Three American doctors have been arrested by the California Department of Insurance and the Orange County District Attorney's Office for medical fraud.
These three are being accused of performing unnecessary surgical procedures and fraudulently billing more than $30 million to insurance companies.
Likened to "body snatchers" by Orange County's top prosecutor, the doctors were arrested Wednesday for their alleged roles in an elaborate insurance fraud scheme in which hundreds of patients across the U.S. were recruited to undergo unnecessary procedures in exchange for money or low-cost cosmetic surgeries.
The arrests bring to 17 the number of people named in the "rent-a-patient" scam allegedly operated out of Unity Outpatient Surgery Center in Buena Park.
Deputy District Attorney Rick Welsh of the Economic Crimes Unit is carrying out the prosecution.
The accused are Dr. Michael Cheeluen Chan, an obstetrician-gynecologist, Dr. William Wilson Hampton Jr., a general surgeon and Dr. Mario Z. Rosenberg, a gastroenterologist. If convicted, they face a maximum sentence of 49 years and four months. Bail is set at $1.8 million for Chan, $1 million for Hampton, and $2.3 million for Rosenberg.
Chan was the owner and Medical Director of Unity Outpatient Surgery Center in Buena Park, Calif. In practice, he contracted almost complete control of Unity to non-licensed administrators in exchange for 2 percent of the center's fraudulent profits, and obtained the right to perform all gynecological procedures at Unity.
Accordingly, the doctors participated in a $96 million billing scheme that recruited 2,000 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. The recruitment of patients, or "capping," is illegal in California. Insurance companies paid more than $17 million during a 10-month period.
The cappers, or recruiters, targeted employees from businesses in more than 32 states and covered by PPO insurance plans, as pre-approval from the insurance company would not be a requirement for surgery.
Employees who were involved in this scheme affected more than 1,600 employers. The cappers arranged transportation for the patients, scheduled the surgeries, and coached the healthy patients on what to say. In exchange for undergoing surgery, the "patients" would receive a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.
The doctors performed many of the surgeries on Saturdays and Sundays. Often, they operated on members of the same household on the same day. Chan is accused of performing procedures on 208 patients, which resulted in more than $9.5 million in insurance billing with more than $1.8 million collected for the unnecessary and fraudulent work.
Rosenberg is accused of performing 646 procedures on 554 patients, which resulted in the fraudulent billing to insurance companies of more than $9 million, for which Unity was paid more than $2.3 million.
Hampton is accused of performing 180 procedures on 178 patients. He primarily performed thoracic sympathectomies, also known as sweaty palms surgeries, which is a highly unusual and dangerous medical procedure. This condition can also be treated with topical creams, medication, and botox. Of the patients that underwent surgery by Hampton, cappers who have already been charged, referred 97 percent. Hampton has been indicted by the federal government for his involvement in a Los Angeles surgery center scheme similar to the Unity Outpatient Surgery Center case.
"We're talking about doctors who were real-life body snatchers," Dist. Atty. Tony Rackauckas was quoted.
"It's unfathomable that a doctor would treat patients as if they were bodies on a medical conveyor belt" for profit".
Deputy Dist. Atty. Rick Welsh, who is leading the prosecution, said he found the case "mind-boggling" on several levels: the volume of the procedures, the boldness of the doctors and the willingness of the patients to put themselves at great potential risk.
Rackauckas, meanwhile, said he hoped the arrests would serve as a strong message to anyone considering taking part in such a scam.
"Doctors have a respected position in our community and are entrusted with our health and well-being," he said. "Doctors need to know if they commit insurance fraud, they may be trading in their scrubs for prison jumpsuits."