Out of Patients

Local waste plant tries to clean up after embarrassing insurance mess

A Phoenix hazardous-waste company fired at least two of its "rent-a-patient" employees last week, after revelations that the pair and others at the firm had been part of a sprawling insurance-fraud scheme.

A top official for Onyx Environmental Services, a national hazardous-waste treatment, recovery and disposal firm with a plant at 56th Avenue and Jefferson Street, says the firm discharged the pair and an unspecified number of other employees for "not conducting themselves in accordance with our high standards of business ethics and standards."

Greig Seidor, Onyx's chief legal officer and vice president in charge of the Law and Compliance Department, says his investigation also has revealed that an unspecified number of other Onyx employees traveled from Phoenix to Southern California for unnecessary and sometimes dangerous medical procedures at selected outpatient surgical clinics.

For their efforts, the rent-a-patients -- so-called because they underwent the procedures in return for cash payments -- confirm that Cuban-born workers Andres Sanchez and Felix Navarro were fired for their role in the scam.

Firing the patients was a huge mistake, says the lawyer whose firm is representing seven rent-a-patients.

"Sometimes corporate lawyers make decisions that they think will make their company look good in the short run," says Holly Gieszl, a Phoenix attorney. "But in the long run, this will make it more difficult for Onyx and firms like Onyx to get to the bottom of why and how situations like this happen on their watch. These employees are victims who came forward when they realized there was a problem, and the company's response is to fire them?"

Two other Onyx employees (also Cuban natives), Oskar Mora and Julio Hernandez, quit their jobs last week, allegedly after clashing with supervisors at the west-side plant.

Some of the Onyx rent-a-patients underwent repeated medical procedures at the clinics, including circumcisions, sweat-gland surgeries, hernia operations, colonoscopies and endoscopies. After the procedures, the rent-a-patients would be paid cash, usually $800 or so, by a middleman (called a "capper," or recruiter of someone in a fraudulent scheme of some kind) for the surgery centers ("Rent a Patient," Paul Rubin, April 24).

New Times identified the "capper" for several Onyx rent-a-patients as Glendale resident Qui Pham. He was a supervisor at Onyx in the shipping-and-receiving department. The company fired Pham shortly after publication of the April 24 story.

Pham denied wrongdoing in a short interview conducted on April 22. But six rent-a-patients interviewed by New Times say Pham told them on numerous occasions that he'd collect up to $2,000 from someone in California for each person he'd convinced to undergo a procedure.

The clinics -- primarily the Unity Outpatient Surgery Medical Center in Buena Park, California -- then billed Onyx's insurance carrier, Highmark Blue Cross/Blue Shield, for thousands of dollars more per procedure than would be considered reasonable under any criteria. Blue Cross routinely approved the exaggerated claims, paying out more than $400,000 for claims by Onyx employees alone, from mid-2002 until a few months ago.

However, because of how Onyx's insurance plan is structured, Highmark sent many of the huge claim checks directly to the patients instead of to the health-care providers. The patients were then supposed to sign over the checks to the providers.

But at least 11 of those rent-a-patients cashed many of those checks for themselves, saying later they were infuriated at the doctors who'd operated on them unnecessarily and the middleman who'd seduced them into going to California.

Then, earlier this year, Unity and another Southern California clinic sued the 11 patients in Orange County Superior Court for fraud, breach of contract and other alleged civil wrongdoing. Those lawsuits opened up the first public-records window into the insurance-fraud scam.

After word of the multilevel scam became public, an attorney for Premium Outpatient Surgery Center, which is located in Huntington Beach, California, asked a judge earlier this month to dismiss the lawsuits against two of the Onyx rent-a-patients, Jhoan Alvarez and Andres Sanchez.

Alvarez was fired in April, allegedly after a run-in with his supervisor, Qui Pham.

But Sanchez, a 52-year-old father of three who cashed more than $60,000 in checks that he shouldn't have, kept his job as a fork-lift operator at Onyx until last week. Sanchez came to this country from Cuba in the mid-1990s.

"I love it here, and I like my job," Sanchez said before he got fired. "I am a person who works for what I have, and I am proud of that."

No criminal charges have been filed in the rent-a-patient scams. But authorities in Orange County executed search warrants on two surgical clinics -- Unity and Anaheim West, a related center -- and other locations less than a week after New Times first detailed the insurance scam. Led by an investigator from the Orange County District Attorney's Office, authorities confiscated more than 200 boxes of documents from Unity and the other clinic. (Unity has been closed for business since then, according to law enforcement officials, though other sources tell New Times that the clinic may soon be reopening under a new name.)

Felix Navarro, the other Onyx employee known to be fired last week, underwent two procedures at Unity, a colonoscopy and a septoplasty (the latter is designed to correct a deviated septum and to improve breathing through the nose). Last October, Navarro cashed a $41,278 check from Blue Cross/Blue Shield that he was supposed to turn over to Unity.

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