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Health Care Reform:

Health Insurance & Affordable Care Act

Clinics Allegedly Billed Insurance Companies for $1.3 Billion in Bogus Health Claims

FBI Cites Massive Medical Fraud Investigation

'Rent-a-Patient' Scheme continued...

Investigators also said that the leaders showed a deep understanding of the medical insurance industry, focusing at first on patients with comprehensive insurance plans and gradually shifting to workers at self-insured corporations and in the federal government.

Clinics also aggressively sought payment from insurers, often threatening legal action if claims were not paid, says Steven E. Skwara, director of fraud investigation for Blue Cross Blue Shield of Massachusetts.

"They'd call constantly, they write nasty letters, they write nasty letters to your boss," he says.

"This is one of the most complex and sophisticated operations they've ever seen," says Paul F. Brown, deputy general council for the Blue Cross and Blue Shield Association, an umbrella group representing Blue Cross insurance plans.

$30 Million Medical Fraud Suit

Twelve Blue Cross plans filed a federal civil lawsuit yesterday seeking $30 million in payments from nine Southern California outpatient surgery clinics, several medical management companies, and 34 individuals.

Eight people affiliated with one former clinic, Unity Outpatient Surgery Center in Buena Park, Calif., have been charged by Orange County prosecutors with a total of 106 felonies, including mail fraud and conspiracy. Several doctors associated with the clinic are also under investigation, though William J. Feccia, the county's senior assistant district attorney, would not give details as to how many could be charged.

Feccia's office has accused the clinic of stealing more than $14 million from insurers. Owners and alleged recruiters from another clinic, Millennium Surgical Center in Santa Ana, Calif., face similar federal charges.

Both clinics are included in the group sued this week by the Blue Cross plans.

William H. Ginsburg, an attorney representing the clinic in the criminal case, did not respond to requests for an interview. Ginsburg said in a 2004 interview with the Bureau of National Affairs newsletter that his clients were "wrapped up in a dragnet because they are a surgical center."

Phone numbers listed for several other clinics named in the Blue Cross suit were disconnected. A man who answered the phone at a number and address listed for another defendant clinic, Premium Outpatient Surgery, of Huntington Beach, Calif., said that his business was an outpatient surgery clinic but that it was called Princess Cosmetic Surgery.

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