Capped

New Times stories lead to arrests in rent-a-patient scam

"It's going to unravel like a cheap sweater."

That's how Phoenix attorney Holly Gieszl reacted to word of the arrests in Southern California last week of six key players in the now-infamous "rent-a-patient" scam.

First reported by New Times ("Rent A Patient," April 24, 2003), the scheme included thousands of "patients" nationwide who traveled to outpatient surgery clinics in the Los Angeles area for medically unnecessary and grossly overpriced procedures. In turn, the patients were paid about $800 per procedure. Colonoscopies, endoscopies and sweat-gland surgeries were most common. The clinics then submitted outrageously high claims to insurance companies, which, until the scheme was exposed, asked few questions and paid millions of dollars in reimbursements.

The New Times series focused on the Unity Outpatient Surgery Center in Buena Park, 20 miles southeast of Los Angeles. That clinic, now called St. Paul Outpatient Surgery Center, also has been the focus of the Orange County District Attorney's Office, which spearheaded last week's arrests.

Among those arrested were clinic owners Tam Vu Pham and his wife, Hoang Ngo, of Fullerton. Authorities also arrested four so-called "cappers" -- middlemen who recruit would-be patients for their own lucrative piece of the action.

The charges against the six include grand theft, insurance fraud and tax evasion. Pham and Ngo are being held on $5 million bail each; bail for the others is $1 million each.

Prosecutor Rick Welsh would not comment on whether authorities have frozen the assets of those arrested, nor if other arrests are imminent. No medical professionals, including the doctors who performed the unnecessary surgeries, yet have been charged.

"I will say that this investigation definitely is ongoing," says Welsh. "There is a huge amount of work ahead, but we are going to see it through and do it right."

Welsh credited investigator Bruce Rogers, a white-collar crime expert with his office, with putting together the case. He also gave New Times props for exposing the rent-a-patient scheme in last year's series.

"If anyone wants to know what this case is all about, all they have to do is read those stories," he says.

The first story described how a group of employees at Onyx Environmental Services -- a hazardous-waste plant in west Phoenix -- had taken advantage of a generous health-insurance plan that allows for easy "out of network" access to medical care. Recruited by a local "capper," the group traveled across the desert on Friday nights, some of them several times, to undergo surgeries, then returned to work on Mondays with extra cash in their pockets.

But the Onyx policy calls for reimbursement checks to be issued directly to the patients when they seek out-of-state care for a medical procedure. That's where things got sticky.

At least 12 of the Arizona rent-a-patients cashed the checks themselves, rather than turn them over to their "capper." The dozen cashed more than $400,000 in insurance checks earmarked for Unity Outpatient in the second half of 2002.

Unity Outpatient then sued the Onyx employees in Orange County, an action that unintentionally opened a window into the inner workings of the surgery center. That lawsuit has not been resolved.

Gieszl, who is representing some of the Arizona rent-a-patients, says she was happy to hear about the arrests, but adds, "This scam obviously wouldn't have worked as well as it did without the cooperation of the medical professionals. They knew and know just what was going on, and I hope they, too, get brought to justice."

E-mail paul.rubin@newtimes.com, or call 602-229-8433.

 
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