Sting yields 12 arrests

Twelve people, including two Huntington Beach residents, have been arrested and charged by the district attorney in an undercover sting operation centering on chiropractic insurance fraud.

“We obviously cannot catch every crooked chiropractor or amoral attorney, but we hope to send a message that they will be risking their license and freedom by engaging in these types of fraud,” District Attorney Tony Rackauckas said at a Wednesday press conference.

As part of Operation K-Fraud (Knockout Fraudulent Attorneys and Unscrupulous Doctors), the district attorney’s office sent 248 letters to suspected fraudulent medical providers.

“The letter explicitly outlined the opportunity for the medical professional to engage in an illegal fee splitting scheme with a fake attorney’s storefront office set up by the OCDA,” a release said.

Specifically, the medical professionals would agree to pay up to 30% of some patient billings to the “law office” in exchange for patient referrals.

Other undercover investigators posed as patients who said they suffered from soft tissue damage following car accidents.

Out of 248 letters sent, the district attorney’s office received 20 replies; from there, four people didn’t show up for a planned meeting. Six others showed up but declined to participate when they decided it was illegal. Three others weren’t engaged for unspecified reasons.

Out of the remaining interested parties, 12 defendants were charged in nine separate criminal cases. The defendants include chiropractors, an attorney, administrative staff and one of the chiropractor’s wives, who worked as a chiropractic assistant.

In another portion of the investigation, the district attorneys conducted walk-in investigations that have led to charges of overbilling, and fee splitting kickbacks — both illegal practices for professionals who file insurance claims.

Chiropractor Keith Tran Callaway, a 41-year-old Huntington Beach resident, was charged with conspiracy, insurance fraud and grand theft.

He and Ky Hoang Tran, 67, a chiropractic administrator, operated the Newport Spinal Rehabilitation center in Fountain Valley. Tran was charged with conspiracy and grand theft.

Both defendants face up to five years and eight months in jail if convicted.

“Our undercover investigators conducted a cold walk-in to a law office, which was not staffed with a lawyer, and were referred illegally to defendant Callaway’s chiropractic office,” Rackauckas said.

“Our investigators were asked to sign for multiple treatments they did not receive. One of the law office staff members knew these so-called patients were cheating, because she was told by one of them that one of the facts in the auto accident report was false. The result: illegal fee splitting, over billing, and kickbacks.”

Also arrested was chiropractor Quan Hoang Tran, 35, also of Huntington Beach. Tran, who worked at the California Pain Center in Fountain Valley, was charged with unlawfully offering or receiving consideration by a claims handler for referral, and would spend up to three years in jail if convicted.

“During these tough economic times, we have people who are trying to avoid foreclosures on their homes and struggling to feed their families,” Rackauckas said. “Insurance costs exceed many families’ budgets. When every dollar counts, it matters that your auto insurance and health insurance keeps skyrocketing because of fraud.”

“Insurance fraud is not a victimless crime, and costs every man, woman and child in California $500 each year,” said Insurance Commissioner Steve Poizner. “Through the good work of the Orange County District Attorney’s Office and oftentimes in partnership with Department of Insurance investigators, these alleged scam artists will be brought to justice.”