A pain management clinic run by doctors accused of Medicare fraud filed for bankruptcy and will shut down its Frederick lab.
Advanced Pain Management Services, renamed the American Spine Center and most recently operating under the name Orthopedic and Wellness, filed for bankruptcy on March 16 in the Western District of Kentucky.
Filing for Chapter 11 bankruptcy will allow it to continue operating as it restructures its debt and considers selling off parts of the business.
The company owes SunTrust Bank $1.7 million, according to court records.
While the Orthopedic and Wellness clinic in the 1000 block of Key Parkway will remain open, an Advanced Pain Management lab at 141 Thomas Johnson Drive in Frederick must be vacated within two weeks, according to court records. SunTrust has a lien on the property and can repossess it.
Orthopedic and Wellness CEO Kal Kahloon stressed that the company as an entity was never accused of any crimes.
“The company itself was never under investigation,” he said. “The company itself is not accused of any wrongdoing.”
The company’s clinic in Germantown closed at the end of last month, according to postings on its website and social media page. Kahloon said the office was not doing well financially.
While the bankruptcy was filed in Kentucky, the parties involved in the case agreed on Thursday to make a motion to transfer the case to a Maryland court.
The bankruptcy came as American Spine Center principal Atif Babar Malik faces criminal charges related to accusations that he was part of a kickback scheme that collected around $1.37 million from a urine testing lab.
He is also accused of participating in a plan to defraud Medicare by $530,000 in reimbursements.
Malik continues to work at Orthopedic and Wellness as he awaits trial.
“An accused [person] is presumed to be innocent until proven guilty. ... He is seeing patients as he did before,” Kahloon said.
The other American Spine Center founder, Sandeep Sherlekar, also faced the same fraud charges. He died by suicide on Sept. 30, 2016, in Frederick after the indictment was unsealed.
New York resident Konstantin Bas, CEO of the laboratory testing company accused of colluding with American Spine Center, already pleaded guilty to conspiracy to violate the anti-kickback act.
Bas is scheduled to be sentenced June 23 when he will face up to five years in prison and a $250,000 fine.
Frederick resident Vic Wadhwa pleaded guilty to his role as a “go-between” to the American Spine Center and the lab and is awaiting sentencing.
Mubtagha Shah Syed, of New Jersey, similarly pleaded guilty to violating the anti-kickback act after admitting to helping set up the agreement between American Spine Center and the laboratory testing company. His sentencing is scheduled for Dec. 13.
Muhammad Ahmad Khan, CEO of American Spine Center at the time of the alleged crimes, faces kickback charges as well.
Sherlekar, Malik and Khan were additionally accused of conspiring to defraud the IRS by failing to report cash payments to American Spine Center and filing false tax returns between January 2009 and 2013.