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Capper Pleading Guilty In the Largest Medical Insurance Fraud Case In the Nation May Be Sentenced To 20 Years - Issued By the Orange County District Attorney's Office

Released: February 20, 2009

SANTA ANA – A capper’s involvement in the largest medical insurance fraud case in the nation, also known as the Unity Outpatient Surgery Center (Unity) scheme, in which $154 million was fraudulently billed to medical insurance companies, pleaded guilty today to 22 felony counts. Sue Nanda, 40, Costa Mesa, pleaded guilty to one felony count of conspiracy, nine felony counts of capping, two felony counts of failing to file tax return, one felony count of filing a fraudulent tax return, one felony count of grand theft, and sentencing enhancements for white collar crime. Under the negotiated plea, Nanda will receive up to 20 years in state prison when she is sentenced on April 24, 2009, at 9:00 a.m. in Department C-35, Central Justice Center, Santa Ana. This was a joint investigation and prosecution by the California Department of Insurance, the California Franchise Tax Board, and the Orange County District Attorney’s Office. On June 13, 2008, following a 3-month hearing, with over 50 witnesses, the Orange County Grand Jury delivered a 70-page indictment of 13 defendants including an attorney, an accountant, three doctors, and cappers.

There are 19 total defendants who have been charged in the Unity case. Aside from Nanda, six defendants have pleaded guilty and have been sentenced. Deputy District Attorneys George McFetridge and Rick Welsh of the Healthcare Insurance Fraud Unit are prosecuting this case.

The rest of the indicted defendants are scheduled for a pre-trial on Feb. 27, 2009, at 9:00 a.m. in Department C-35, Central Justice Center, Santa Ana

“Insurance fraud is not a victimless crime and costs $500 a year to every man, woman and child in California," said Insurance Commissioner

Steve Poizner. "This is a great example of what happens when government works together. I want to thank the Orange County District Attorney’s office, the

Department of Insurance's enforcement branch, and all those involved for their hard work in this case. I hope this sends a message to all of

those contemplating insurance fraud that we will work together to find you and prosecute you.”

“These types of crimes cannot occur without these cappers illegally rounding-up healthy, so-called patients, bringing them to doctors for unnecessary surgeries, and ripping off the health care system and the public,” said Orange County District Attorney Tony Rackauckas. “This Unity fraud amounts to the equivalent of stealing $50 from every citizen in Orange County. It must be stopped.”

Overview

The newest evidence in the Unity case was presented to the Orange County Grand Jury beginning March 4, 2008, and concluded with a sealed indictment on June 13, 2008. The defendants in the Unity case are accused of participating in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. The recruitment of patients, or “capping,” is illegal in California. Insurance companies paid out more than $20 million during a 9-month period. The first three charged administrators, Tam Vu Pham, Huong Ngo, and Lan Nguyen, have pleaded guilty. Pham, the primary perpetrator, was sentenced to 12 years in state prison.

The Cappers

Nanda, Maria Rosales, Olga Toscano, Pancha Keophimone, Thuy Huynh, and Ngoc Huynh are accused as acting as Unity cappers, or recruiters, targeting employees from businesses in 39 states who were covered by PPO insurance plans. Nanda personally recruited over 170 so-called patients from 16 different states for unnecessary surgical procedures. Henry Truong, Amanda Tran, and Nicholas Vu have pleaded guilty to multiple felony counts of capping. Administrators Rosalinda Landon and Dee Francis are accused of recruiting doctors and cappers and coordinating the fraudulent surgeries. More than 1,000 employers were affected by employees who were involved in this scheme. The cappers are accused of arranging transportation for the patients, scheduling the surgeries, and coaching the healthy “patients” on what to say. In exchange for undergoing surgery, the “patients” would receive a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery. Nanda, who had no medical training, recruited patients with insurance, scheduled the surgical procedures, coached patients to parrot the correct symptoms for the surgical procedures she scheduled, and assisted patients in filling out the surgery center paperwork. This included telling the patients to falsely sign an affidavit that they had not been offered compensation and had not received any compensation in ex-change for using Unity’s services. In doing so, Nanda used corporations as part of her scheme. She will be ordered to pay restitution on all counts of the indictment including back taxes for personal and corporate taxes owed to the California Franchise Tax Board exceeds $400,000.

Doctors Michael Chan, William Hampton & Mario Rosenberg

The three doctors charged in this case are accused of participating in medical insurance fraud for performing medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Michael Chan, William Hampton, and Mario Rosenberg are accused of performing 1,037 procedures, resulting in insurance billings exceeding $30 million for the facilities fees alone. Unity received over $5.1 million in payment as a result of the surgeries performed by the doctors.

Many of the surgeries were performed on Saturdays and Sundays by the doctors. They often performed the same procedures on co-workers or members of the same household on the same day. The doctors are accused of ignoring basic medical protocols such as: 1) Patients receiving surgeries on consecutive days instead of while under one anesthesia; 2) Doctors not meeting the patients prior to operating; 3) Doctors not following up with patients after the procedure was completed; and 4) Doctors not obtaining necessary medical information.

Attorney Roy Dickson

Dickson, an attorney, is accused of coming to Unity after having previously managed and represented another surgery center involved in similar illegal activities. He was sanctioned by the federal bankruptcy court for filing a fraudulent bankruptcy claim for a doctor at that surgery center. Dickson was hired by Unity to collect payments from insurance companies and patients. He is accused of helping the surgery scheme by creating fraudulent documents to disguise illegal capping activities.

Immediately after the OCDA searched Unity in April 2003, Dickson is accused of using his attorney client trust account to keep Unity open and operating, and furthering the criminal activity by funneling over $1 million in surgery center cash assets into his account to prevent it from being seized. In the three months following the search of Unity, he is accused of laundering as much as $3 million into the trust account using fraudulently billed payments from insurance companies to keep the surgery center operating.

Accountant Andrew Harnen

Harnen, who worked as an accountant and bookkeeper for Unity and was a profit shareholder, is accused of signing 10 checks to doctors totaling over $50,000, and 157 checks to cappers totaling almost $1 million, for their participation in the Unity scheme. He is accused of acting as an official representative for several of the corporations used by Unity to hide their illegal scheme from insurance companies, and of being one of the bank signatories for multiple bank accounts used in the fraud.

Harnen is accused of assisting cappers and administrators to hide their illegal activities by helping them to funnel money to corporations that he had helped them to create with the intention of hiding income and avoiding detection of their crimes. Harnen is accused of helping Unity to continue to illegally recruit “patients” and defraud insurance companies using his own corporation to pay cappers and distribute profits to shareholders. Harnen is also accused of assisting co-defendants Francis, Landon, Rosales, and Toscano in filing fraudulent tax returns. Harnen is accused of failing to report more than $6 million over a 3-year period by failing to file tax returns and filing false tax returns.