A few months before he was indicted in a stem cell implantation case, Henderson Dr. Ralph Conti put his profitable medical practice into bankruptcy, raising questions about the finances of the business.
Foothills Pediatrics LLC, which is owned by Conti, filed for Chapter 11 bankruptcy reorganization on July 27 to block efforts by a former Conti partner to collect $327,000 awarded by an arbitrator in a business dispute.
Foothills Pediatrics, headquartered at 6301 Mountain Vista St., Suite 205, Henderson, has six Las Vegas-area offices and employs 62 people, including nine physicians, physician assistants and nurse practitioners.
The business said in court filings it has $2.3 million in assets against liabilities of $968,000.
Foothills Pediatrics generated $6.9 million in income in 2010, a court filing said.
Records show it generated a profit of $68,000 in August while operating in bankruptcy.
The business distributed payments to Conti of $1.2 million in the 12 months ending July 15, bankruptcy records show.
The bankruptcy filing came after Dr. Michael Rosenman was awarded the $327,000 by an arbitrator and a judge confirmed the award over the protests of Conti.
Conti is appealing that ruling.
The bankruptcy case grew contentious when attorneys for Conti accused Rosenman of violating the automatic stay of litigation and debt-collection activity — a stay provided by the bankruptcy — by trying to collect the $327,000 from Foothills Pediatrics affiliates.
Bankruptcy Judge Mike Nakagawa on Sept. 6 denied a request by Conti that Rosenman and his attorneys be sanctioned and be found in contempt of court.
Nakagawa noted that insurance companies for patients of Foothills Pediatrics had received garnishment orders from Rosenman for funds due to multiple Conti entities, not just Foothills Pediatrics.
After the bankruptcy was filed, attorneys for Rosenman called off the garnishments against Foothills Pediatrics but continued them against some nonbankrupt entities.
Nonbankrupt entities named in court records include the Ralph Conti Trust, Raconti LLLP and Raconti LP.
“In the correspondence between counsel, Rosenman and (attorney John ) Muije have asserted that Conti’s practice of billing under Raconti LP’s tax identification number for medical services provided by Foothills may constitute civil and criminal fraud under applicable laws governing healthcare providers,” Nakagawa wrote in his order. “The assertion is not relevant to the disposition of the current motion, although a debtor in possession is required to operate in compliance with applicable law.”
Court records show that Muije, in an Aug. 29 letter to Conti’s attorneys responding to the sanction motion, wrote, “Are you truly admitting that Dr. Conti and various other doctors affiliated with his practice are engaging in criminal healthcare fraud, knowingly billing for services to an entity which does not provide these services?”
“Bankruptcies to screw business partners out of money that have been generated and earned for the business can hardly be considered coming before the court with clean hands, particularly when we are seeing elements of tax fraud, healthcare financing fraud and bankruptcy fraud undertaken by Dr. Conti in furthering that immoral purpose,” his letter said.
A request for comment on these assertions was placed Friday with Conti’s attorney pursuing the arbitration appeal.
Attorneys for Foothill Pediatrics, in court briefs, have denied the allegations of wrongdoing involving the business’s medical billings.
“All of the payments from insurers for patient services are paid for services provided by Foothills and Foothills’ employees. All of the payments received from patients or their insurers have been reported on the income tax return of Foothills,” a Foothills court filing said. “Due to inattention, Foothills never bothered to inform the insurers that the proper entity for payment was Foothills. Foothills has earned the payments from the payments and their insurers. Conti Trust, Raconti LP and Raconti LLLP are obligated to turn over any payments for medical services to Foothills.”
The issue of whether the bankrupt or nonbankrupt entities, or both, will continue receiving payments from patients’ insurers is heading for further litigation.
Insurers Aetna and Amerigroup Nevada have filed “interpleader” actions so they can place the money in escrow with the bankruptcy court until Nakagawa decides what to do with it. UnitedHealthcare has been added to these cases by Conti.
In another twist in the case, attorneys for Conti asked Nakagawa on Aug. 26 to waive the appointment of a patient care ombudsman, which can be required to protect the interests of patients in bankruptcies involving health care companies.
“The debtor’s relatively low debt to asset ratio highlights the non-necessity of an ombudsman. This is not a case where a debtor is suffering due to poor financial performance and is continually trying to cut costs,” Conti wrote in a court declaration. “Debtor is in compliance with all state and federal regulatory agency requirements and there are no pending actions against debtor by any regulatory agencies or boards.”
Nakagawa approved this waiver on Oct. 7 — five days before the U.S. attorney’s office in Las Vegas announced Conti had been indicted in the stem cell case in which he’s accused of fraud.
Prosecutors claim Conti worked with Alfred Sapse of Las Vegas to perform experimental implant procedures in which patients and investors were defrauded.
Foothills Pediatrics is not part of the criminal case.