CALIFORNIA Millions of Dollars Medical Insurance Fraud Scheme

Weekly Fraud Blotter from Lexis/Nexis:  August 15, 2009

Each week we’ll be surveying what the media, state agencies, insurance companies, and others report in terms of workers’ comp fraud. Just like a police blotter, our workers’ comp fraud blotter lists recent arrests, charges, and convictions.

$154 Million Medical Insurance Fraud Scheme

Talk about  fraud and abuse!  Here’s a case study that would make a good stage play.

The Story
$154 Million Scam
19 Defendants
2,841 healthy patients
Unnecessary and dangereous surgeries
Fraudulant billing of medical insurance companies (PPO)
1,0000 Employers in 39 states scammed

The Players
  1 Outpatient surgery center
10 Cappers
  5 Administrators
  3 Doctors
  1 Attorney
  1 Accountant

The Game – Capping
The defendants  in the outpatient surgery center were accused of participating in a $154 million medical insurance fraud scheme by recruiting 2,841 healthy people nationwide and bribing them with money or low cost cosmetic surgery, to receive unnecessary and dangerous surgeries and submitting fraudulant claims to medical insurance companies.  “Capping,” the recruitment of patients, is illegal in California. 

The cappers  targeted employees from businesses in 39 states covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in the scheme.

They were  accused of arranging transportation for the patients, scheduling the surgeries, and coaching the healthy “patients” on what to say.

In exchange  for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

The convicted  had no medical training, recruited patients with PPO insurance, scheduled surgical procedures, and coached patients to correctly describe symptoms for the unnecessary surgical procedures. They assisted patients in filling out surgery center paperwork, had them sign a false affidavit stating they had not been offered compensation and had not received any compensation in exchange for using the surgery center’s services.

The Penalty
All participants  were arrested, charged with a variety of fraudulent crimes, indicted or pleaded guilty and received various prison sentences for participating in one of the nation’s largest medical fraud prosecutions. for recruiting over 2,841 healthy patients to undergo unnecessary and dangerous surgeries to fraudulently bill medical insurance companies in the amount of $154 million.  (workersxzcompxzkit)

The surgery center will be ordered to pay restitution and back taxes for personal and corporate taxes to CFTB. A restitution hearing for all of the convicted cappers is scheduled for December 4, 2009.

Extracted:  Press release office of  Attorney Tony Rackauckas, 8/11/09.

Reposted with Permission  Visit LexisNexis for more information and full reports.

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