STATE OF MINNESOTA COUNTY OF ISANTI DISTRICT COURT TENTH JUDICIAL DISTRICT COURT FILE NO. COUNTY ATTORNEY FILE NO. 14-0125 CONTROLLING AGENCY: MN062095Y CONTROL NUMBER: 12000578 State of Minnesota, Plaintiff, [X] SUMMONS [ ] WARRANT [ ] ORDER OF DETENTION v. [ ] AMENDED DAVID JAMES SCHORNSTEIN 534 MAIN ST N CAMBRIDGE, MN 55008 DOB: 11/15/1970 COMPLAINT The Complainant, being duly sworn, makes complaint to the above-named Court and states that there is probable cause to believe that the Defendant committed the following offense(s): COUNT I INSURANCE FRAUD M.S. 609.611, SUBD. 1(a)(2); 609.52, SUBD. 3(3)(a), SUBD. 3(5) PENALTY: 0-5 YEARS and/or $10,000 MOC: U111H GOC: N [X] Felony [ ] Gross Misdemeanor [ ] Misdemeanor [ ] Petty Misdemeanor That on or between January 1, 2011 and June 30, 2011, in Isanti County, Minnesota, DAVID JAMES SCHORNSTEIN, with intent to defraud for the purpose of depriving another of property or for pecuniary gain in the amount of $4,125, presented or caused to be presented, or prepared with knowledge or reason to believe that it would be presented, on behalf of an insured, claimant, or applicant to an insurer, insurance professional, or premium finance company, information that contained a false
representation as to a material fact, or concealed a material fact concerning a claim for payment or benefit under an insurance policy. COUNT II INSURANCE FRAUD M.S. 609.611, SUBD. 1(a)(2); 609.52, SUBD. 3(3)(a), SUBD. 3(5) PENALTY: 0-5 YEARS and/or $10,000 MOC: U111H GOC: N [X] Felony [ ] Gross Misdemeanor [ ] Misdemeanor [ ] Petty Misdemeanor That on or between July 1, 2011 and December 31, 2011, in Isanti County, Minnesota, DAVID JAMES SCHORNSTEIN, with intent to defraud for the purpose of depriving another of property or for pecuniary gain in the amount of $1,762, presented or caused to be presented, or prepared with knowledge or reason to believe that it would be presented, on behalf of an insured, claimant, or applicant to an insurer, insurance professional, or premium finance company, information that contained a false representation as to a material fact, or concealed a material fact concerning a claim for payment or benefit under an insurance policy. COUNT III INSURANCE FRAUD M.S. 609.611, SUBD. 1(a)(2); 609.52, SUBD. 3(3)(a), SUBD. 3(5) PENALTY: 0-5 YEARS and/or $10,000 MOC: U111H GOC: N [X] Felony [ ] Gross Misdemeanor [ ] Misdemeanor [ ] Petty Misdemeanor That on or between September 1, 2011 and November 30, 2011, in Isanti County, Minnesota, DAVID JAMES SCHORNSTEIN, with intent to defraud for the purpose of depriving another of property or for pecuniary gain in the amount of $2,498, presented or caused to be presented, or prepared with knowledge or reason to believe that it would be presented, on behalf of an insured, claimant, or applicant to an insurer, insurance professional, or premium finance company, information that contained a false representation as to a material fact, or concealed a material fact concerning a claim for payment or benefit under an insurance policy. 2
STATEMENT OF PROBABLE CAUSE The Complainant states that the following facts establish probable cause: Your complainant, Brandon Johnson, is a Special Agent in the Fraud Bureau of the Minnesota Department of Commerce. Complainant has participated in the investigation of this case and has familiarized himself with the investigations and reports of others with personal knowledge of this matter. Complainant believes the following establishes probable cause that DAVID JAMES SCHORNSTEIN ( Defendant herein) committed insurance fraud by submitting claims seeking payment under an insurance policy that contained material false representations regarding services rendered. BACKGROUND Defendant obtained his chiropractic license from the Minnesota Board of Chiropractic Examiners ( the board ) in 2000 and subsequently opened the North Metro Chiropractic Clinic, P.A. ( the clinic ), located in Cambridge, Isanti County, Minnesota. In 2010, Defendant hired two independent contractors to work at the clinic: S.E. to perform massage therapy and B.W. to provide chiropractic services. As independent contractors, S.E. and B.W. maintained their own patient schedules and treatment notes, but the clinic billed for and collected payment for all services S.E. and B.W. rendered. Defendant, in addition to providing chiropractic services to his patients, ran the clinic and performed all billing duties for the clinic. In December 2010, S.E. and her family including her husband, N.E., and her two children, A.E. and So.E. were in a car accident. As a result of the accident, S.E., N.E., A.E., and So.E. began seeing Defendant for chiropractic treatment. S.E. also provided massage therapy treatment to N.E., A.E., and So.E. The chiropractic and massage therapy treatments continued through most of 2011 and are at the center of this insurance fraud case. S.E. and her family, through N.E. as the policyholder, were insured by Kemper Insurance ( Kemper ). Following the accident, they filed claim number C093103MN10, invoking the Personal Injury Protection coverage of their policy. To request payment under the policy, Defendant compiled and submitted documentation for each service allegedly rendered to S.E., N.E., A.E., and So.E. in the course of treatment following the accident. Documentation submitted to Kemper included chiropractic treatment notes and a Health Insurance Claim Form 1500 ( Form 1500 ). Chiropractic treatment notes were completed by the treating chiropractor and included a summary of treatment performed, including whether massage therapy was rendered. Massage treatment notes were not submitted to Kemper. The Form 1500s contained information necessary for Kemper to process the claim, including the patient s name, claim number, dates of service, procedure codes, and charges. Defendant completed all of the Form 1500s submitted to Kemper on behalf of S.E., N.E., A.E., and So.E. In August 2011, while S.E., N.E., A.E., and So.E. were still being treated for injuries sustained in the car accident, the board suspended Defendant s chiropractic license and prohibited him from treating patients. Since approximately 2005, Defendant had been participating in the Health Professionals Services Program (HPSP) to aid him in recovering from an addiction to prescription pain medication. Defendant had developed the addiction after being prescribed pain medication for a medical condition. 3
Throughout his participation in HPSP, Defendant had continued to operate the clinic and provide chiropractic services to patients. But in March 2011, HPSP discharged Defendant from the program after learning that he was misusing prescription controlled-substance medications. In response to Defendant s discharge from HPSP, the board sought a conference with Defendant to evaluate his ability to practice chiropractic with reasonable skill and safety to the public. Defendant admitted at the conference that his pain and use of controlled medications to manage his pain had affected his judgment and decision making abilities. Following the conference, Defendant and the board entered into a Stipulation and Order whereby the board suspended Defendant s chiropractic license. The board stayed the suspension contingent upon the condition that Defendant not provide direct patient care, thereby allowing Defendant to continue to operate the clinic but prohibiting him from rendering services himself. Defendant signed the Stipulation and Order on May 27, 2011, and the board effectuated the agreement on August 9, 2011. After Defendant was prohibited by the board from practicing chiropractic, B.W. was the only licensed chiropractor at the clinic. Thus, B.W. began treating all of the chiropractic patients at the clinic, including S.E., N.E., A.E, and So.E. Defendant continued to handle the billing for the clinic. Following an investigation into allegations that Defendant violated the terms of the stayed suspension, the board revoked the stay and formally imposed the suspension. Ultimately, in April 2012, the board revoked Defendant s license to practice chiropractic. OFFENSES Investigations into Defendant s billing practices revealed that Defendant submitted two types of fraudulent claims regarding the treatment allegedly rendered to S.E. and her family after they were involved in the car accident. Investigations were completed by the Minnesota Attorney General s Office on behalf of the board and by the Minnesota Department of Commerce. The investigations included interviewing witnesses, including Defendant, and reviewing documents and communications pertaining to the clinic s billing practices and records. The investigations established that (1) Defendant submitted claims to Kemper seeking payment for massage-therapy services allegedly but not actually rendered to S.E, and (2) Defendant submitted claims for chiropractic services that contained material false representations regarding the provider of chiropractic services. Massage-therapy services Defendant submitted over 50 Form 1500s seeking payment from Kemper for massage services allegedly but not actually rendered to S.E. in 2011. Because S.E. was the only massage therapist at the clinic, Defendant told her he would submit insurance claims for massage services not rendered to S.E., and then give S.E. the money received from Kemper so she could seek massage-therapy treatments elsewhere. In an interview with law enforcement, Defendant agreed that he intentionally submitted claims to Kemper for massage-therapy services that had not been rendered to S.E., stating, [W]e had made an agreement that I would bill Kemper for massages and give [S.E.] the funds directly and she would be able to go and see a friend that was in another facility. Defendant did bill and receive payment from Kemper for massages, but S.E. did not receive that money and did not receive massage treatments at the clinic or elsewhere. In an audio- and video-recorded conversation between S.E. and Defendant, S.E. confronted Defendant about how he would explain the claims he submitted to Kemper 4
seeking payment for massage services allegedly rendered to S.E., since she had not received any massages. Defendant responded, Right. That part we ll have to make up. You know what I mean? They ve gotta have clear evidence that we intended to commit fraud. B.W. also stated in interviews with law enforcement that Defendant instructed him to include in all of his treatment notes for S.E. that she had received massage-therapy services on the dates B.W. performed chiropractic services. B.W. later learned from S.E. that she had not been receiving massage-therapy treatments at the clinic or elsewhere and ceased including the massage services in his notes. In sum, Defendant submitted 58 insurance claims to Kemper seeking payment in the amount of $5,887.50 for massage-therapy treatments not rendered to S.E. The fraudulent claim submissions regarding massage-therapy services allegedly but not actually rendered to S.E. are summarized in the following table: Count Time Period Number of massage therapy treatments billed for but not rendered Amount billed 1 Jan. 1, 2011 - June 30, 2011 44 $4,125.00 2 July 1, 2011 - Dec. 31, 2011 14 $1,762.50 Chiropractic services After the board imposed the stayed suspension and prohibited Defendant from practicing chiropractic effective August 9, 2011, Defendant maintained billing responsibilities for the clinic. Defendant submitted claims seeking payment for chiropractic services allegedly rendered to S.E., N.E., and A.E. on 19 occasions after August 9, 2011. The dates of alleged chiropractic services and their corresponding costs billed to Kemper are detailed in the following table: Patient Date of service Date of claim Amount billed A.E. 9/6/2011 9/22/2011 $123 A.E. 9/20/2011 9/22/2011 $135 N.E. 9/20/2011 9/22/2011 $155 A.E. 10/8/2011 10/20/2011 $135 N.E. 10/8/2011 10/14/2011 $155 S.E. 10/8/2011 10/14/2011 $100 A.E. 10/13/2011 10/14/2011 $135 N.E. 10/13/2011 10/14/2011 $155 S.E. 10/13/2011 10/14/2011 $100 A.E. 10/20/2011 10/20/2011 $135 N.E. 10/20/2011 10/20/2011 $155 S.E. 10/20/2011 10/20/2011 $100 A.E. 10/27/2011 10/27/2011 $135 N.E. 10/27/2011 10/27/2011 $155 A.E. 10/30/2011 11/3/2011 $135 S.E. 10/30/2011 11/3/2011 $100 A.E. 11/3/2011 11/3/2011 $135 N.E. 11/3/2011 11/3/2011 $155 S.E. 11/3/2011 11/3/2011 $100 Total $2,498 5
In box 31 of the Form 1500s, Signature of physician or supplier including degrees and credentials, Defendant electronically signed B.W. s signature. And because these services were rendered after August 9, 2011, B.W. was the only licensed chiropractor in the clinic who could have performed the services. But B.W. maintains that he did not render these services. Moreover, Defendant admitted in an interview with law enforcement that, although the claims he submitted stated that B.W. rendered the services, B.W. did not in fact render chiropractic services on those 19 occasions. Based upon the above-described information, Complainant has probable cause to believe that Defendant committed insurance fraud. Defendant is not currently in custody. 6
NOTICE: You must appear for every court hearing on this charge. A failure to appear for court on this charge is a criminal offense and may be punished as provided in Minn. Stat. 609.49. Complainant requests that Defendant, DAVID JAMES SCHORNSTEIN, subject to bail or conditions of release, be: (1) arrested or that other lawful steps be taken to obtain Defendant s appearance in court, or (2) detained, if already in custody, pending further proceedings, and that said Defendant otherwise be dealt with according to law. COMPLAINANT S NAME COMPLAINANT S SIGNATURE Brandon Johnson Subscribed and sworn to before the undersigned this day of, 2014. NOTARY STAMP: SIGNATURE Notary Public Being authorized to prosecute the offenses charged, I approve this complaint. Date: PROSECUTING ATTORNEY SIGNATURE: Name: Erica M. Yarlagadda Special Assistant Isanti County Attorney C-2000 Hennepin County Government Center 300 Sixth Street South Minneapolis, MN 55487 (612) 348-5987 Attorney Registration No.: 0393081 7
FINDING OF PROBABLE CAUSE From the above sworn facts, and any supporting affidavits or supplemental sworn testimony, I, the Issuing Officer, have determined that probable cause exists to support, subject to bail or conditions of release where applicable, Defendant s arrest or other lawful steps be taken to obtain Defendant s appearance in court, or Defendant s detention, if already in custody, pending further proceedings. Defendant is therefore charged with the above-stated offense. [X] SUMMONS THEREFORE YOU, THE ABOVE-NAMED DEFENDANT, ARE HEREBY SUMMONED to appear on the date stated on the attached Notice of Hearing before the above-named court at Isanti County Government Center, 555 18 th Avenue Southwest, Cambridge, Minnesota, 55008 to answer this complaint. IF YOU FAIL TO APPEAR in response to this SUMMONS, a WARRANT FOR YOUR ARREST shall be issued. [ ] WARRANT To the Sheriff of the above-named county; or other person authorized to execute this warrant: I hereby order, in the name of the State of Minnesota, that the above-named Defendant be apprehended and arrested without delay and brought promptly before the above-named court (if in session), and if not, before a Judge or Judicial Officer of such court without unnecessary delay, and in any event not later than 36 hours after the arrest or as soon as such Judge or Judicial Officer is available to be dealt with according to law. [ ]Execute in MN Only [ ]Execute Nationwide [ ]Execute in MN and Border States [ ] ORDER OF DETENTION Since the above-named Defendant is already in custody, I hereby order, subject to bail or conditions of release, that the above-named Defendant continue to be detained pending further proceedings. Bail: No Bail Required ($5000 if Defendant fails to appear on Summons) Conditions of Release: This complaint, duly subscribed and sworn to, issued by the undersigned Judicial Officer this day of, 2014. JUDICIAL OFFICER: NAME: TITLE: SIGNATURE: Judge COUNTY OF ISANTI STATE OF MINNESOTA Clerk s Signature or File Stamp STATE OF MINNESOTA vs. DAVID JAMES SCHORNSTEIN Plaintiff, Defendant RETURN OF SERVICE I hereby Certify and Return that I have served a copy of this COMPLAINT upon the Defendant herein named. Signature of Authorized Service Agent: 8