Rent a patient

Need some quick cash? Everyone makes a killing when doctors and clinics scam the insurance companies.

Hildebrand also noted in a phone interview that the Onyx employees involved in the scheme "are all very good workers who we have cared about as people."

The several Onyx employees who have become rent-a-patients are covered by a Blue Cross/Blue Shield PPO (preferred provider option) plan. It allows for unfettered out-of-network access to medical care, including little preauthorization from the insurer for most procedures.

The California clinics soon submit their insurance claims to Blue Cross, which serves as an "administrator" for Onyx's self-insured plan.

Julio Hernandez.
Jackie Mercandetti
Julio Hernandez.
Glendale resident Andres Sanchez underwent 
hernia surgery in California last year.
Jackie Mercandetti
Glendale resident Andres Sanchez underwent hernia surgery in California last year.

Records reviewed by New Times show that the claims are for thousands of dollars more per procedure on the rent-a-patients than are considered "usual and customary" under any criteria.

Blue Cross routinely has approved those insurance claims, which have totaled hundreds of thousands of dollars for the Onyx employees alone.

But the best-laid plans of those who devised this rent-a-patient scam have been going awry.

Blue Cross policies call for insurance reimbursement checks to be issued directly to the patients instead of to the out-of-network clinics and doctors. And in recent months, several Arizona rent-a-patients have been cashing those checks themselves -- more than $400,000 at last count -- instead of signing them over to the clinics as they'd promised.

For example, insurance records provided by Glendale resident Andres Sanchez show that he underwent a septoplasty at Unity last October 4. The procedure is designed to alleviate problems caused by deviated septums, and usually costs about $5,000, everything included, according to two Southern California surgeons and a health-care information Web site.

But Unity billed Blue Cross/Blue Shield $42,237 for Sanchez's operation, including $25,531 for "surgical supplies" allegedly used during the procedure -- which he insists lasted no longer than 15 minutes.

On November 7, the insurer mailed Sanchez a check for the entire amount. Sanchez says he cashed the $42,237 check himself.

"People around me have been getting rich on this," the 52-year-old Cuban immigrant says through a translator. "The check was made out to me, and it was my body. I said, Okay.'"

Two of the Southern California clinics reacted to that unexpected turn in January by suing Sanchez and 11 other Valley rent-a-patients in Orange County Superior Court. The clinics -- Unity and Premium Outpatient Surgery Center of Huntington Beach -- are claiming breach of contract, fraud and other alleged wrongdoing.

Many of the rent-a-patients have hired their own Phoenix attorney to fight the clinics' lawsuit.

Ironically, the filing of the lawsuits by the clinics provided the catalyst for this story, and a previously unpublicized glimpse into the fraudulent scheme.

The brazenness of the lawsuits filed by clinics that are engaging in massive health-care fraud is matched only by the fraud itself.

"When you took the money, you were well aware that it did not belong to you," Roy C. Dickson, an attorney for the clinic, wrote to Julio Hernandez in a January 22 letter notifying him of the lawsuit. "You cannot possibly believe that you had a right to make a profit from having a surgery performed at Unity's facility while Unity is deprived of the income for allowing you to have the surgery there."

Thomas Brennan, the director of Pittsburgh-based Highmark Blue Cross/Blue Shield's special investigations unit, bristled when informed by New Times of the lawsuits:

"So they're greedy enough to try to go that route? That just about takes the cake."

Told of the scam, Washington, D.C.-based Blue Cross/Blue Shield spokeswoman Jackie Fishman replied in a prepared statement:

"We are aware of several allegations of similar conduct made against a number of surgery centers and providers that use these facilities, some of which are located in the state of California. Several Blue Cross/Blue Shield plans have identified claims that seem to fit this billing pattern . . .

"Collectively, we are searching for ways to deal with these cleverly disguised schemes while remaining compliant with the various state and federal prompt-pay statutes that make no provision for the suspension of payment of a claim that, on its face, meets payment guidelines."

Just after dawn on Saturday, April 5, a man with a pockmarked face and an Elvis hairdo leaned against a wall inside the Unity Outpatient Surgery Center in Buena Park, California.

He spoke in a thick accent that betrayed his Vietnamese heritage to a portly Latino. The pair was among the 25 or so people already seated inside the clinic.

"No worries," cooed the Vietnamese man, who wore a black tee shirt with the inscription "Bad Bones."

"You done here quick, then go and rest. We drive back to Phoenix real early. You go to work no problem on Monday."

The Latino smiled nervously, his left leg twitching as he sat there. Another Vietnamese man seated nearby in the waiting room joked about needing a cigarette. Several rent-a-patients later identified that Vietnamese man to New Times as Qui Pham, the insurance-fraud recruiter who owns a home in Glendale.

A tired-looking man in blue scrubs and a cap stepped into the lobby and called for a woman with a Hispanic surname.

"Buenos días," he greeted her.

"Buenos días," she replied, before following him toward the surgery rooms.

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