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Doctor convicted of insurance fraud in Orange County surgery scam

Dr. Michael Chan of Cerritos faces 28 years in state prison after being convicted of billing health insurers for unnecessary, dangerous surgeries.

August 05, 2011|By Corina Knoll, Los Angeles Times

A 65-year-old doctor was convicted Thursday of performing unnecessary and dangerous surgeries on more than 160 people in a $154-million medical insurance scam that lured patients by promising them cash or low-cost cosmetic surgeries.

Dr. Michael Chan of Cerritos, one of 19 defendants accused of fraudulently billing medical insurance companies, pleaded guilty in Orange County Superior Court to 40 felony counts, including conspiracy to commit insurance fraud and insurance fraud.

He faces up to 28 years in state prison.

Nearly 3,000 people across the U.S. allegedly agreed to undergo unnecessary procedures such as sweaty palm surgeries and colonoscopies at the Unity Outpatient Surgery Center, a Buena Park facility which is now closed.

Recruiters, known as "cappers," targeted employees from businesses in 39 states who were covered by PPO insurance plans. Prosecutors likened them to "body snatchers."

Patients, who typically received between $300 and $1,000 per surgery, were allegedly coached on how to describe their symptoms by the cappers who then scheduled their surgeries, assisted them with paperwork and arranged their travel. Recruiting patients is illegal in California.

Chan was the owner and medical director of Unity. He specialized in invasive gynecological surgeries and performed laparoscopy, tubal ligation, colporrhaphy and hysterectomy procedures.

Along with Dr. William Hampton Jr., 55, of Seal Beach and Dr. Mario Rosenberg, 63, of Beverly Hills, Chan was accused of ignoring basic medical protocol, such as failing to obtain medical information, not meeting with patients beforehand and neglecting to follow up.

The surgeries were mainly performed on weekends. All three doctors were arrested in 2007.

Nine defendants pleaded guilty and have been sentenced, including Hampton, who was sentenced to 16 years in state prison.

The remaining nine are scheduled to appear Friday for a pretrial hearing at the Central Justice Center in Santa Ana. In addition to doctors and cappers, the defendants include an attorney, an accountant and administrators.

Chan's sentencing date has not been set.

The Unity case was investigated by the California Department of Insurance and the Orange County district attorney's office, with assistance from the California Franchise Tax Board.

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