The former owners of a Glendale medical lab were sentenced Monday for bilking Medi-Cal out of $12.7 million in a scam that involved using their own blood -- and blood purchased from people they approached on the street -- to create fake lab tests.
Luisa Gonzalez, 57, and her ex-husband, Juan Carlos Ciraolo, 62, pleaded guilty in October to conspiracy and money laundering, which was carried out in 1996 and 1997 at Los Angeles Bio-Clinical Laboratory. The lab was closed in February 1997. A federal judge Monday sentenced Gonzalez and Ciraolo to 51 months each in federal prison and ordered them to repay $6.4 million.
The defendants were accused of forwarding $19 million in claims to Medi-Cal, claiming the blood tests were ordered for patients. The lab allegedly billed Medi-Cal the maximum $550 per claim and paid kickbacks to two medical clinics for patient names and phony doctor authorizations.
Assistant U.S. Atty. Lee Arian, who prosecuted the case, said the dollars involved made it the largest fraud ever committed by a lab against the state's medical assistance program.
Although the lab claimed the blood was drawn from patients, officials discovered it actually came from Gonzalez, Ciraolo and their employees, as well as strangers they recruited.
"There are many people -- and we're sure some of the homeless were those who gave blood -- who will gladly give their blood for the 15 or 20 bucks," said Sharon Marks, who investigated the case for the FBI. "That pays for a meal, or whatever else they want to buy."
Larry Malm, chief of investigations for the California Department of Health Services, said there are ongoing attempts to halt the type of abuses exacted by Gonzalez and Ciraolo.
"We're working as hard as we can to quash this fraud stuff, and we have not come close to running out of work yet," Malm said.
Gonzalez and Ciraolo caught the attention of Department of Health Services investigators by submitting millions of dollars in claims in a short time.
In February, Dr. Luis Lombardi, who worked at the San Gabriel Medical Clinic in Wilmington, was sentenced to probation after pleading guilty to federal charges stemming from the scheme. Lombardi was accused of giving patient names and blood test authorizations to Gonzalez and Ciraolo.
Sentencing remains for Constanza Ciraolo, who is Ciraolo's wife and a former Bio-Clinical receptionist, on April 28. Alfredo Morales, the former owner of Hawthorne-based La Guadalupana Medical Clinic who pleaded guilty to falsifying medical records and buying blood, will be sentenced May 12. Arian said he hasn't filed court documents indicating what penalties he will seek for those two.