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Clinics Find Surgery Scam Pays

'Rent-a-patient' procedures cost insurance firms millions

June 20, 2004|Christine Hanley | Times Staff Writer

Sandra Padilla traveled 360 miles to let strange doctors in Orange County poke around her insides. She got a colonoscopy, an endoscopy and something else she can't pronounce. The Arizona resident didn't need these procedures, but she was paid $1,600 to go through with them.

"I needed the money," Padilla would explain later.

She is one of thousands of women and men from around the country who federal investigators say are being used as pawns by Southern California outpatient surgery centers in what has mushroomed into one of the biggest and most brazen insurance rackets they have come across.

Recruiters working with clinics offer healthy people -- often immigrants who speak little English, often from out of state -- cash, vacations and even cosmetic surgery to undergo needless and overpriced medical procedures, from routine examinations to major surgery. The clinics are later paid by the health plans, either directly or by patients who agree to sign over the reimbursement checks mailed to them.

Federal investigators are working in 48 states to untangle complex paper trails involving countless clinics -- many of which also perform legitimate work -- as well as doctors, recruiters and patients.

Authorities have conducted several raids -- seizing records in March at clinics in Beverly Hills, Orange County and Reseda -- but have yet to arrest anyone. They say they are working as fast as they can to amass evidence against as many as 200 clinics in Los Angeles and Orange counties.

They estimate the scams, which are perpetrated nationwide, have cost insurance companies at least $500 million in the last few years, and left some so-called rent-a-patients with serious medical complications. Although no deaths have been reported, investigators worry there will be.

"We're literally talking about thousands of people who've been recruited for this. It's despicable when you think about it," said Dan Martino, the supervising FBI agent in charge of the case. "We don't want to see anyone get hurt. But we have to make sure the evidence we have will stand up in court."

The probe began about a year ago in Southern California, where investigators say the landscape and laws provide ideal conditions for the fraud. Here, clinics can exist in relative obscurity amid the urban sprawl and patients can be lured by all-expense-paid trips to the beach. California also is among the states that require insurance carriers to pay claims in 30 to 45 days, leaving little time for the firms to investigate suspected fraud.

In typical cases being dissected by Martino's unit, middlemen working for one or more outpatient clinics recruit assembly line workers and other hourly wage earners insured by Blue Cross and Blue Shield, United Health Group Inc., Cigna Corp. and other carriers that allow treatment outside of preferred provider organizations, or PPOs.

These recruits, usually drawn from immigrant populations, have been solicited by word of mouth or handwritten fliers. "Those of you who have Aetna, Cigna, Blue Cross, Blue Shield, or any PPO medical insurance plan and would like to make $4,000-$5,000 in cash! NO WORK INVOLVED!," read one flier investigators found in a factory break room. Patients can drive themselves or be transported to the clinics by van if they are within driving distance, or come by plane if they are farther away. Hotel rooms are provided to out-of-towners.

Beyond the trip to Southern California, patients are lured with the offer of free cosmetic surgery: face-lifts, tummy tucks and nose jobs, in addition to other unnecessary procedures, all at the expense of insurers.

"If you're dealing with an hourly wage earner who's never been to California, and tell them they're going to pay for their plane ticket and hotel," it's not hard to lure participants, Martino said, adding that in some cases recruits "are being told, 'If you come in for an endoscopy, we'll throw in a nose job.' It's pretty outrageous stuff."

Martino said the clinics perform medical procedures -- rather than just fake the paperwork -- because going through the motions gives the guilty parties "plausible deniability." Before they are treated, recruits are coached about what symptoms to describe to justify the procedures they will undergo.

Among procedures being routinely performed are endoscopies, in which a flexible, fiber-optic cable is used to look inside a patient's stomach or esophagus; and colonoscopies, in which a long tube with a camera lens at the end is inserted in the large intestine to look for polyps and tumors. The average cost of legitimate treatment ranges from $1,500 to about $3,000.

Inflated claims that run upward of 10 times those amounts are then submitted by the wayward clinics that have figured out how to penetrate insurers' billing systems without triggering software designed to root out fraud and inflated claims.

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