACA-compliant policies
16 were marketed.
17 30. In 2014, Health Net began marketing health insurance policies through
18 the exchanges. At the time, the terms of Health Net’s policies—designed to increase
19 Health Net’s market share—required payment to out-of-network mental health facility
20 claims for inpatient, residential or outpatient treatment based on 75% or 100% of the
21 billed amount. In contrast, most health insurance policies offered through the
22 exchanges required payment to out-of-network mental health facility claims for
23 inpatient, residential or outpatient treatment at a significantly lower rate.
24 31. Health Net had great success in the exchange market. In 2014 and 2015,
25 Health Net saw dramatic increases in the number of policyholders. As disclosed in
26 Health Net’s SEC filings, enrollment in individual policies in Health Net’s Western
27 Region increased 188.7 percent from year-end 2013 to year-end 2014, from
28 approximately 115,000 policyholders to 332,000 policyholders. In California alone,
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COMPLAINT
1 enrollment increased 137.0 percent, from approximately 100,000 policyholders to

2 237,000 policyholders. According to Health Net, this significant increase was
3 primarily due to an increase in new individual policyholders from the ACA exchanges
4 in California and Arizona.
5 32. Along with this huge increase in the number of policyholders, Health Net
6 saw an even more dramatic increase in the number and dollar amount of claims. In its
7 filings with the California Department of Insurance (“DOI”), Health Net disclosed that
8 in 2014 it earned $233.5 million in premiums for California policies but incurred
9 $345.5 million in claims, resulting in a loss of $112 million. In the following year,
10 2015, Health Net earned $189 million in premiums, but incurred $473 million in
11 claims, resulting in a loss of $284 million.
12 33. The increase in the dollar amount of claims related to the treatment of
13 substance abuse was particularly dramatic. According to Health Net’s DOI filings,
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14 from 2014 to 2015 its paid substance abuse claims in California increased 1,577
15 percent. Out-of-network substance abuse claims alone accounted for 42.7 percent of all
16 of Health Net’s claims in California in 2015 (i.e., $202,385,210 out of a total of
17 $473,970,047). The number of out-of-network behavioral health claims, which include
18 substance use disorder claims, were over 9,000 percent greater in 2015 than in-network
19 behavioral health claims. Health Net attributed this difference solely to the fact that
20 out-of-network claims were required to be paid at a percentage of billed charges rather
21 than at the much lower negotiated rate it paid to in-network providers.
22
23 HEALTH NET MERGES WITH CENTENE
24 34. On July 2, 2015, Health Net announced that it had entered into a merger
25 agreement with Centene under which Centene would acquire 100% of Health Net. In
26 October 2015, Health Net’s stockholders voted to approve the adoption of the merger
27 agreement with Centene. When the deal was finalized, it was valued at $6.8 billion.
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8
COMPLAINT
1 35. In March 2016, the California DOI concluded its review of the merger
2 and granted conditional approval, mandating that Centene keep Health Net’s individual
3 policies on Covered California (the exchange marketplace in California under the
4 ACA), that Health Net ensure its networks of providers was adequate to meet the needs
5 of its insureds, and that Health Net make efforts to improve its ratings on the “report
6 card” issued to it by California Office of Patient Advocacy.
7 36. Health Net’s CEO received a golden parachute worth $54,000,000 and its
8 CFO received a golden parachute worth $23,400,000. Neidorff received total
9 compensation of approximately $20.75 million in 2015 and $21.97 million in 2016.
10 37. In July 2016, after the effective date of its merger with Health Net,
11 Centene could not long avoid disclosing to its shareholders that Health Net had
12 incurred $390 million in liabilities, which existed as of the March 24, 2016 merger
13 date, but had not been properly accounted for and disclosed. At least $140 million of
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14 the undisclosed liabilities related to substance use disorder claims in California. The
15 increased liabilities were greater than Health Net’s entire pre-tax annual earnings for
16 any of the prior five years.
17 38. In numerous public statements, Neidorff admitted that Centene knew
18 about Health Net’s liability prior to March 2016. Centene admitted in public filings
19 that Health Net’s liability existed prior to the acquisition date.
20
21 DEFENDANTS FALSELY ACCUSE PLAINTIFFS OF FRAUD
22 TO HIDE HEALTH NET’S LOSSES
23 39. Beginning during the second half of 2015, Defendants conspired to create
24 and implement a systematic campaign of targeting and refusing to pay or underpaying
25 certain claims to stem the financial bleeding from Health Net’s PPO policies. Rather
26 than abide by the terms of Health Net’s policies and its duty of good faith and fair
27 dealing, and accept the losses which occurred as the result of Health Net’s policy
28 design, Defendants created a plan to resolve Health Net’s financial issues by arbitrarily
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COMPLAINT
1 reducing or eliminating payments to out-of-network substance use disorder providers

2 in California.
3 40. Defendants’ plan involved various steps to achieve the financial savings
4 they hoped for and had conveyed to shareholders. For example, Health Net instituted a
5 blanket policy of denying and underpaying claims for certain types of behavioral
6 health services. To implement the policy and ensure it was followed by claims
7 personnel, Health Net revised its claims handling manual to instruct claims personnel
8 on how these claims should be handled, denied, and underpaid.
9 41. Pursuant to Defendants’ plan, by November 2015, Health Net’s payments
10 to California substance use disorder treatment centers became sporadic. The reduction
11 or elimination of benefit payments was not limited to Plaintiffs but was a uniform
12 practice put in place by Defendants impacting claims submitted by in excess of 1,000
13 California substance treatment centers.

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14 42. Plaintiffs are informed and believe that, in January 2016, Health Net hired
15 Manatt to collaborate on a strategy regarding the outstanding claims by out-of-network
16 substance abuse providers. In furtherance of the plan, Gohari, Julian, LeBlanc and
17 Hernandez devised a fraudulent scheme to advance a variety of false accusations
18 against Plaintiffs and other out-of-network substance abuse providers.
19 43. As part of the scheme devised by Gohari, Julian, LeBlanc and Hernandez,
20 in January 2016, Health Net instituted a special investigation unit (“SIU”) “audit” of
21 Plaintiffs and all or substantially all substance use disorder treatment centers in
22 California as a pretext for refusing to pay claims. Providers like Plaintiffs were placed
23 on an SIU “watchlist.” Defendants instructed claims personnel to re-route all claims
24 from providers on the “watchlist” to the out-of-network behavioral health SIU audit
25 unit. This audit was directed by Gohari, Julian, Hernandez and LeBlanc and led to an
26 exponential increase in the number of claims that Health Net refused to pay. Before
27 and after the merger was concluded in March 2016, Centene joined the scheme and
28 participated in the audit.
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COMPLAINT
1 44. In connection with the “audit,” Gohari drafted a boiler plate form letter to
2 more than 1,000 treatment centers designed to hide the blanket policy of refusing to
3 pay certain claims and the policy of indiscriminately rerouting claims to SIU. Gohari
4 caused the letter to bear the signature of Health Net’s Director of SIU, Matthew
5 Ciganek, without Mr. Ciganek’s prior knowledge. The Ciganek letter imposed
6 unlawful and onerous burdens on providers regarding claim submission, requesting
7 extensive and unusual amounts of documentation in a short time frame (15 days). The
8 letter also stated that Health Net was suspending payment on claims previously
9 submitted and that Health Net was investigating alleged fraudulent practices.
10 45. In putting its fraudulent scheme into effect, Health Net, at the direction of
11 Gohari, Julian, Hernandez and LeBlanc, falsely alleged in the Ciganek letter that the
12 failure of out of network mental health and substance use disorder treatment providers
13 to collect the patients’ deductibles, copayments or co-insurance could raise questions

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14 regarding false or fraudulent claims. Health Net’s 2015 and 2016 ACA policies,
15 however, were coinsurance only policies with zero deductible and zero copayments for
16 out-of-network services. Moreover, it is impossible for treatment providers to
17 determine co-insurance before an insurer adjudicates the claim. As a pretext for
18 refusing to pay claims and to hide the blanket policies described above, the Ciganek
19 letter placed an impossible burden on providers by refusing to adjudicate claims unless
20 and until providers submitted proof of something (coinsurance) that can only be
21 determined after claim adjudication. Neidorff has also publicly acknowledged that
22 Health Net’s ACA policies did not include the cost-sharing provisions (a co-payment
23 or deductible for out-of-network services) of which Ciganek’s letter demanded proof.
24 46. The Ciganek letter also stated that eligibility under the Health Net policies
25 was limited to individuals who “permanently reside” in a defined California area.
26 There is no such requirement in the policies. Health Net had the authority to approve
27 or deny enrollment applications, a process with which Plaintiffs had no involvement.
28 Under California law, in the event Health Net believed it had issued coverage on the
11
COMPLAINT
1 basis of a material misrepresentation on the application, its sole remedy was to rescind
2 coverage within two years. At no time during the relevant period has Health Net
3 rescinded a single policy issued in California on the basis that the policyholder did not
4 permanently reside in a defined California area. Defendants used these pretenses to
5 effect a fraudulent scheme and avoid paying valid claims by punishing providers and
6 insureds for acting within the terms of Health Net’s policies.
7 47. The Ciganek letter also alleged that claim payment may not be
8 appropriate if improper payments (such as payment of premiums) or other
9 consideration has been made to patients “to induce procurement of services from your
10 facility.” Neither federal nor California law, however, prohibits third-party premium
11 payment or cost sharing assistance to prospective patients. Additionally, Health Net’s
12 policies did not contain any provision prohibiting third party premium payments. In
13 fact, Neidorff publicly acknowledged that the Health Net policies allowed third party
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14 premium payments and stated that one of the key changes Centene was making was
15 placing “restrictions on third-party premium payments, which were not included in the
16 original 2016 offering.” In March 2017, LeBlanc authored an article entitled “Third
17 Party Payment of Premiums: Controversy and HHS Guidance” in which he concluded
18 that the payment of health insurance premiums by third parties did not violate the law.
19 As such, Defendants’ premising all or any part of a “special investigation” on conduct
20 that Defendants acknowledged was permitted under the policy language was not just
21 disingenuous, but fraudulent.
22 48. Defendants also developed a scheme to conceal Health Net’s under-
23 reserved substance use disorder treatment claims by introducing certain claims
24 procedures that assured none of Plaintiffs’ claims were paid. In May and June 2016,
25 Defendants revised the claims handling manual guideline to specifically provide that
26 Plaintiffs’ claims were not paid at a percentage of the billed amount but, instead, a
27 Medicare percent conversion factor. To conceal the new procedures, neither
28 policyholders nor providers were given notice of these changes in claims processing.
12
COMPLAINT
1 Not paying the 75% or 100% reimbursement rate, and instead using the Medicare rate,
2 was a component of Defendants’ fraudulent scheme to retroactively resolve the
3 financial problems caused by their own “plan design flaws.”
4 49. Plaintiffs are informed and believe that, in early 2016, Centene and Health
5 Net hired Optum to further Defendants’ fraudulent scheme. Centene, Health Net and
6 Optum, at the direction of Gohari, Julian, Hernandez and LeBlanc, attempted to
7 manufacture evidence to support their false accusations. Specifically, Defendants
8 interviewed Plaintiffs’ former employees. During those interviews, Defendants falsely
9 accused Plaintiffs of a variety of unlawful, unethical and immoral conduct for the
10 purpose of inducing witnesses to, essentially, gossip, including (1) opening facilities
11 just to make money; (2) billing insurance companies for services that were not
12 provided; (3) double billing for services provided; (4) using employees in India to
13 create charts and medical records for patients; (5) pressuring employees to treat
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14 patients at a higher level of care than was medically indicated; (6) pressuring
15 employees to alter patient diagnoses; (7) allowing patients to get pregnant in treatment
16 and then kicking them out; and (8) “human trafficking” by trading patients.
17 50. Defendants also exaggerated, mischaracterized, and falsely recorded the
18 substance of interviews. For example, Defendants falsely recorded that at least one
19 witness said Dr. Tonmoy Sharma, Plaintiffs’ then-CEO, was a flight risk and that he
20 had threatened a witness. In addition, Optum, on behalf of Defendants, offered to pay
21 the claims of other out-of-network substance abuse providers if they provided
22 “evidence” against Sovereign to support Defendants’ false accusations.
23 51. Defendants also spoke to other health insurance companies to
24 “collaborate” on the false accusations Defendants were making against Plaintiffs.
25 Defendants shared this false information in an effort to convince other health insurance
26 companies to stop paying claims submitted by Plaintiffs. Optum specifically
27 participated in this “collaboration.”
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13
COMPLAINT
1 52. Optum hired unqualified medical providers to conduct “medical

2 necessity” reviews of certain claims. These providers did not meet the written
3 standards set by Health Net. The providers were given a list of language to insert in
4 their reviews to deny the claims. They did not speak to the patients or to anyone at
5 Sovereign. They accessed medical records electronically but did not confirm or inquire
6 as to whether the records were complete. The providers applied outdated guidelines
7 created by a third-party vendor and did not know or inquire as to whether these
8 guidelines were consistent with the applicable plan or policy language.
9 53. After the providers finished their reviews, Dr. Matthew Wong of Health
10 Net signed off on the reviews, without speaking with the providers or conducting any
11 review of his own. Health Net sent out denial letters based on these reviews and
12 signed Dr. Wong’s name on those letters, without his prior knowledge.
13 54. Defendants knew that they were obligated to pay the outstanding claims
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14 unless they were able to discredit Plaintiffs and/or force them out of business. In late
15 2016, Defendants initiated multiple meetings with law enforcement and regulatory
16 entities in an attempt to convince them to institute criminal proceedings against
17 Plaintiffs. Defendants repeated their blatantly false allegations, telling these entities:
18 a. Plaintiffs were treating Health Net patients and “dumping” them on
19 the street when insurance coverage was denied.
20 b. Plaintiffs were about to close their facilities.
21 c. Dr. Tonmoy Sharma was about to flee the country.
22 d. Plaintiffs were using “cappers” and “runners” to solicit patients.
23 55. Defendants met with the District Attorney in Los Angeles and Orange
24 County, as well as the California Department of Insurance, all of whom refused to act
25 on Defendants’ allegations. Determined to have criminal proceedings initiated against
26 Plaintiffs, Julian, on behalf of all Defendants, created a Power Point presentation in
27 which Defendants: falsely accused Plaintiffs of the manufactured conduct described
28 above; suggested “targets” for criminal investigation; misrepresented the contents of
14
COMPLAINT
1 interviews; and, suggested legal theories for criminal prosecution. This Power Point
2 was presented to Julian’s former colleagues at the FBI and the U.S. Attorney in Orange
3 County. Defendants specifically omitted, however, that Plaintiffs had sued Defendants
4 to recover the unpaid amounts.
5 56. On the morning of June 13, 2017, based on the misrepresentations
6 presented by Defendants, more than 100 armed guards from the FBI, U.S. Department
7 of Health and Human Services, IRS, DHCS, and several other agencies,
8 simultaneously executed search warrants at six Sovereign locations across southern
9 California and the home of Dr. Tonmoy Sharma. Mental health patients and others
10 recovering from substance abuse addiction, as well as their counselors, medical care
11 providers, and Sovereign employees, were physically escorted from their rehabilitative
12 activities and ordered to line up while government agents seized business and personal
13 documents. Agents, some with weapons drawn, immediately separated patients from
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14 employees, confining employees to conference rooms and lobbies and forcing patients,
15 many suffering from PTSD and anxiety, to stand outside with armed agents. Patients
16 and employees were searched and interrogated; cell phones were confiscated.
17 57. Defendants ultimately achieved its desired result: Over one hundred
18 patients left treatment on the day of the raid. Immediately thereafter, Plaintiffs’ bank
19 forced them to close their accounts. In furtherance of their goal to put Plaintiffs out of
20 business, Defendants arranged to have a reporter at the raid, who published articles in
21 local newspapers, repeating Defendants’ false allegations. These false allegations
22 were picked up by various other news outlets, landing additional blows against
23 Plaintiffs’ business. Patient admissions and revenue declined. As a result of
24 Defendants’ conduct, Plaintiffs were forced to close all nine of its facilities and layoff
25 nearly 1,200 employees.
26
27
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COMPLAINT
1 CA DOI ORDERS HEALTH NET TO SHOW CAUSE

2 58. On June 23, 2017, the DOI issued an Order to Show Cause (“OSC”) to
3 Health Net, stating that it had received hundreds of complaints from out-of-network
4 substance use disorder providers about Health Net’s handling of claims for treatment
5 of Health Net policyholders. The OSC alleges that Health Net’s refusal to honor the
6 policy language, requiring reimbursement at 75% of billed charges, evidences unfair
7 claims practices, violations of the Mental Health Parity Act, and unfair and/or
8 deceptive act of practices in violation of California Insurance Code Section 790.03.
9 59. Plaintiffs are informed and believe that Defendants misrepresented to the
10 DOI that it was resolving the claims of the out-of-network substance use disorder
11 treatment providers. In truth, Defendants have refused and failed to do so with respect
12 to Plaintiffs and others who have rightfully exercised their rights, as assignees of
13 Health Net policyholders, to pursue payment of the outstanding claims. In August

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14 2017, the California DOI withdrew the OSC.

15 60. On July 24, 2018, however, the DOI issued a new OSC alleging that
16 Health Net’s refusal to honor its policy language violates the law. The DOI stated that
17 Health Net’s referral of all claims to its SIU unit “directly upon receipt of the claims
18 payment request, prior to performing a reasonable review of the claim” and placing
19 providers “on an audit list and then require[ing them] to prove that they should be
20 removed from the list before any payment was made” “resulted in illegitimate denials
21 and delayed payment of claims” and “is an unreasonable standard for the
22 investigation and processing of claims.”
23 61. On January 6, 2019, Health Net settled with the DOI for $1,025,000.
24
25 FIRST CAUSE OF ACTION
26 VIOLATION OF RICO, 18 U.S.C. § 1962(c)
27 62. Plaintiffs incorporate by reference all paragraphs alleged above.
28
16
COMPLAINT
1 63. Each of the Defendants is a “person” within the meaning of 18 U.S.C.

2 § 1961(3).
3 64. Each of the Defendants together constitute an “enterprise” within the
4 meaning of 18 U.S.C. § 1961(4) and are referred to herein as “the enterprise.”
5 65. Each of the Defendants has repeatedly and systematically conducted and
6 participated, directly and indirectly, in the conduct of the affairs of the enterprise
7 through a pattern of “racketeering activity” consisting of two or more predicate acts in
8 furtherance of the above-described fraudulent scheme, in violation of 18 U.S.C. § 1341
9 (mail fraud) and 18 U.S.C. § 1343 (wire fraud).
10 66. Pursuant to and in furtherance of their fraudulent scheme, each of the
11 Defendants knowingly and willfully used and caused to be used the United States mail
12 and/or interstate wires to commit multiple acts, including:
13 a. Conducting an unfounded and fraudulent audit of legitimate claims

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14 for treatment of Health Net policyholders submitted by Plaintiffs and other out
15 of network mental health and substance use disorder providers;
16 b. “Pending” indefinitely the review of legitimate claims for the
17 treatment of Health Net policyholders, without a good faith investigation into
18 whether the claims were covered by the applicable policy, and without
19 informing Plaintiffs or the policyholders of the status of those claims;
20 c. Failing and refusing to pay legitimate claims for treatment of
21 Health Net policyholders submitted by Plaintiffs on the ground that a referral fee
22 was paid for the placement of the policyholder, without a legitimate basis for
23 using the payment of a referral fee as an excuse for failing to pay a claim,
24 without a good faith investigation into whether the claims were covered by the
25 applicable policy, and without informing Plaintiffs or the policyholders of the
26 status of those claims;
27 d. Failing and refusing to pay Plaintiffs’ legitimate claims for
28 treatment of Health Net policyholders absent proof that the patients first paid
17
COMPLAINT
1 amounts that they were not required to pre-pay and/or that could not be
2 determined until Health Net paid the legitimate claims;
3 e. Failing and refusing to pay Plaintiffs’ legitimate claims for
4 treatment of Health Net policyholders on the grounds that premiums were paid
5 by Plaintiffs or third parties, despite no ban on third party payment of premiums
6 in the applicable policies or under the law;
7 f. Offering to pay the claims of other out-of-network substance abuse
8 providers if they offered “evidence” against Plaintiffs;
9 g. Contacting other insurance companies to share false accusations
10 and encourage them to stop paying Plaintiffs’ claims;
11 h. Using an inappropriate and unlawful calculation for the amount
12 owed on paid claims;
13 i. Falsely reporting to law enforcement that Plaintiffs had engaged in

KANTOR & KANTOR LLP
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14 unlawful conduct;
15 j. Falsely reporting to law enforcement that Plaintiffs’ principal was a
16 flight risk;
17 k. Interfering with the payment of Plaintiffs’ legitimate claims for
18 patients who did not have Health Net policies.
19 l. Persisting in its refusal to pay thousands of valid and covered
20 claims after and despite DOI’s findings described above and Defendants’
21 representations to DOI that it was resolving these claims.
22 67. Defendants used or caused to be used the United States mail and/or
23 interstate wires in creating, implementing, and concealing from Plaintiffs a blanket
24 policy of denying, permanently “pending” and refusing to pay, and underpaying valid
25 and covered claims of a certain type or from certain providers including Plaintiffs
26 without any investigation into the merits of such claims by, for example:
27 a. Mailing letters to Plaintiffs, patients, and other providers with
28 boilerplate language misrepresenting Defendants’ rationale for investigating
18
COMPLAINT
1 and/or refusing to pay claims, the purpose of which was to mislead and conceal
2 Defendants’ fraudulent scheme and the wrongful policies described above, and
3 misrepresenting that the letters complied with applicable law and regulations;
4 b. Distributing claims handling guidelines to claims personnel
5 outlining the blanket policies of denying, underpaying, refusing to pay, and
6 referring to SIU claims of a certain type or from certain providers, including
7 Plaintiffs, without independently investigating the merits of such claims or the
8 validity of any accusations against Plaintiffs;
9 c. Sending claims and medical records to Optum to conducting
10 inadequate and fraudulent medical reviews to manufacture support for the
11 knowingly wrongful refusal to pay claims that were valid and covered; and
12 d. Affixing Dr. Matthew Wong’s signature to denial letters with his
13 knowledge, and sending the letters through mail or electronic mail, to Plaintiffs
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14 and their Health Net patients.

15 68. The enterprise’s fraudulent scheme, as described above, has continued for
16 a substantial period and is ongoing. It began in 2015 and continues today, five years
17 later, thus amounting to continuing fraudulent activity and posing a threat of such
18 fraudulent activity continuing into the future. Further, these acts demonstrate
19 Defendants’ ongoing and regular way of doing business.
20 69. The enterprise is engaged in, and its activities affect, interstate commerce.
21 70. As a direct and proximate result of the above-described pattern of
22 racketeering activity, the enterprise damaged Plaintiffs in an amount to be proven at
23 trial by causing Plaintiffs to close its operations.
24 71. Plaintiffs are entitled to an injunction requiring each of the Defendants to
25 cease the conduct alleged in this cause of action, treble damages, costs of litigation,
26 and reasonable attorney fees pursuant to 18 U.S.C. § 1964 and applicable law.
27
28
19
COMPLAINT
1 SECOND CAUSE OF ACTION

2 CONSPIRACY TO VIOLATE RICO, 18 U.S.C. § 1962(d)
4 73. Each of the Defendants is a “person” within the meaning of 18 U.S.C.
5 § 1961(3).
6 74. Each of the Defendants together constitute an “enterprise” within the
7 meaning of 18 U.S.C. § 1961(4) and are referred to herein as “the enterprise.”
8 75. The enterprise engaged in a pattern of “racketeering activity” consisting
9 of two or more predicate acts in furtherance of the above-described fraudulent scheme,
10 in violation of 18 U.S.C. § 1341 (mail fraud) and 18 U.S.C. § 1343 (wire fraud).
11 76. Each of the Defendants deliberately joined “the enterprise” with
12 knowledge of its purpose.
13 77. Pursuant to and in furtherance of their fraudulent scheme, each of the

KANTOR & KANTOR LLP
(818) 886 2525
14 Defendants knowingly and willfully agreed that “the enterprise” would be used or
15 cause to be used the United States mail and/or interstate wires to commit multiple acts,
16 including
17 a. Conducting an unfounded and fraudulent audit of legitimate claims
18 for treatment of Health Net policyholders submitted by Plaintiffs and other out
19 of network mental health and substance use disorder providers;
20 b. “Pending” indefinitely the review of legitimate claims for the
21 treatment of Health Net policyholders, without a good faith investigation into
22 whether the claims were covered by the applicable policy, and without
23 informing Plaintiffs or the policyholders of the status of those claims;
24 c. Failing and refusing to pay legitimate claims for treatment of
25 Health Net policyholders submitted by Plaintiffs on the ground that a referral fee
26 was paid for the placement of the policyholder, without a legitimate basis for
27 using the payment of a referral fee as an excuse for failing to pay a claim,
28 without a good faith investigation into whether the claims were covered by the
20
COMPLAINT
1 applicable policy, and without informing Plaintiffs or the policyholders of the

2 status of those claims;
3 d. Failing and refusing to pay Plaintiffs’ legitimate claims for
4 treatment of Health Net policyholders absent proof that the patients first paid
5 amounts that they were not required to pre-pay and/or that could not be
6 determined until Health Net paid the legitimate claims;
7 e. Failing and refusing to pay Plaintiffs’ legitimate claims for
8 treatment of Health Net policyholders on the grounds that premiums were paid
9 by Plaintiffs or third parties, despite no ban on third party payment of premiums
10 in the applicable policies or under the law;
11 f. Offering to pay the claims of other out-of-network substance abuse
12 providers if they offered “evidence” against Plaintiffs;
13 g. Contacting other insurance companies to share false accusations

KANTOR & KANTOR LLP
(818) 886 2525
14 and encourage them to stop paying Plaintiffs’ claims;

15 h. Using an inappropriate and unlawful calculation for the amount
16 owed on paid claims;
17 i. Falsely reporting to law enforcement that Plaintiffs had engaged in
18 unlawful conduct;
19 j. Falsely reporting to law enforcement that Plaintiffs’ principal was a
20 flight risk;
21 k. Interfering with the payment of Plaintiffs’ legitimate claims for
22 patients who did not have Health Net policies.
23 78. The enterprise’s fraudulent scheme, as described above, has continued for
24 a substantial period and is ongoing.
25 79. The enterprise is engaged in, and its activities affect, interstate commerce.
26 80. As a direct and proximate result of the above-described pattern of
27 racketeering activity, the enterprise damaged Plaintiffs in an amount to be proven at
28 trial by causing Plaintiffs to close its operations.
21
COMPLAINT
1 81. Plaintiffs are entitled to an injunction requiring each of the Defendants to

2 cease the conduct alleged in this cause of action, treble damages, costs of litigation,
3 and reasonable attorney fees pursuant to 18 U.S.C. § 1964 and applicable law.
4
5 THIRD CAUSE OF ACTION
6 INTENTIONAL INTERENCE WITH
7 PROSPECTIVE ECONOMIC ADVANTAGE
9 83. Beginning in 2013, Plaintiffs had an economic relationship with Health
10 Net policyholders who exercised their right to use their out-of-network benefit to
11 obtain mental health and substance use disorder treatment. Pursuant to that
12 relationship, Plaintiffs provided treatment to those patients and billed Health Net for
13 that treatment. Defendants were aware of Plaintiffs’ economic relationship with Health
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(818) 886 2525
14 Net policyholders.
15 84. In late 2015 or early 2016, Defendants decided that they wanted to
16 discourage policyholders from exercising their rights to utilize their out-of-network
17 benefits to obtain behavioral health treatment from Plaintiffs. In addition, Defendants
18 wanted to avoid the requirements of Health Net’s policy designs. To accomplish these
19 goals, Defendants engaged in the following unlawful acts, among others, designed to
20 disrupt the relationship between Plaintiffs and Health Net policyholders:
21 a. Defendants “pended” and referred all claims submitted by
22 Plaintiffs to Defendants’ Special Investigations Unit, prior to performing a
23 reasonable review of the claim. This conduct is an unreasonable standard for
24 the investigation and processing of claims, in violation of California Ins. Code
25 § 790.03(h)(3) & (5) and §10123.13, and Cal. Code of Regs., tit. 10,
26 § 2695.7(d).
27 b. Health Net sent Plaintiffs letters stating that payment of claims
28 was contingent on submission of extensive documentation and attestation of
22
COMPLAINT
1 certain facts, many of which were irrelevant to the processing of the claims.
2 This conduct constituted an unlawful failure to conduct and diligently pursue
3 a thorough, fair and objective investigation of claims and resulted in
4 unreasonable delays and denial of legitimate claims, in violation of California
5 Ins. Code §790.03(h)(3) & (5) and §10123.13, and Cal. Code of Regs., tit. 10,
6 § 2695.7(d).
7 c. Defendants refused to pay claims based on the clear policy
8 language, which required reimbursement at 75% or 100% of billed charges,
9 but instead substituted a bundled per diem Medicare rate for an entirely
10 different service furnished by an entirely different type of facility. This
11 conduct was a misrepresentation of the applicable policy language and
12 resulted in underpayment and unfair processing of claims, in violation of
13 California Ins. Code § 790.03(h) (3) & (5) and §10123.13, and Cal. Code of
KANTOR & KANTOR LLP
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14 Regs., tit. 10, § 2695.7(d).

15 d. Defendants refused to pay any amount on the vast majority of
16 claims submitted by Plaintiffs, despite the fact that the treatment had been
17 authorized, was properly provided and was medically necessary, in violation
18 of California Ins. Code § 796.04.
19 e. Defendants falsely accused Plaintiffs of illegal conduct,
20 damaging the good name and reputation of Plaintiffs, and causing Health Net
21 policyholders and others to stop seeking treatment from Plaintiffs.
22 f. Defendants reached out to other insurance companies, shared
23 their false accusations, and encouraged them to stop paying claims submitted
24 by Plaintiffs.
25 g. Defendants’ conduct was targeted at behavioral health providers,
26 not providers of medical/surgical benefits, in violation of Federal Mental
27 Health Parity and Addiction Equity Act of 2008, and the California Mental
28 Health Parity Act, California Ins. Code §§ 10112.27(a)(2)(D) and 10144.4.
23
COMPLAINT
1 85. As a direct result of the conduct of Defendants, Plaintiffs were unable to

2 continue treating Health Net policyholders.
3 86. In 2018, as a further direct result of the conduct of Defendants, Plaintiffs
4 were unable to sustain their operations, and were forced to close their treatment
5 facilities.
6 87. Plaintiffs have been damaged in an amount to be determined at trial, but
7 which exceeds $625,000,000.00.
8 88. Defendants’ conduct, described herein, was intended to cause injury to
9 Plaintiffs or was carried out with a willful and conscious disregard of the rights of
10 Plaintiffs, subjected Plaintiffs to cruel and unjust hardship in conscious disregard to its
11 rights, and was an intentional misrepresentation, deceit, or concealment of a material
12 fact known to Defendants with the intention to deprive Plaintiffs of property, legal
13 rights, or to otherwise cause injury, such as to constitute malice oppression or fraud

KANTOR & KANTOR LLP
(818) 886 2525
14 under California Civil Code section 3294, thereby entitling Plaintiffs to punitive
15 damages in an amount appropriate to punish or set an example of Defendants.
16
17 FOURTH CAUSE OF ACTION
18 VIOLATION OF UNFAIR COMPETITION LAW,
19 BUSINESS AND PROFESSIONS CODE §17200
21 90. Defendants’ conduct, as set forth above, was unlawful, unfair and
22 constitutes fraudulent business practices or acts.
23 91. Defendants engaged in the following unlawful conduct, among others:
24 a. Defendants “pended” and referred all claims submitted by Plaintiffs
25 to Defendants’ Special Investigations Unit, prior to performing a reasonable
26 review of the claim. This conduct is an unreasonable standard for the
27 investigation and processing of claims, in violation of California Ins. Code
28
24
COMPLAINT
2 § 2695.7(d).
3 b. Defendants sent Plaintiffs letters stating that payment of claims was
4 contingent on submission of extensive documentation and attestation of certain
5 facts, many of which were irrelevant to the processing of the claims. This
6 conduct constituted an unlawful failure to conduct and diligently pursue a
7 thorough, fair and objective investigation of claims and resulted in unreasonable
8 delays and denial of legitimate claims, in violation of California Ins. Code
9 §790.03(h)(3) & (5) and §10123.13, and Cal. Code of Regs., tit. 10, § 2695.7(d).
11 language, which required reimbursement at 75% or 100% of billed charges, but
12 instead substituted a bundled per diem Medicare rate for an entirely different
13 service furnished by an entirely different type of facility. This conduct was a

KANTOR & KANTOR LLP
(818) 886 2525
14 misrepresentation of the applicable policy language and resulted in

15 underpayment and unfair processing of claims, in violation of California Ins.
16 Code § 790.03(h) (3) & (5) and §10123.13, and Cal. Code of Regs., tit. 10,
17 § 2695.7(d).
20 authorized, was properly provided and was medically necessary, in violation of
21 California Ins. Code § 796.04.
22 e. Defendants’ conduct was targeted at behavioral health providers,
23 not providers of medical/surgical benefits, in violation of Federal Mental Health
24 Parity and Addiction Equity Act of 2008, and the California Mental Health
25 Parity Act, California Ins. Code §§ 10112.27(a)(2)(D) and 10144.4.
26 92. Defendants engaged in the following fraudulent and unfair business
27 practices, among others:
28
25
COMPLAINT
1 a. Defendants “pended” and referred all claims submitted by Plaintiffs

2 to Defendants’ Special Investigations Unit, prior to performing a reasonable
3 review of the claim. This conduct is an unreasonable standard for the
4 investigation and processing of claims, in violation of California Ins. Code
6 § 2695.7(d).
7 b. Defendants sent Plaintiffs letters stating that payment of claims was
8 contingent on submission of extensive documentation and attestation of certain
9 facts, many of which were irrelevant to the processing of the claims. This
10 conduct constituted an unlawful failure to conduct and diligently pursue a
11 thorough, fair and objective investigation of claims and resulted in unreasonable
12 delays and denial of legitimate claims, in violation of California Ins. Code
KANTOR & KANTOR LLP
(818) 886 2525
14 § 2695.7(d).
16 language, which required reimbursement at 75% or 100% of billed charges, but
17 instead substituted a bundled per diem Medicare rate for an entirely different
18 service furnished by an entirely different type of facility. This conduct was a
19 misrepresentation of the applicable policy language and resulted in
20 underpayment and unfair processing of claims, in violation of California Ins.
21 Code § 790.03(h) (3) & (5) and §10123.13, and Cal. Code of Regs., tit. 10,
22 § 2695.7(d).
25 authorized, was properly provided and was medically necessary, in violation of
26 California Ins. Code § 796.04.
27
28
26
COMPLAINT
1 e. Defendants falsely accused Plaintiffs of illegal conduct, damaging

2 the good name and reputation of Plaintiffs, and causing Health Net
3 policyholders and others to stop seeking treatment from Plaintiffs.
4 f. Defendants reached out to other insurance companies, shared their
5 false accusations, and encouraged them to stop paying claims submitted by
6 Plaintiffs.
7 g. Defendants’ conduct was targeted at behavioral health providers,
8 not providers of medical/surgical benefits, in violation of Federal Mental Health
9 Parity and Addiction Equity Act of 2008, and the California Mental Health
10 Parity Act, California Ins. Code §§ 10112.27(a)(2)(D) and 10144.4.
11 93. As a direct and proximate results of Defendants’ unlawful, fraudulent and
12 unfair business practices, Plaintiffs have suffered and will continue to suffer
13 substantial monetary losses and irreparable injury. Plaintiffs do not have an adequate
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(818) 886 2525
14 remedy at law and will continue to suffer irreparable harm if an injunction does not
15 issue ordering Defendants to stop their unlawful, fraudulent and unfair business
16 practices. Plaintiffs are entitled to an injunction under California Business and
17 Professions Code § 17203.
18 94. Defendants have been unjustly enriched by their unlawful, fraudulent and
19 unfair business practices. Plaintiffs seek restitution in an amount to be proved at trial.
20
21 FIFTH CAUSE OF ACTION
22 SLANDER PER SE
24 96. In or about December 2016, Defendants communicated and/or met with
25 representatives from other health insurance carriers, including Anthem and Cigna. In
26 those communications and/or meetings, Defendants made statements that falsely
27 accused Plaintiffs of illegal and unethical business conduct. These statements
28 constitute slander per se under California Civil Code § 46 (1) and (3).
27
COMPLAINT
1 97. Defendants did not fully reveal these private communications until
2 October 2019.
3 98. As a direct result of the conduct of Defendants, Plaintiffs were unable to
4 sustain their operations, and were forced to close their treatment facilities. As a result,
5 Plaintiffs have been damaged in an amount to be determined at trial, but which exceeds
6 $625,000,000.00.
7 99. Defendants’ conduct, described herein, was intended to cause injury to
8 Plaintiffs or was carried out with a willful and conscious disregard of the rights of
9 Plaintiffs, subjected Plaintiffs to cruel and unjust hardship in conscious disregard to its
10 rights, and was an intentional misrepresentation, deceit, or concealment of a material
11 fact known to Defendants with the intention to deprive Plaintiffs of property, legal
12 rights, or to otherwise cause injury, such as to constitute malice oppression or fraud
13 under California Civil Code section 3294, thereby entitling Plaintiffs to punitive
KANTOR & KANTOR LLP
(818) 886 2525
14 damages in an amount appropriate to punish or set an example of Defendants.

15
16 REQUEST FOR RELIEF
17 WHEREFORE, Plaintiffs pray for judgment against Defendants as follows:
18 1. Damages in an amount to be determined at the time of trial but in excess
19 of $625,000,000, plus interest, including prejudgment interest;
20 2. General damages and other incidental damages;
21 3. Treble damages under RICO;
22 4. Punitive and exemplary damages in an amount in excess of $500,000,000;
23 5. Injunctive relief requiring Defendants to ease engaging in unlawful, unfair
24 and fraudulent business acts and practices;
25 6. Reasonable attorney fees as allowed by law;
26 7. Costs of suit incurred herein; and
27
28
28
COMPLAINT
1 8. Such other and further relief as the Court deems just and proper.
2
3 Dated: May 5, 2020 KANTOR & KANTOR, LLP
LISA S. KANTOR
4 TIMOTHY J. ROZELLE
5 DAWSON & ROSENTHAL, P.C.
STEVEN C. DAWSON
6 ANITA ROSENTHAL
SANDER DAWSON
7
By: /s/ Lisa S. Kantor
8 Lisa S. Kantor,
Attorneys for Plaintiffs, Dual Diagnosis
9 Treatment Center, Inc., Satya Health of
California, Inc., Adeona Healthcare, Inc.,
10 Sovereign Health of Florida, Inc., Sovereign
Health of Phoenix, Inc., Sovereign Health of
11 Texas, Inc, Shreya Health of Florida, Inc.,
Shreya Health of Arizona, Inc., Vedanta
12 Laboratories, Inc.
13
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(818) 886 2525
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
COMPLAINT
1 DEMAND FOR JURY TRIAL

2 Plaintiffs hereby demand a trial by jury.
3
4 Dated: May 5, 2020 KANTOR & KANTOR, LLP
LISA S. KANTOR
5 TIMOTHY J. ROZELLE
6 DAWSON & ROSENTHAL, P.C.
STEVEN C. DAWSON
7 ANITA ROSENTHAL
SANDER DAWSON
8
9 By: /s/ Lisa S. Kantor
Lisa S. Kantor,
10 Attorneys for Plaintiffs, Dual Diagnosis
Treatment Center, Inc., Satya Health of
11 California, Inc., Adeona Healthcare, Inc.,
Sovereign Health of Florida, Inc., Sovereign
12 Health of Phoenix, Inc., Sovereign Health of
Texas, Inc, Shreya Health of Florida, Inc.,
13
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Shreya Health of Arizona, Inc., Vedanta

Laboratories, Inc.
(818) 886 2525
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
30
COMPLAINT

Racketeering &amp; Conspiracy Case Against Liann Gohari

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Racketeering &amp; Conspiracy Case Against Liann Gohari

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Case 2:20-cv-04112 Document 1 Filed 05/05/20 Page 1 of 30 Page ID #:1

1 Lisa S. Kantor, State Bar No. 110678

Attorneys for Plaintiffs, Dual Diagnosis Treatment Center, Inc.,

14 Satya Health of California, Inc., Adeona Healthcare, Inc.,

business as “Sovereign Health of California” and on occasion under other names as

13 6. Plaintiff Sovereign Health of Texas, Inc. (“Sovereign Texas”) is a

(818) 886 2525

1 accreditation organization for clinical laboratories under the Clinical Laboratory

13 13. Defendant Health Net Life Insurance Company (“Health Net”) is a

(818) 886 2525

14 California corporation with its principal place of business at 21281 Burbank

13 Hernandez and Optum are referred to as “Defendants.”

(818) 886 2525

(818) 886 2525

1 training at Sovereign facilities. Plaintiffs also provided continued education to lawyers

13 insurance policies to provide ten categories of “essential health benefits,” including

(818) 886 2525

1 enrollment increased 137.0 percent, from approximately 100,000 policyholders to

(818) 886 2525

(818) 886 2525

1 reducing or eliminating payments to out-of-network substance use disorder providers

13 California substance treatment centers.

(818) 886 2525

13 to collect the patients’ deductibles, copayments or co-insurance could raise questions

(818) 886 2525

(818) 886 2525

(818) 886 2525

1 52. Optum hired unqualified medical providers to conduct “medical

(818) 886 2525

(818) 886 2525

1 CA DOI ORDERS HEALTH NET TO SHOW CAUSE

13 Health Net policyholders, to pursue payment of the outstanding claims. In August

(818) 886 2525

14 2017, the California DOI withdrew the OSC.

1 63. Each of the Defendants is a “person” within the meaning of 18 U.S.C.

13 a. Conducting an unfounded and fraudulent audit of legitimate claims

(818) 886 2525

13 i. Falsely reporting to law enforcement that Plaintiffs had engaged in

(818) 886 2525

(818) 886 2525

14 and their Health Net patients.

1 SECOND CAUSE OF ACTION

13 77. Pursuant to and in furtherance of their fraudulent scheme, each of the

(818) 886 2525

1 applicable policy, and without informing Plaintiffs or the policyholders of the

13 g. Contacting other insurance companies to share false accusations

(818) 886 2525

14 and encourage them to stop paying Plaintiffs’ claims;

1 81. Plaintiffs are entitled to an injunction requiring each of the Defendants to

(818) 886 2525

(818) 886 2525

14 Regs., tit. 10, § 2695.7(d).

1 85. As a direct result of the conduct of Defendants, Plaintiffs were unable to

13 rights, or to otherwise cause injury, such as to constitute malice oppression or fraud

(818) 886 2525

13 service furnished by an entirely different type of facility. This conduct was a

(818) 886 2525

14 misrepresentation of the applicable policy language and resulted in

1 a. Defendants “pended” and referred all claims submitted by Plaintiffs

(818) 886 2525

1 e. Defendants falsely accused Plaintiffs of illegal conduct, damaging

(818) 886 2525

(818) 886 2525

14 damages in an amount appropriate to punish or set an example of Defendants.

Racketeering & Conspiracy Case Against Liann Gohari

Racketeering & Conspiracy Case Against Liann Gohari