Hypocritic Oath

California's rent-a-patient scam has reaped millions for greedy physicians, clinics and patients

In mid-November, more than 200 FBI agents and insurance industry investigators packed into a banquet room at Tampa's Marriott Waterside Hotel.

They came to hear what an FBI supervisory agent and a prominent insurance investigator had to say about a stunningly successful health-insurance scam centered inside Southern California outpatient surgery clinics.

The presentation was part of a cutting-edge training conference sponsored by the National Health Care Anti-Fraud Association. New Times first revealed the scheme in a story published earlier this year ("Rent A Patient," Paul Rubin, April 24).

Fred Harper
Phoenix attorney Holly Gieszl, with her colleagues Mike Kimerer and Timothy Tweeton.
Jackie Mercandetti
Phoenix attorney Holly Gieszl, with her colleagues Mike Kimerer and Timothy Tweeton.

That story described how insurance companies had become fodder for a lucrative scam in which doctors at California clinics perform medically unnecessary and grossly overpriced surgical procedures on willing Arizona patients. For their efforts, those patients are paid cash -- usually $800 per procedure -- for allowing their bodies to be used as instruments for fraud.

Now, months later, law enforcement and insurance-fraud investigators are calling the rent-a-patient scam one of the nation's most significant ongoing health-care frauds.

"This has become one of the largest initiatives that we've undertaken in several years," FBI special agent Dan Martino told the Tampa gathering.

A burly, confident 32-year FBI veteran, Martino said it's rare for his agency to discuss ongoing investigations publicly. But he reiterated that cooperation with the insurance industry is imperative if they want to crack the rent-a-patient ring.

"This is a conspiracy between surgery centers, doctors, office personnel, billing services, cappers' [patient recruiters] and patients," Martino said. "Nobody has died yet, but I give it just a matter of time until it happens. It doesn't get any worse than this when you're looking at [a lack of] medical necessity.

"There's all kinds of free money floating around. We have these egregious patients . . . they're thieves, like the clinics. Then the clinics and docs submit their big bills and some insurers just pay. Some companies have set up red flags and some still have not.

"We have a national crime problem here, and we're trying to come up with a solution that will help the victims -- the insurance companies and the American public that have to pay higher premiums."

Specifically, Martino said his task force is targeting more than 100 doctors and about 25 Southern California clinics as part of a multi-state investigation that includes patients from 44 states.

He added that the top five states from which the clinics have recruited patients through cappers are California, Texas, Utah, Minnesota and Arizona.

Martino estimated the rent-a-patient conspiracy has cost consumers and insurance companies up to $300 million in the last two years.

The continuing New Times investigation also has uncovered new information demonstrating that the magnitude of the conspiracy fraud far surpasses that described in April. That story unfolded after a handful of employees from a Phoenix hazardous-waste plant approached the paper with astounding tales of deception, greed and danger.

Since then, the paper has interviewed dozens of people, obtained internal documents from the most prominent of the targeted Southern California clinics -- St. Paul Outpatient Surgery Center, in Buena Park -- and obtained records involving rent-a-patients from insurance companies and other sources around the nation.

New Times interviewed 16 claims adjusters, all of whom conceded they are just starting to realize the extent of the Southern California surgery scam. The adjusters have provided similar accounts of how the holders of so-called "golden" health-insurance policies (and their family members) travel west from around the nation to undergo an array of medical procedures ranging from sweat-gland surgery to colonoscopies.

St. Paul's own documents indicate that about 2,000 patients from 45 states have undergone surgical procedures at the clinic since it opened for business as Unity Outpatient in early 2002 (the name was changed to St. Paul shortly after publication of the first New Times story).

About 75 percent of the clinic's business has come from out of state, even though almost any procedure performed there could have been done within a few miles of the patients' homes, and at a fraction of the cost. The patients' employers included such companies as Pepsi-Cola, Frito-Lay, the Purdy Corporation, and the Nutrilite division of Amway.

The clinic billed insurers more than $60 million during a 15-month period that ended last July. Of that remarkable sum, records show St. Paul collected about $15 million from insurers, which has left about $45 million in unpaid bills.

But many insurance investigators agree that if it hadn't been for ineffective billing practices, St. Paul would have collected much more. Industry vigilance has been lax.

St. Paul's internal documents also demonstrate that, until recently, employees and administrators at 48 of the nation's insurance companies rarely questioned the medical necessity or excessive cost of the procedures completed on the rent-a-patients.

It seemed not to matter to adjusters that dozens of out-of-state residents were -- every month -- flying to California for procedures of dubious medical necessity.

Agent Martino told the Tampa gathering that a constant in the scam has been that the rent-a-patients all have been adults -- the majority of them men between the ages of 25 and 35 -- who consent in writing to whatever medical procedures are about to be performed on them.

But New Times recently uncovered a case involving two teenagers -- ages 14 and 16 -- and their mother, who traveled from North Carolina to Southern California for a series of procedures. Doctors performed sweat-gland surgery on the trio to alleviate their alleged problems with excessive perspiration -- even though those problems never had been documented back home.

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1 comments
keith
keith

It is ashamed that people themselves to be used like that. The 800 dollars compared to the thousands the clinic pocketed is nothing. They should be prosocuted also.

JMO

Keith:

Site: septoplastyrecovery.com

 
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