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Five charged in $34 million outpatient surgery fraud

Compliance Monitor, November 3, 2004

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A federal grand jury indicted five defendants October 27, including the Millennium Outpatient Surgery Center in Santa Ana, CA in relation to a $34 million scheme to defraud health insurers by billing for unnecessary medical procedures, according to the U.S. attorney's office in Los Angeles.

The grand jury in Santa Ana returned an indictment charging Millennium Outpatient Surgery Center (MOSC), its owner, Perry Pham, and three employees with conspiracy and 10 counts of mail fraud.

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

The allegations include the following:
1. MOSC, Pham, and two employees used the mail to promote and engage in unlawful activity
2. Pham compensated the three employees and other patient recruiters for referring patients to MOSC
3. The four defendants allegedly offered money and discounted cosmetic surgery to people who had private health insurance coverage sponsored by their employers to persuade them to have unnecessary procedures at MOSC
4. The three employees told recruited patients to describe false and exaggerated symptoms to the treating physicians at MOSC and to get authorization and payment from private health insurers for unnecessary procedures.

In connection with the scheme, the indictment alleges that the defendants used the mail to fraudulently bill private health insurers for medical procedures that they knew to be unnecessary, corruptly induced, and falsely justified. The attorney's office says the intended losses to health insurers totaled about $34 million.

For more information, click here.

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