Hypocritic Oath

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

Dickson -- who did not return three calls seeking comment -- has had a checkered record with the State Bar of California.

Records show that in October 2001 the Supreme Court of California placed him on four years' probation for having "intentionally or recklessly failed to perform, with competence, the legal services for which he had been employed." The high court canceled its six-month suspension order after Dickson agreed to attend weekly counseling sessions for substance-abuse problems.

Last April 28, a few days after New Times published its first story on the rent-a-patient scam, clinic records show that six members of Unity's board of directors met at the clinic. Among the six were Huong Ngo -- wife of clinic chief Tom Vu.

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.

At the meeting, the board voted to try to sell the uncollected medical billings -- then estimated at "having a face value in excess of $45 million" -- to a company that specializes in such collections.

Such companies buy accounts receivable at a discount, and gamble on being able to collect enough from debtors to make the deal profitable. For the seller, it's a time-tested way to raise immediate cash.

The day after that April 28 meeting, California Secretary of State records show Unity petitioned to change its name to St. Paul Outpatient Surgery Medical Center.

The paperwork listed Martha Madrid as the clinic's agent for service of process. Dr. Madrid has been listed as anesthesiologist in dozens of surgical procedures at the clinic. She currently is St. Paul's medical director.

Madrid did not respond to requests for comment.

On May 2, the Institute for Medical Quality, a subsidiary of the California Medical Association, "terminated" St. Paul's accreditation, according to a spokesperson for that agency.

The following day, investigators from the Orange County District Attorney's Office and the FBI executed search warrants at the Unity clinic and other locations. The other locations included the old Anaheim West clinic (which was closed for business, but at which boxes of records were stored) and the residence of Unity/St. Paul clinic chief Tom Vu.

Unity shut its doors for a few weeks after the raid, then reopened with its new name, St. Paul.

In the weeks that followed, attorney Dickson continued to shop St. Paul's $45 million-plus in outstanding billings to firms around the nation.

"You should be aware," Dickson wrote to a potential buyer last June, "that it is the utopian desire of all major insurance companies to corral all of the doctors, hospitals and surgery centers into their usually [sic] and customary' contractual web. Fortunately for many providers, which includes Unity and all of its accounts receivable, they are not in-network' providers.

"Consequently, those providers are not required to accept payment on their claims based on the usual and customary' guidelines. That phrase (and its attendant monetary collection limitations) is totally inapplicable and unenforceable against doctors, hospitals or surgery centers that are not within the particular insurance company's contractual network of providers."

Dickson's letter concluded, "In other words, and in that regard, the subject accounts receivable are more valuable."

Clinic records show Unity/St. Paul billed insurers $20.7 million in the first quarter of this year, with doctors performing medical procedures on 665 people.

Billings for the second quarter -- the time frame during which the New Times story was published and Orange County authorities executed their search warrant -- dropped to $5.8 million, with 205 patients undergoing procedures.

Though Unity/St. Paul's proposed deal with the accounts receivable company didn't pan out, records indicate that the clinic finally did sell an unknown amount of its uncollected billings to a Florida firm in late August

That firm, Strategica Southwest Financial Group, has been sending demand letters to insurance companies and administrators around the nation.

"The [medical] procedures for this claim were done by a California provider and are covered under California law," Strategica vice president Ben Seeley wrote to a North Carolina firm, Piedmont Administrators, in an October 15 letter that demanded the reimbursement of $66,115.

"To keep [your California] license you must abide by their laws. Failure to do so can lead to revocation of your license and damages for your actions."

A claims adjuster for Piedmont tells New Times that her company has no intention of paying any money, because the medical procedure done at St. Paul was medically unnecessary.

That's exactly what CIGNA investigations director Ken Faustine says he told someone at Strategica a few weeks ago.

"I said as directly as I know how that we just aren't going to pay bogus claims, and that the St. Paul claims are bogus," he says. "They are rent-a-patient claims, pure and simple."

Last July, 39-year-old Jill Smith and her two teenage children flew from their home in North Carolina to Southern California, where they stayed for more than a week.

Like the former Onyx employees in Arizona, Smith's health-care policy allowed her to seek "out of network" medical treatment wherever she wished, without pre-authorization.

She and her children, 16-year-old Bobby and 14-year-old Michele (New Times is not using the mom or kids' real names), first endured a battery of medical tests -- everything from nerve conduction and sleep studies to tests for carpal tunnel syndrome and vertigo -- at an outpatient surgery clinic in Orange County called Premier Wellness.

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My Voice Nation Help

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.



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