Orange County District Attorney Press Release

Tony Rackauckas, District Attorney
401 Civic Center Drive West
Santa Ana, CA 92701

For Immediate Release Case # 08ZF0025     August 11, 2009

Contacts:

Susan Kang Schroeder Public Affairs Counsel Office: 714-347-8408 Cell: 714-292-2718 Farrah Emami Spokesperson Office: 714-347-8405 Cell: 714-323-4486

CAPPER SENTENCED TO EIGHT YEARS IN PRISON FOR RECRUITING OVER 245 HEALTHY PATIENTS FOR UNNECESSARY SURGERIES IN $154 MILLION
MEDICAL INSURANCE FRAUD SCHEME

SANTA ANA – A capper was sentenced today to eight years in state prison in the largest medical fraud prosecution in the nation for recruiting over 245 healthy patients to undergo unnecessary and dangerous surgeries to fraudulently bill medical insurance companies. Olga Lilia Toscano, 41, pleaded guilty to the court to 98 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million.

The Unity Outpatient Surgery Center (Unity) scheme, in which $154 million was fraudulently billed to medical insurance companies, was a joint investigation by the California Department of Insurance and Orange County District Attorney’s Office with assistance from the California Franchise Tax Board (CFTB).

Of the 19 defendants charged in the Unity case, 13 were indicted by a criminal grand jury on June 13, 2008. The Orange County Grand Jury examined 1,054 exhibits and heard testimony from 56 witnesses over 28 days, resulting in a 70-page indictment. The indicted defendants include an attorney, accountant, three doctors, and patient recruiters known as “cappers.” 

Six other defendants in the Unity case pleaded guilty prior to the indictment and have been sentenced. Including Toscano, four of the indicted defendants have pleaded guilty. The remaining nine defendants are scheduled for jury trial on Oct. 26, 2009, at the Central Justice Center in Santa Ana.  

Senior Trial Counsel Todd Spitzer and Deputy District Attorney Rick Welsh of the Healthcare Insurance Fraud Unit prosecuted this case.

Case Overview

The defendants in the Unity case are accused of participating in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. The recruitment of patients, or “capping,” is illegal in California.  Insurance companies paid out more than $20 million during a 9-month period.

Administrators

Rosalinda Landon and Dee Francis are accused of being clinic administrators and recruiting doctors and cappers. They are accused of running the Unity facility, coordinating the fraudulent surgeries, mailing all facility billings, receiving payments from insurance companies on fraudulent billings, receiving and paying capper invoices for patient procedures. Administrators Tam Vu Pham, Huong Ngo, and Lan Nguyen, have pleaded guilty to performing the same roles in the scheme. Pham, the primary perpetrator, was sentenced to 12 years in state prison.

Cappers

Pancha Keophimone, Thuy Huynh, and Ngoc Huynh are also accused as acting as cappers. Henry Truong, Amanda Tran, and Nicholas Vu have pleaded guilty to multiple felony counts of capping. Sue Nanda, 41, Costa Mesa, personally recruited over 170 so-called patients from 16 different states for unnecessary surgical procedures. Nanda pleaded guilty Feb. 20, 2009, to 22 felony counts including conspiracy, capping, failing to file tax returns, filing fraudulent tax returns, grand theft, and sentencing enhancements for white collar crime. She was sentenced Aug. 7, 2009, to 10 years in state prison.

Maria DeJesus Licea Rosales, 42, Orange, personally recruited over 90 so-called patients, all of whom were from California. Rosales was sentenced to eight years in state prison after being convicted Aug. 7, 2009, of 96 felony counts including conspiracy, capping, insurance fraud, grand theft, filing fraudulent tax returns, and sentencing enhancements for white collar crime and loss over $2.5 million.

Toscano personally recruited over 245 patients, 15 of whom underwent sweaty palms surgeries, primarily from California. The insurance companies were billed over $10 million and paid over $2.5 million for the unnecessary procedure performed on “patients” recruited by Toscano. Toscano was paid $770,000 for recruiting these patients.

The Unity cappers are accused of targeting employees from businesses in 39 states who were covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in this scheme. They are accused of arranging transportation for the patients, scheduling the surgeries, and coaching the healthy “patients” on what to say. In exchange for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.  The cappers who have been convicted had no medical training, recruited patients with PPO insurance, scheduled surgical procedures, and coached patients to correctly describe symptoms for the unnecessary surgical procedures. They assisted patients in filling out surgery center paperwork, including having them sign a false affidavit stating that they had not been offered compensation and had not received any compensation in exchange for using Unity’s services. For Unity capping, they were paid directly and through corporations they had individually set up. They will be ordered to pay restitution and back taxes for personal and corporate taxes to CFTB. A restitution hearing for all of the convicted cappers is scheduled for Dec. 4, 2009.

Doctors

The three doctors charged in this case are accused of participating in medical insurance fraud for performing unnecessary medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Michael Chan, William Wilson Hampton, and Mario Rosenberg are accused of performing 1,037 procedures, resulting in insurance billings exceeding $30 million for the facilities fees alone. Unity received over $5.1 million in payment as a result of the surgeries performed by these doctors.

Many of the surgeries were performed on Saturdays and Sundays by the doctors. They often performed the same procedures on co-workers or members of the same household on the same day.  The doctors are accused of ignoring basic medical protocols such as: 1) Patients receiving surgeries on consecutive days instead of while under one anesthesia; 2) Doctors not meeting the patients prior to operating; 3) Doctors not following up with patients after the procedure was completed; and 4) Doctors not obtaining necessary medical information.  

Hampton, a general surgeon, performed 180 procedures on 178 patients. He primarily performed thoracic sympathectomies, also known as sweaty palm surgeries, which is a highly unusual and dangerous medical procedure that can often be treated with topical creams, medication, and botox. Of the patients that underwent surgery by Hampton, 97 percent were referred by Unity cappers. Hampton was also indicted and convicted by the federal government for his involvement in a scheme similar to the Unity case. 

Hampton was the second indicted defendant to plead guilty. He pleaded guilty to 47 felony counts including conspiracy, insurance fraud, and capping on May 8, 2009, and was sentenced to 16 years in state prison.

Attorney

Roy Dickson, an attorney, is accused of coming to Unity after having previously managed and represented another surgery center involved in similar illegal activities. He was sanctioned by the federal bankruptcy court for filing a fraudulent bankruptcy claim for a doctor at that surgery center. Dickson was hired by Unity to collect payments from insurance companies and patients. He is accused of helping the surgery scheme by creating fraudulent documents to disguise illegal capping activities. 

Immediately after the OCDA searched Unity in April 2003, Dickson is accused of using his attorney client trust account to keep Unity open and operating and furthering the criminal activity by funneling over $1 million in surgery center cash assets into his account to prevent it from being seized. In the three months following the search of Unity, he is accused of laundering as much as $3 million into the attorney client trust account using fraudulently billed payments from insurance companies to keep the surgery center operating. 

Accountant

Andrew Harnen, an accountant, bookkeeper and profit shareholder for Unity, is accused of signing 10 checks to doctors totaling over $50,000 and 157 checks to cappers totaling almost $1 million for their participation in the Unity scheme. He is accused of acting as an official representative for several of the corporations used by Unity to hide their illegal scheme from insurance companies, and of being one of the bank signatories for multiple bank accounts used in the fraud.

Harnen is accused of assisting cappers and administrators in hiding their illegal activities by helping them funnel money to corporations that he helped them to create with the intention of hiding income and avoiding detection of their crimes. Harnen is accused of helping Unity continue to illegally recruit “patients” and defraud insurance companies using his own corporation to pay cappers and distribute profits to shareholders. Harnen is also accused of assisting co-defendants Francis, Landon, Rosales, and Toscano in filing fraudulent tax returns. Harnen is accused of failing to report more than $6 million over a 3-year period by failing to file tax returns and filing false tax returns.

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