North Texas Chiropractors Convicted in Million Dollar Fraud

U.S. District Judge Reed O’Conner and a federal jury convicted Drs. Abbas Zahedi and James Sterns of health care fraud in January 2015 in the Northern District of Texas. Dr. Zahedi of Carrolton, Texas was convicted of one count of conspiracy to commit health care fraud, five counts of health care fraud, and four counts of aggravated identity theft. Dr. Zahedi will serve 145 months in federal prison and pay $2.4 million in restitution. Dr. Sterns, of DeSoto, Texas, will be incarcerated for 10 months and serve thirty-six months of supervised release. [i]

Dr. Zahedi and his partner, Reginald Guy (sentenced to 156 months in federal prison and also ordered to pay $2.4 million in restitution), partnered together for years in an effort to defraud insurance companies. Dr. Zahedi and Guy recruited friends to treat at the DFW Rehab & Diagnostics clinic in Arlington, Texas from 2009 to 2012.[ii]

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After Dr. Zahedi and Guy’s friends agreed to treat at DFW Rehab, the alleged patients began receiving fake work excuse documentation. Then all of the involved parties would collect monetary kickbacks from the submission of bills to their respective insurance companies for chiropractic services that were not performed.[iii]

If you have ever been legitimately treated for an injury that was accompanied by an insurance claim, you may be familiar with the circumstances surrounding this scheme. Imagine being involved in a car accident and having to submit a claim to your auto insurance company. Your insurance company would then be obligated to pay the medical bills that result from the car accident. However, if you have no genuine injury and your doctor performs no treatment but you submit fake bills to the insurance company, the insurance company will likely be duped into sending your doctor money to compensate them for your bogus treatment.

Reginald Guy utilized his former role as a union representative to recruit patients. Dr. James Sterns was the initial conspirator with Guy back in 2010. Dr. Sterns ran the Metroplex DFW Sports Rehab Center in Arlington and Guy served as the office manager until 2011. In 2011, Guy began his association with Dr. Zahedi. Guy’s fraudulent billing scheme began at Metroplex and was efficiently transferred to Dr. Zahedi’s clinic as Guy’s employment changed. [iv]

Guy, Sterns, and Zahedi were not the only conspirators. Tina Perkins, who held the title of Biller and Office Consultant at Dr. Zahedi’s DFW Rehab clinic, and her sister-in-law, Donna Harris, were personally responsible for submitting the fraudulent claims to insurance companies. Both Perkins and Harris received immediate cash disbursements in exchange for allowing Dr. Zahedi to submit claims under their names, their relatives’ names, and other falsified patients’ names. [v]

Although Drs. Zahedi and Sterns were the only licensed doctors of chiropractic involved, all parties related to this scheme were liable and charged with health care fraud. The primary conspirators, Dr. Zahedi and Reginald Guy initially faced a maximum statutory penalty of ten years in federal prison, and a $250,000 fine for the conspiracy charge and each health care fraud count. Each count of aggravated identity theft carries a maximum statutory penalty of two years. Tina Perkins was sentenced to ten months of incarceration, followed by thirty-six months of supervised release.[vi]

The investigation into Metroplex DFW Sports & Rehabilitation Clinic and DFW Rehab & Diagnostics was conducted jointly by the Texas Department of Insurance’s (“TDI”) Fraud Unit and the Federal Bureau of Investigation. U.S. Attorney Sarah R. Saldana assisted in the prosecution.[vii]

The TDI was made aware of this scheme by Sedgwick Claims Management pursuant to Texas Insurance Code §701.051.[viii] This section of the Insurance Code mandates reporting of insurance fraud within 30 days of reasonable discoverability. The TDI selected this claim for in-depth investigation due to the relatively high amount of damages, exceeding $1 million dollars upon their initial review, and the mail and wire fraud aspect of the scheme which brought it under Federal purview.[ix] [x] [xi]

If you or someone you know suspects insurance fraud, the TDI Fraud Unit recommends reporting the activity as soon as possible. The TDI website provides their own online reporting ( and the number for their Fraud Hotline (1-800-252-3439). Once you have reported the activity, please give the TDI Fraud Unit time to investigate – in 2009 the Fraud Unit received approximately 11,000 reports and in 2015 they received an excess of 13,500 reports. All information is anonymous; however, it is easier for the TDI to follow up on reports if the complainant includes their contact information and participates in the investigation. [xii]

[i] Tex. Dep’t of Ins., Insurance Fraud Cases, (2016), available at (last visited May 4, 2016).

[iii] Tex. Dep’t of Ins., Insurance Fraud Cases, (2016), available at (last visited May 4, 2016).

[iv] U.S. Att’y Office, N.D. Tex. (2015), available at (last visited May 5, 2016).

[v] Id.

[vi] Id.

[vii] Ins. Journal, North Texas Doctor Gets 12 Years for Insurance Fraud, (2015), available at (last visited May 10, 2016).

[viii] Tex. Ins. Code § 701.05.

[ix] 18 U.S.C. §24(b).

[x] 18 U.S.C. § 1035 (a).

[xi] Saren E Williams & Captain of the Fraud Unit, David Englert, Information Regarding Dr. Zahedi (2016).

[xii] Id.