Five Charged in $34 Million Calif Fraud Scheme

A federal grand jury has indicted five defendants, including the Millennium Outpatient Surgery Center in Santa Ana, California in relation to a $34 million scheme to defraud health insurers by billing for unnecessary medical procedures.

The grand jury in Santa Ana returned an indictment charging the following defendants with conspiracy and 10 counts of mail fraud:

– Millennium Outpatient Surgery Center (MOSC), a California medical corporation;
– Perry Pham, 41, of Mission Viejo, the owner and operator of MOSC;
– Olga Lilia Toscano, 37, of Irvine;
– Maria Licea Rosales, 37, of Santa Ana; and
– Esmeralda Ortiz Tello, 32, of Anaheim.

Tello, who reportedly recruited patients for MOSC, was also charged with three counts of perjury for allegedly lying to the federal grand jury investigating the case.

Additionally, MOSC, Pham, Toscano and Tello were charged with reportedly using the mails to promote and carry on unlawful activity, in violation of the “Travel Act.”

The indictment alleges that Pham unlawfully compensated Toscano, Rosales, Tello and other patient recruiters for referring patients to MOSC. Additionally, the four individual defendants allegedly offered money and discounted cosmetic surgery to people who had private health insurance coverage sponsored by their employers in order to persuade them to undergo unnecessary procedures at MOSC.

The indictment further alleges that defendants Toscano, Rosales and Tello directed recruited patients to describe false and exaggerated symptoms to treating physicians at MOSC for the purpose of obtaining authorization and payment from private health insurers for unnecessary procedures.

In connection with the scheme, the indictment alleges that the defendants used the United States mails to fraudulently bill private health insurers for medical procedures that they knew to be unnecessary, corruptly induced and falsely justified. The indictment alleges that the defendants – through “false statements, half truths, concealed and omitted facts, and deceptive acts and practices” – caused and intended losses to health insurers of approximately $34 million.

A magistrate judge has issued arrest warrants for the individual defendants and federal authorities were reportedly planning on taking them into custody soon.

The maximum penalty under federal law for each count of mail fraud is 20 years in federal prison. The maximum penalty for each conspiracy, perjury and Travel Act violation is five years imprisonment.