$1BIL BILLING FRAUD,CALIF HEALTH PLANS
$1BIL BILLING FRAUD,CALIF HEALTH PLANS
2005-03-14 at 9:26:00 am #10845
$1 Billion Billing Fraud Hit California Health Plans
Huge Billing Fraud Is Cited by Health Plans in
WASHINGTON (March 05) – Twelve Blue Cross and Blue Shield
plans, working with the F.B.I., said Friday that they had broken up an elaborate
insurance scheme in which thousands of patients from 47 states were sent to
California to undergo unnecessary surgical and diagnostic procedures, for which
doctors filed more than $1 billion of fraudulent insurance claims.
Insurance executives and law enforcement officials said
that surgery clinics in Southern California typically paid recruiters $2,000 to
$4,000 for each patient who received a medical procedure. The patients, they
said, received rewards in the form of cash or discounts on cosmetic surgery.
Daniel M. Martino, acting chief of the health fraud unit at
the Federal Bureau of Investigation, said the payments to patients ranged from
$200 to $2,000 each.
Mr. Martino said the outpatient surgery clinics had billed
more than $1.3 billion for services provided as part of the scheme, while
insurers and employers had lost $350 million in claims paid to date.
The Blue Cross and Blue Shield plans filed a civil lawsuit
on Thursday against nine surgery clinics, 21 doctors and 13 people described as
owners, employees or administrators of the clinics. The Justice Department and
the district attorney in Orange County, Calif., have filed criminal charges
against some of the defendants.
Steven E. Skwara, a fraud investigator at Blue Cross and
Blue Shield of Massachusetts, said, “It’s astounding, the degree of brazenness
of some of the folks perpetrating this scheme.” He spoke at a briefing with Blue
Cross executives and federal and state law enforcement officials.
William J. Feccia, an assistant district attorney in Orange
County, said the patients traveled to California from 47 states.
Mr. Martino, the F.B.I. official, said insurers became
suspicious when, for example, “50 people from Boston arrived in Southern
California in a three-week period and filed claims for colonoscopies performed
every other day.”
The civil lawsuit, filed in Federal District Court in Los
Angeles, also stated that the plaintiffs – Blue Cross and Blue Shield plans –
were puzzled to see “clusters of employees from the same workplace” going to
California for the same treatments.
The recruiters often persuaded co-workers to join the
scheme. Patients were recruited from small and medium-size businesses, as well
as units of corporations like Textron.
In the lawsuit, the Blue Cross plans said that the
recruiters located patients, persuaded them to have the procedures, verified
that they had insurance coverage and helped arrange transportation to
The F.B.I. and the Blue Cross executives said that many
patients who traveled to California received three or more procedures in a week.
The most common combination was a colonoscopy, to examine the lower part of the
gastrointestinal tract; an endoscopy, to examine the upper part of the digestive
system; and an unusual procedure to treat “sweaty palms.”
Mr. Martino said the last procedure, known as a
thoracoscopic sympathectomy, posed potential risks to the patient because it
involved collapsing a lung and deactivating a nerve near the spine.
Repeated efforts to obtain comment from the doctors and
clinics on Friday were unsuccessful. Millennium Outpatient Surgery Center was
named as a defendant in the civil suit filed by Blue Cross and in the criminal
case filed by the United States attorney in Los Angeles. Fabiola Sanchez, a
receptionist, answered the telephone at the number listed for Millennium. She
said that a new clinic, Park Center Outpatient Surgery, now occupied the site,
but was not taking patients because “we don’t have any doctors yet.”
In Irvine, Calif., at the office of a doctor named as a
defendant, an employee expressed surprise and said the charges in the lawsuit
“make no sense.” Another doctor defendant, in Tustin, Calif., refused to take a
phone call seeking comment.
The civil-suit complaint includes abundant detail drawn
from insurance claims. In a typical case, an Arizona couple had three identical
procedures at a clinic in Buena Park, near Anaheim, Calif. On Saturday, March
22, 2003, the husband and wife had endoscopies. They had colonoscopies the next
day. On March 29, both had surgery for sweaty palms.
As compensation, some patients got cash and others received
discounts on cosmetic procedures including a “tummy tuck,” breast enhancement
and surgery to correct the sagging or drooping of eyelids, according to the
The insurers said that doctors had fabricated symptoms and
diagnoses for patients, but performed the surgical procedures. Thus, the medical
records looked “legitimate or semi-legitimate,” Mr. Skwara said.
No patients were named as defendants. But Paul F. Brown,
vice president of the Blue Cross and Blue Shield Association, a trade group that
helped coordinate the investigation, said: “The vast number of patients knew
exactly what they were doing. They did this to get money. They did not need the
The Orange County district attorney, Tony Rackauckas, said,
“Health care fraud victimizes each of us because it raises everyone’s health
“At least 1,600 employers had employees who were involved
in the fraud” at one clinic, Mr. Rackauckas said. More than 5,000 patients had
unnecessary surgeries, he added.
County prosecutors said that owners of the clinic in Buena
Park had billed insurers for almost $97 million and tried to hide their
identities by creating shell corporations with different addresses and different
tax identification numbers.
Mr. Martino said the scheme had apparently first developed
among Vietnamese patients, who learned of the clinics at nail salons and from
newspaper advertisements. It spread to “the Hispanic community in California”
and to assembly-line workers at companies around the country, he said.