Modern Vascular managers file for bankruptcy after Republic investigation, DOJ lawsuit

By Andrew Ford
 Published May 23, 2023 by The Arizona Republic.

Every morning Charles Raymond realizes how much he lost.

He prioritizes God, family and work. He’s 66, he was successful in business, and he has supported eight kids. 

He has a tiger tattoo on his right forearm, a dragon on his left. Inspired by Bruce Lee, he’s a kung fu fighter who feared no evil thanks to his potent kick.

Then he went to Modern Vascular.

After eight surgeries, which he says weren’t all necessary, his left leg was damaged. Other doctors tried to save it. But ultimately, it was amputated.

He’s grown dependent on his wife of 42 years. But she was driven from their bed because he wakes in the night screaming in pain.

When morning comes, the 6-foot-2 former college football player has to remember he’s missing a leg. He has forgotten before, and he fell.

He twists into his wheelchair and maneuvers to the bathroom, squeezing through a narrow doorway to get to the toilet. 

To get to breakfast in the kitchen, he grinds his wheelchair over carpet in his Glendale home. The resistance feels like lifting weights.

Still, he has energy for a fight.

He saw Arizona Republic stories about Modern Vascular that revealed the company’s pursuit of profit and claims of harm to patients. He felt his experience was similar and he sued the company in April. 

His lawsuit claims their star doctor, Scott Brannan, performed “excessive and unwarranted treatment” which “caused severe and irreversible damage.” Brannan and the company haven’t yet responded to him in court.

“It wasn’t right,” Raymond told The Republic. “And unless these things are done, they will continue to violate others.”

Months of turmoil for Modern Vascular

Meanwhile, Modern Vascular is struggling. Eight months after The Republic published its investigation,  Modern Vascular’s parent company filed for bankruptcy, the culmination of months of turmoil.

The Republic’s October story was quoted in a December civil complaint filed by the Department of Justice that claimed Modern Vascular bilked Medicare out of $50 million and pressured staff to perform procedures:

“As Modern Vascular Corporate’s Chief Medical Officer Steve Berkowitz told a reporter for the Arizona Republic, ‘If you run a pizza joint and you’re not selling enough pizzas, you’re not going to stay in business.’”

Then came a “crippling blow,” the company said in a bankruptcy filing:  Medicare suspended payments to Modern Vascular in February. The federal health care program had funded 50% of Modern Vascular’s patients. 

Modern Vascular’s website once boasted 17 clinics. It now shows five.

“I have no comment,” CEO Patrick Santore said in a recent text message to The Republic.

In a court filing, the parent company — Nobility Management LLC — said it is “insolvent and unable to pay its debts when due.” It filed for Chapter 11 protection in the federal Central District of California on May 15.

It pledged to fight the DOJ lawsuit and hopes the suspension from Medicare will eventually be lifted. The company said in a court filing it aims to “restructure its operations, rebrand, and, if necessary, find strategic partners.”

In the bankruptcy filing, the company pegged its assets between $9 million and $10 million and listed the landlords to which it owes money. 

But other folks also want money from Modern Vascular: the DOJ trying to claw back what it considers ill-gotten gains, and patients who sued claiming Modern Vascular hurt them.

Patients and their attorneys would first try to get money from Modern Vascular’s malpractice insurance, according to attorney Cynthia Braun, who is suing the company. If they hit a limit on policies for Modern Vascular and its doctors, they could be stuck trying to go after the company’s assets, standing in line with other parties the company owes money to. Many of the patients suing are not in great health and face the daunting prospect of legal battles that could take years. 

Meanwhile, the people running Modern Vascular are largely shielded from liability. 

“That is the purpose of a limited liability company — to protect the owners, the individuals,” Braun said.

More lawsuits against Modern Vascular

Modern Vascular was created in 2017 and promoted outpatient procedures to treat peripheral artery disease, a narrowing of blood vessels that can lead to amputation, particularly in the legs and feet.

It grew quickly because it attracted local doctors to invest, the company said in a bankruptcy filing. The DOJ took issue with Modern Vascular’s courting of referring doctors — often podiatrists — as investors, a practice also detailed in The Republic’s investigation. Modern Vascular paid these doctors dividends. One podiatrist told The Republic he made $100,000 from the arrangement.

The company said in court it “worked tirelessly” to comply with the law, but the DOJ said Modern Vascular’s pursuit of investing doctors amounted to an illegal kickback scheme.

Medicare stopped payments to Modern Vascular citing “credible allegations of fraud,” according to a letter filed in court. Medicare laid blame on founder Yury Gampel.

“Law enforcement investigation and a civil false claim case has revealed credible allegations that Yury Gampel and Modern Vascular Corporate designed and implemented a fraud scheme at Modern Vascular at the expense of patients and federal payors,” the Medicare letter said.

Through an attorney, Modern Vascular pushed back in court on the Medicare suspension. In a letter dated in February, the attorney wrote the company is trying to settle with the DOJ.

The attorney’s letter said the feds don’t want to “kill the company,” and they demanded in settlement negotiations Modern Vascular pay $80 million. The attorney argued, in effect, that cutting Modern Vascular off from Medicare jeopardizes its ability to settle with the DOJ, which claims it ripped off Medicare. 

And meanwhile, the attorney wrote, Modern Vascular made changes “… to end even an appearance of any wrongdoing …”. 

The attorney said in the letter Modern Vascular stopped paying current investors and stopped adding new investors. It also booted Gampel “from active management responsibilities as yet another risk mitigating strategy …”. 

An April email from an attorney for Gampel to federal prosecutors says the Medicare suspension has been “economically crippling the clinics and causing massive economic damage to Mr. Gampel personally.”

The LLC running Modern Vascular’s Sun City clinic was sued in April by a landlord saying Modern Vascular failed to pay rent. The landlord’s attorney declined to comment.

A letter attached to that lawsuit shows Modern Vascular’s attorney begging the landlord for leniency as the clinic fired staff, closed the clinic and handed over the keys.

“While we are still going through appeals, it has become painfully clear that the company is rapidly moving towards insolvency,” Mark Rabinovich wrote of the Sun City location. He didn’t respond to emails seeking comment.

The company was founded around the Phoenix area and once boasted five clinics in Arizona. Four have closed since October. The last Modern Vascular clinic standing in the copper state is the site of more recently alleged wrongdoing.

Two lawsuits filed in April say Dr. Brannan performed unnecessary and damaging procedures at their Mesa location, leaving one patient missing toes and another missing a leg.

In addition to the lawsuit filed on behalf of Raymond, who lost a leg, Bonnie Suzanne Tucker claimed in a lawsuit she underwent multiple surgeries with Brannan including a 5⅟₂-hour session of “extremely aggressive” procedures that led to complications. The procedures didn’t work, and Tucker lost two toes, she claimed. 

“It was horrible,” Tucker told The Republic.

Photos attached to the lawsuit show a dark wound growing over her foot after Modern Vascular began a series of procedures.

Tucker’s lawsuit says the company “routinely encouraged, endorsed and performed overly aggressive and medically unnecessary interventional vascular procedures.”

“I cried a lot of tears over the whole thing,” Tucker said in an interview. “How could you do this?”

For the work done on Tucker, her lawsuit says, Modern Vascular billed Medicare $435,211.26.

Brannan was a focus of The Republic’s October investigation. He didn’t offer a response for this story, but he previously shared in 16 hours of interviews his roller coaster ride from a trailer park home to medical school, from prison to national prominence. 

“I keep going when other people would sometimes stop,” he previously said.