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March 18, 2004 Prime Time Thursday

Recruiters are bringing would-be patients to Southern California, where they are paid to undergo surgeries they don't need, according to a Primetime investigation. (ABCNEWS)
A Healthy Dose of Fraud
Primetime Investigates a Gigantic Medical Insurance Scam

March 18— It's one of the largest medical insurance scams in history, according to the FBI — involving thousands of healthy people across the country.

In the scam, agents say, recruiters bring "patients" from across the nation to surgery centers in California where they give phony or exaggerated symptoms and doctors perform unnecessary operations on them. Then the surgery centers send inflated claims for the unnecessary procedures to the patients' insurance companies. When the insurers pay up, federal authorities say, the recruiters, the surgery centers and the patients split the proceeds.

The FBI believes as many as 100 surgery centers are involved in the scams, many of them in Southern California. "For a few dollars, somebody is going to subject a human being to carving them up, subjecting them to risk," said FBI agent Grant Ashley. "That's as bad as it gets."

Rarely does the FBI discuss an ongoing investigation. But the agency made an exception because this scam is so big. Insurance companies have already been hit with half a billion dollars in claims.

"It's truly a nationwide scam," said FBI agent Tim Delaney. "We have patients who have traveled from 46 of the 50 states to Southern California to have these surgeries."

Lives are also at risk. "It's really almost mayhem. It's almost selling body parts. This is a terrible crime," said Ashley.

Colonoscopies and Cosmetic Surgery

Glidewell Laboratories, a dental manufacturer in Southern California, was especially hard hit. Two years ago, it started getting expensive medical claims on dozens of their young employees.

Even more unusual, they noticed that some of the workers who were having procedures like colonoscopies — were also getting cosmetic surgery.

"Who goes and gets their breasts enlarged and, you know, at the same time, have your colon checked out?" said company vice president Darryl Withrow. "It doesn't happen."

Some of the company's employees now admit former co-workers offered them cash and even some free cosmetic surgery if they'd go along with the scheme.

Miguel Helguerra says it was a deal he couldn't refuse. "They give you a thousand dollars you know, and I think, 'Well, I mean how bad this thing is?'" he said. "Oh, it's nothing. It's just one hour."

When the company started getting the bills, they were charged $10,000 or more for a colonoscopy, which typically costs $2,000. Glidewell ended up with a bill for $1.4 million. The company owes most of that because it's self-insured.

An FBI analysis shows that insurance companies are being hit even harder. Many of them have been paying, said Bill Mahon, executive director of the National Health Care Anti-Fraud Association, a trade group of insurers and law enforcement officials.

Some surgery centers have been billing under different names, according to an FBI analysis — making it harder to detect suspicious activity in a system that processes billions of claims.

"I wouldn't excuse or defend a company that pays an outrageous claim, but the reality is it does happen," Mahon said.

One for Another

Primetime decided to see for itself how easy it was to become a rented patient.

Recruiters seem to have an idea of what a good prospect is: usually an immigrant, with a good job and health benefits, but who may have difficulty understanding how insurance works.

They reportedly look for patients in nail salons, in the neighborhood south of Los Angeles nicknamed "Little Saigon," and in Houston, Texas.

Jamie Nguyen, a local ABCNEWS producer who speaks Vietnamese, began calling nail salons and got an appointment in Houston. She and a photographer arrived wearing hidden cameras. They met a woman named Kimberly. Nguyen told her she'd like to get a nose job and surgery to reshape her eyes.

Kimberly told her she could get cosmetic surgery via her insurance company, Nguyen said.

On the video from the hidden camera, Kimberly is seen telling Nguyen, "You don't pay your cash money. Now you understand? They take the money from the insurance."

But before she could get her cosmetic surgery, Kimberly asked Nguyen to fly to California for a medical procedure she doesn't need: a colonoscopy.

Kimberly explained to Nguyen why she needed to have the operation. "The insurance," she is seen saying on video. "They send to the insurance. They collect that money from your insurance to do your nose, your eye."

In other words, the clinic can charge thousands of dollars for the colonoscopy and that would cover the cost of Nguyen's cosmetic surgery.

And then she told Nguyen to make up phony symptoms to tell the doctor. "Just lie," she said. "You know, you lie? It doesn't hurt, right? Because you have insurance going to pay for [it]."

Problem Operation

Kimberly arranged Nguyen's trip with a contact in California called Kim. When Nguyen arrived in California with her photographer, Kim picked them up. Once again, Nguyen and her photographer were both wearing hidden cameras — but without sound, because California law doesn't allow the recording of private conversations without consent.

In the car, Kim coached Nguyen. Nguyen said Kim told her not to mention cosmetic surgery but to complain about symptoms, and to ask the doctor about stomach problems and migraines.

They arrived at a medical building near Beverly Hills. Kim acted like she worked there, helping Jamie check in and even accompanying her into the exam room.

Nguyen, who is 28, talked with the doctor about her menstrual cramps and indigestion when she eats spicy food.

She was given an ultrasound, and after a brief exam, the doctor told her she would need an endoscopy, a procedure in which a tube is inserted through the patient's mouth and into the stomach while the patient is under anesthesia.

Nguyen was scheduled to have her endoscopy at a surgery center the next day. When she arrived at the surgery center, the staff began preparing her for intravenous anesthesia — before she had even met her doctor.

She told the staff she was having second thoughts and needed some fresh air. A nurse gave her oxygen. Finally, she told them she had changed her mind and wouldn't be having the endoscopy after all.

Shameful Work

Primetime showed video of Nguyen being recruited for the unnecessary medical procedure to Dr. David Peura of the American Gastroenterological Association. "It's deplorable behavior," he said. "Unethical, fraudulent, and it's hurting all of us."

Endoscopies are usually recommended for older patients, according to Peura. If someone came to him with Nguyen's complaints, he said, that would not, generally speaking, be a reason for an endoscopy in an otherwise young, healthy individual. "Simply telling her not to eat spicy food. That would have been the simplest thing to do," he said.

Not one of the people who arranged Nguyen's trip now wants to talk about it. Kimberly at the Houston salon denies arranging Nguyen's California trip. And Kim, the woman who arranged things in Los Angeles, had little to say as well.

Outside the surgical center where Nguyen was taken, Quiñones asked Kim why she was offering people cosmetic surgery. "I did not offer anything," she replied. She refused to comment further, saying, "No, sir, I'm not a doctor, OK?"

As for the doctor who ordered the endoscopy, her office told Primetime she's now working somewhere else. And when Primetime approached the surgery center, they locked their doors.

Under the Knife

Still, there are plenty of other recruiters out there looking for patients.

In California, recruiters offered Primetime correspondent John Quiñones $800 to undergo major surgery for a condition called hyperhidrosis, which causes the hands to sweat excessively.

The recruiters brought Quiñones to a doctor at one medical clinic and told him to tell give the doctor symptoms of excessive sweating. Quiñones, however, described milder symptoms and the doctor tell him, he is not a candidate for surgery.

One week later, Quiñones returned to the same office and is seen by another doctor. After an 11-minute exam where Quiñones described his sweating as sometimes bothering him when he exercised, was nervous or worked at his computer. The doctor agreed to operate on him.

UCLA vascular surgeon Dr. Samuel Ahn, one of the first to perform the surgery, says the procedure should only be used as a last resort. Many patients can be treated with medication, he said. After looking at Quiñones' hands, Ahn said he certainly would not recommended surgery, even if Quiñones really had those symptoms.

Quiñones did not have the surgery, but instead confronted the doctor, who denied any wrongdoing. He said he had approved surgery based on Quiñones' own description of his symptoms and he insisted that knew nothing about recruiters or payments made to patients.

Afterwards, lawyers for the surgery center said in a letter, "Our client does not pay 'recruiters' to find patients … we do not know of any illegal, improper, or inappropriate fees charged or paid."

But Primetime has learned that it is among the surgery centers under investigation by federal authorities. As for the recruiters — when Quiñones confronted them, they had little to say.

"It's a shame that there are those that would prey on the system, and really they're preying on all of us," said agent Ashley.

March 18, 2004