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Health Insurance & Affordable Care Act

FBI Cites Massive Medical Fraud Investigation

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

$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.

The man, who identified himself as Danny P., said that he has managed the business for a year and has never heard of Premium Outpatient Surgery and was not familiar with the lawsuit.

In addition to an unspecified number of injuries caused by the surgical procedures, Martino also says that in a few patients colonoscopies appear to have revealed previously undiscovered polyps.

"There were a couple of times," he says.

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