Karens who cause harm are being fined or made to pay restitution. Despite the fact that these repayments can be deducted as business expenses, the Commissioner is trying to push them into a punitive situation.
The Cavarettas contend that restitution was part of their criminal sentence and should be treated as compensatory rather than punitive. The case is now before the Supreme Court for consideration.
1. Dr. Cavaretta
Karen Cavaretta fraudulently billed insurance companies for work she hadn’t actually performed. In 2001, she was sentenced to 18 months in prison and two years of supervised release for health-care fraud; furthermore, GHI was ordered to pay Cavaretta $600,000 in restitution.
The Cavarettas maintain that this restitution should have been deducted as business expenses; however, the Commissioner contends they should not have deducted anything at all since it was restitution rather than an expense. He further asserts that the Cavarettas were negligent in taking a different view of the payments than what the court would have allowed them.
This dispute arises from an examination of Peter and Karen Cavaretta’s dental practice records. For several years, Karen allegedly submitted false claims to GHI for procedures that Peter never performed, such as “planing and scaling.” Her records demonstrate this practice continued until January 2001 when a postal inspector intervened and stopped her activities.
Karen and her husband were ultimately found guilty of health-care fraud. In addition to the criminal penalties, Judge Elfvin also ordered Karen to adhere to a civil restitution agreement she had privately negotiated with GHI.
Karen Cavaretta entered into an agreement with GHI to repay them the $600,000 she had allegedly charged for fraudulent surgeries. In return, the Cavarettas would agree to settle any remaining civil claims that had arisen during their criminal case with GHI.
The Cavarettas argue that this restitution should be deductible as either a loss carryback under section 162 or 165(c)(1), or as payment made under a claim of right under section 1341. However, the Commissioner contends that since it wasn’t a loss carryback, it cannot be deducted under sections 162 or 165(c)(1).
We do not believe this argument to be convincing. The Commissioner makes much of the fact that only one contract with GHI existed in the trial record, which occurred in November 2000; however, there is no evidence indicating it was separate from Karen’s improper billing scheme.
We are confident that we can establish that the Cavarettas had a contract with GHI during these years that required them to return any overcharges submitted by Karen. At trial, every witness who worked in the office during that time confirmed their obligation to reimburse any overcharges submitted by Karen to GHI; Karen herself being the only denial.
2. Dr. Spranger
In 1858, Doctor Spranger married Mary Sattig of Ohio and they had seven children – four of whom are still living. One died as a child while the others are now in their sixties.
Born in Germany, he received his education at public schools and colleges of that country before moving to America where he practiced medicine for 24 years. In 1890 he relocated to California where he has enjoyed great success as a general practitioner. Furthermore, he has contributed articles to leading medical journals as well as being an active member of the California Homeopathic Society.
He strongly believes that it is the physician’s obligation to cure their patient, regardless of any theories or dogmas present at the time. He holds fast to the similia similibus doctrine in homeopathy and does not subscribe to single remedies or infinitesimal doses.
Spranger maintains a large and sophisticated office, where he sees between one hundred to three hundred patients daily. The practice is run as a family affair, with many friends throughout the city.
His family life has been filled with happiness, and he takes great joy in spending time with his grandchildren. Despite being successful, he never exhibits the arrogance that so often characterizes some of his colleagues.
He has dedicated his profession to treating diseases of the heart and kidneys. A member of the American College of Homeopathy, he holds liberal views regarding religious affiliations.
He is known for his outgoing personality and talent for music; a passionate amateur performer of the Zither who has few peers in this field. An unassuming yet honest man, his moral qualities are well admired by those around him. His religious faith is Catholic, with no interest in politics or public office; he belongs to both Arbeiter Society and Concordia Club organizations and has always been a friend to those in need.
3. Dr. Spranger’s Law Firm
On Wednesday, Karen Spranger, a former Macomb County clerk who was accused of stealing money from an elderly woman, entered no contest into Judge Diane Druzinski’s courtroom and agreed to pay back $1,660 as part of a deal with Macomb prosecutors. Additionally, she was ordered to pay $300 in fines plus an additional $125 in crime victims rights fees and court costs as part of her agreement with Macomb prosecutors.
Spranger joined Pepper Hamilton in January as chair of their life sciences transactional group, after spending 10 years at Saul Ewing Arnstein & Lehr. Her group handles mergers, acquisitions and other deals for clients in biotechnology. With a diverse practice that encompasses corporate finance, intellectual property licensing and litigation – although she declined to name specific clients – her expertise is in high demand within this sector.
Her departure marks the latest in a string of partner defections at Pepper Hamilton, which has lost roughly 20 partners to rival firms over the last year. The firm’s revenue per lawyer dropped 10% in 2016 compared to 2015 due to decreased production from its health effects litigation team, according to several sources.
4. Dr. Cavaretta’s Law Firm
Dr. Cavaretta is the co-owner and partner of Cavaretta Law Firm with her husband Peter, representing physicians, hospitals and other healthcare providers before trial and appellate courts as well as state licensing boards. With over two decades of experience under her belt, Dr. Cavaretta is board certified in civil appellate law by the Texas Board of Legal Specialization. Additionally, she writes regularly on medical malpractice defense topics like alternative medicine (both complementary and conventional) along with health-care fraud and ethics.
Karen Cavaretta was sentenced to pay a $600,000 restitution payment to GHI as part of her criminal sentence. This amount represents the most expensive restitution payment ever made in San Antonio and was deducted from her family income. While it’s commendable that Karen was able to cover her share of costs, this restitution payment does not represent best practice in legal practice.