Local woman accused of medical fraud

Andrew Edwards

A Huntington Beach woman was one of three Orange County residents

accused by the Orange County District Attorney’s office of scamming

thousands of businesses across the country by allegedly recruiting

patients who would bill their employers’ health plans for unnecessary

surgeries.

Deputy Dist. Atty. Elizabeth Henderson said she was unaware of any

similar fraud case, in which healthy patients would allegedly go

under the knife for money, ever going to court in the country.

“It may be the first one that’s been prosecuted in the United

States,” Henderson said.

Lan Nguyen, 48, of Huntington Beach was arrested on July 20, along

with Fullerton resident Tam Vu Pham, 39, and his 38-year-old wife

Hoang Ngo. They were taken into custody after a two-year joint

investigation by the Orange County District Attorney’s Office, the

California Department of Insurance and the Franchise Tax Board. The

three have been charged with 46 felony counts of conspiracy, grand

theft, insurance fraud, tax evasion and “capping,” recruiting

patients to participate in the alleged fraud.

The investigation focused on an eight-month period between August

2002 and April 2003, when the three allegedly billed insurance

companies for about $97 million worth of unneeded surgery and

collected more than $14 million in fees. They reportedly hid their

finances by creating multiple dummy corporations with various

addresses, phone numbers and tax ID numbers.

“It’s a huge fraud,” Henderson said. “It’s kind of scary when you

think about it, the extent of it.”

If convicted on all charges, Nguyen could spend 26 years and 8

months in state prison. Pham could wind up behind bars for 26 years

and Ngo could spend 38 years and 8 months in prison.

Authorities believe the alleged conspirators paid “cappers” to

find patients in 45 states and Washington, D.C., who would be willing

to fly to Orange County and submit to unnecessary surgeries at Unity

Outpatient Surgery Center in Buena Park, owned by Pham and Ngo. The

cappers targeted employees with PPO health insurance plans, which do

not require the insurance company to sign off on elective surgeries.

Three alleged cappers -- Olga Lilia Toscano, 36, of Irvine, Sue

Nanda, 36, of Costa Mesa and Maria Dejesus Rosales, 37, of Orange --

face charges of conspiracy, grand theft and insurance fraud for their

alleged participation in the fraud. Henderson said the investigation

was continuing and did not want to give specific comments or say how

many charges could be filed in the future, but said any patients who

submitted to unnecessary surgeries could face insurance fraud

charges.

The patients frequently underwent minor procedures, including

colonoscopies, sweaty-palms procedures and hemorrhoid surgeries,

despite their lack of health problems. The cappers reportedly got a

cut for bringing in patients, who were themselves paid between $300

and $1,000 for their participation.

“They were healthy people ... going under general anesthesia,

being prodded poked and cut into, all for a few hundred dollars,”

Department of Insurance spokesman Gary Gartner said.

Henderson said all six defendants are scheduled to be arraigned on

Aug. 6.