Tonmoy Sharma, Massive Health Insurance Fraud, California 2024

Santa Ana, California – In a shocking turn of events, Tonmoy Sharma, the 61-year-old founder and former CEO of the now-defunct Sovereign Health Group addiction treatment provider, has been arrested on an eight-count federal grand jury indictment alleging he submitted more than $149 million in fraudulent claims to health insurers.

According to the indictment, from 2014 to 2020, Sovereign billed private insurance companies for drug addicted and mentally ill patients often at high, out-of-network rates. Sharma directed his employees to aggressively pursue patients through various forms of marketing, directing them to contact the company at its toll-free phone number.

Once patients called in to Sovereign’s call center, employees used various tactics to enroll patients into the company’s treatment facilities, including misrepresentations. One such misrepresentation was that a patient’s treatment would be paid for by a foundation funded by donations from former Sovereign patients. In fact, the foundation was a sham organization and a ruse for Sovereign employees to obtain patients’ names, dates of birth, and Social Security numbers for use in surreptitiously obtaining health insurance coverage on their behalf.

Sovereign employees, at Sharma’s direction, made false representations on insurance applications, claiming qualifying life events that had not happened in order to obtain new insurance outside the enrollment period and inflating or underreporting their income so the patients would qualify for Affordable Care Act government-subsidized private insurance instead of Medicaid, whose reimbursement rates were significantly lower than private insurers.

The indictment also alleges that Sovereign fraudulently billed insurers more than $29 million for urinalysis tests not authorized by the purported ordering health providers. Sharma directed Sovereign employees to frequently administer cup testing and comprehensive panel testing, which was billed at a significantly higher rate than cup testing.

Co-defendant Paul Jin Sen Khor, 45, of Irvine, who worked as Sovereign’s cash management and accounts payable supervisor, was also arrested. Khor is charged with one count of conspiracy and one count of illegal remunerations for referrals to clinical treatment facilities. He pleaded not guilty and a July 29 trial date was scheduled. A federal magistrate judge ordered him released on $20,000 bond.

Tonmoy Sharma is expected to make his initial appearance and be arraigned tomorrow in United States District Court in downtown Los Angeles. He faces four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for referrals to clinical treatment facilities.

Related Federal Cases