Two California Physicians Face Felony Charges In Insurance Fraud Scheme.
The American Health Lawyers Association (www.healthlawyers.org) picked up on an article reported yesterday in the LA Times, “2 Newport Beach doctors among six people charged in $22-million fraud scheme tied to sober-living homes,” where two physicians from Newport Beach, California have been charged along with six others for “insurance fraud in connection with an alleged $22-million urine test billing scheme that authorities say operated through sober-living homes in Orange County until 2014.”
Both physicians, 61-year-old Carlos Montano and 70-year-old Suzie Schuder, allegedly prescribed unnecessary “urine drug tests multiple times per week for employees of Compass Rose Recovery homes and affiliated businesses, according to the Orange County district attorney’s office.”
Prosecutors allege that Pamela Ganong, 61, of La Jolla and Philip Ganong, 63, of Bakersfield, who operated Compass Rose Recovery throughout Southern California with homes in cities including Huntington Beach and Costa Mesa, concocted a scheme to overbill insurance companies for the collection of urine for drug tests.
The Ganongs are each charged with a count of conspiracy to commit medical insurance fraud, 13 counts of insurance fraud and 26 counts of money laundering, with possible sentencing enhancements on allegations of property damage over $3.2 million, money laundering over $2.5 million and aggravated white-collar crime over $500,000. They pleaded not guilty to all charges Monday.
Authorities allege that between 2012 and 2014, the Ganongs fraudulently listed residents and non-residents of sober-living homes as employees of their four businesses — William Mae Co., Compass Rose Recovery, Compass Rose Staffing and Ghostline Labs — and expanded their health insurance policy to cover nearly 100 people, according to the district attorney’s office.
Prosecutors contend the Ganongs started Compass Rose Staffing, a temporary-labor agency, in January 2013 to act as a front for their scheme.
The Ganongs and their son William, 33, of Bakersfield are accused of submitting bills of more than $1 million to Aetna, Anthem, Cigna and UnitedHealthcare for drug testing themselves and other associates.
To further the scheme, prosecutors claim, the Ganongs hired Montano and Schuder, who are accused of writing urine drug prescriptions beginning at three times per week and increasing to seven times per week for most of the couple’s employees.
In exchange for the test orders, the doctors received 20% of the net insurance proceeds from the billing and a per-patient fee of $200, prosecutors say.