On July 16, 2014, a federal grand jury indicted
three Southern California residents in a scheme to defraud health insurance
programs by submitting bills in alleged medically unnecessary medical
procedures performed on insurance beneficiaries who received free or discounted
cosmetic surgery. The Indictment claims that there were more than $50 million
in unnecessary medical procedures billed. An indictment contains allegations
that a defendant has committed a crime. Every defendant is presumed innocent
until and unless proven guilty in court.
The indictment in Case No. SACR14-00110-JLSoutlines allegations
in which marketers or cappers lured patients to a surgery center in Orange County,
California known at various times as Empire Surgical Center, Vista Surgical
Center and Princess Cosmetic Surgery. The marketers allegedly told patients
that they could use their union or PPO health insurance plans to pay for
cosmetic surgeries, which are generally not covered by insurance. This involved private insurance but was investigated by Department of Labor which indicates that there may have been some government beneficiaries
When
patients came to the surgery center for a consultation, they were told that
they could receive free or discounted cosmetic surgeries if they underwent
multiple, medically unnecessary procedures that would be billed to their union
or PPO health care benefit program, the indictment alleges. The unnecessary
procedures typically performed on the “patients” were endoscopies (usually
esophagogastroduodenoscopies, or EGDs), colonoscopies and cystoscopies.
Once
the health care benefit program paid the claims, the patients were given free
or discounted cosmetic surgeries, including “tummy tucks,” breast
augmentations, rhinoplasties (“nose jobs”) and liposuction. Further, according
to the indictment, tummy tucks were billed as hernia repair surgeries, and
rhinoplasties were billed as deviated septum repair surgeries.
The
three defendants charged in the indictment are: (1) Vi Nguyen, 31, of
Placentia, who was a consultant at the surgery center and who is charged with
10 counts of mail fraud; (2) Theresa Fisher, 44, of Tustin, who was another
consultant at the surgery center and who is charged with five counts of mail
fraud; and (3) Lindsay Hardgraves, 30, of San Pedro, who was a marketer and
charged with two counts of mail fraud.
Attorney Commentary:
There were similar state and federal criminal cases some years ago in Orange County with
different surgery centers that also charged the physicians with performing the
medically unnecessary surgeries. At this point, no physicians are charged but
that could change depending on the evidence and whether these defendants later
cooperate and present evidence that the physicians who performed the
unnecessary procedures knew or should have known that they were
unnecessary. This is a case where the fraud was driven by illegal marketing to patients. Physicians and owners of surgery centers must be careful on how patients are recruited and what promises, if any, are made in order for them to have procedures performed at a certain facility.
Posted by Tracy Green, Esq.
Email: tgreen@greenassoc.com
Phone: 213-233-2260
