Phony Medical Charges Cost State Millions

SACRAMENTO —  California lost more than $68 million in the last two years to companies that overbilled the state for diapers and medical equipment, state Controller Gray Davis said Thursday.

Total losses to the Medi-Cal program because of phony bills submitted by medical equipment companies could approach $120 million, Davis told a Capitol news conference.

“Most of these people intended to rip us off. They were not legitimate businesses,” he said. “Their whole business was billing us. “

Some of the companies charged the state too much for providing diapers, wheelchairs, beds and other health equipment to Medi-Cal patients, but other firms were nothing more than a post office box or empty storefront opened to receive state checks, Davis said.

Nearly all of the losses involved companies that purportedly supplied diapers to elderly Medi-Cal patients and others who suffered from incontinence.

A federal grand jury in Los Angeles indicted a Culver City woman Thursday for allegedly defrauding the Medi-Cal program of $3.2 million by submitting thousands of fake claims for incontinence supplies.

Barbara Fontaine, 33, was charged with six counts of mail fraud and nine counts of money laundering, said Carole Levitzky, a spokeswoman for the U.S. attorney’s office in Los Angeles.

In a similar case, four employees of a Valencia firm were charged Thursday in Los Angeles Municipal Court in connection with an alleged $7.2-million Medi-Cal scam, the state attorney general’s office said.

Eliseo Sur of Granada Hills, Macario Tiu Sr. of Valencia, Carol Dunbar of Newhall and Lisa Cabuntala of Los Angeles, who worked for Bruce Pharmacal, face counts that include conspiracy, grand theft and filing false claims. Company owner Roy Pacia was charged last December with grand theft and filing false claims.

Fraudulent activity by so-called “durable medical equipment providers” grew rapidly in 1989 because of lax oversight by the state, Davis said.

“Clearly, the word got around that you could make money by overcharging the state for wheelchairs (and) diapers,” Davis said.

Davis said fraud is now on the decline because of agressive prosecution. He proposed a plan to combat future Medi-Cal fraud, including:

On-site inspections of all new durable medical equipment providers before the state issues the first payment for Medi-Cal services. This, along with random checks of existing suppliers,would help determine whether the firms are legitimate businesses or merely storefront fraud operations.

Continuous monitoring of Medi-Cal billings to detect deviations or increases.

Credit and criminal background checks of company officers before they are authorized to receive Medi-Cal payments.

Legislation to impose triple damages against fraudulent suppliers.