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Doctor Sentenced to 16 Years in Prision for Performing Unnecessary Surgeries on Healthy Patients in $154 Million Medical Insurance Fraud Scheme - Issued by the Orange County District Attorney's Office

Released: May 08, 2009

SANTA ANA – A doctor charged in the largest medical fraud prosecution in the nation was sentenced today to 16 years in state prison for performing unnecessary and dangerous surgeries on over 175 patients in order to fraudulently bill medical insurance companies. William Wilson Hampton, Jr., 53, Seal Beach, pleaded guilty to 47 felony counts including conspiracy, insurance fraud, and capping.

The Unity Outpatient Surgery Center (Unity) scheme, in which $154 million was fraudulently billed to medical insurance companies, was a joint investigation by the California Department of Insurance and Orange County District Attorney’s Office with assistance from the California Franchise Tax Board (CFTB).

Of the 19 defendants charged in the Unity case, 13 were indicted by a criminal grand jury on June 13, 2008. The Orange County Grand Jury examined 1,054 exhibits and heard testimony from 56 witnesses over 28 days, resulting in a 70-page indictment. The indicted defendants include an attorney, accountant, three doctors, and patient recruiters known as “cappers.” Hampton is the second indicted defendant to plead guilty. Capper Sue Nanda, 40, Costa Mesa, pleaded guilty Feb. 20, 2009, to 22 felony counts and is expected to be sentenced to up to 20 years in state prison on June 1, 2009. The other six defendants in the Unity case pleaded guilty prior to the indictment and have been sentenced. The remaining 11 defendants are scheduled for pre-trial on June 5, 2009, at the Central Justice Center in Santa Ana.

Deputy District Attorneys George McFetridge and Rick Welsh of the Healthcare Insurance Fraud Unit are prosecuting this case.

“A sweaty palm surgery requires a patient to undergo general anesthesia, where the doctor will collapse a lung to clamp a nerve right next to the spine. It is dangerous, almost always unnecessary, and may result in terrible side effects,” stated District Attorney Tony Rackauckas. “It is outrageous that a doctor would cut into healthy patients and use their bodies as cash registers.”

“Insurance fraud is never a victimless crime, and this especially deplorable scheme had the potential to injure otherwise healthy people,” said Insurance Commissioner Steve Poizner. “We'll continue to work with our local partners to find and prosecute those who would try to defraud the insurance system for personal gain.”

“It's rewarding to know state and local governments can work together to stop these serious crimes and protect individuals who depend upon affordable healthcare services. FTB is proud to stand shoulder to shoulder with Tony Rackauckas,” said John Barrett, Franchise Tax Board Public Information Spokesman.

Case Overview

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.

Administrators

Rosalinda Landon and Dee Francis are accused of being clinic administrators and recruiting doctors and cappers. They are accused of running the Unity facility, coordinating the fraudulent surgeries, sending all facility billings, receiving payments from insurance companies on fraudulent billings, receiving and paying capper invoices for patient procedures. Administrators Tam Vu Pham, Huong Ngo, and Lan Nguyen, have pleaded guilty to performing the same roles in the scheme. Pham, the primary perpetrator, was sentenced to 12 years in state prison.

Cappers

Maria Rosales, Olga Toscano, Pancha Keophimone, Thuy Huynh, and Ngoc Huynh are accused as acting as cappers. Henry Truong, Amanda Tran, and Nicholas Vu have pleaded guilty to multiple felony counts of capping. Nanda personally recruited over 170 so-called patients from 16 different states for unnecessary surgical procedures.

The Unity cappers are accused of targeting employees from businesses in 39 states who were covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in this scheme. They 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 received 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 PPO insurance, scheduled surgical procedures, and coached patients to correctly describe symptoms for the unnecessary surgical procedures. She assisted patients in filling out surgery center paperwork, including having them sign a false affidavit stating that they had not been offered compensation and had not received any compensation in exchange for using Unity’s services. For Unity capping, Nanda was paid directly and through corporations she had set up. She will be ordered to pay restitution and over $400,000 in back taxes for personal and corporate taxes to CFTB.

Doctors

The three doctors charged in this case are accused of participating in medical insurance fraud for performing unnecessary medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Michael Chan, 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 these 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.

Hampton, a general surgeon, performed 180 procedures on 178 patients. He primarily performed thoracic sympathectomies, also known as sweaty palm surgeries, which is a highly unusual and dangerous medical procedure that can often be treated with topical creams, medication, and botox. Of the patients that underwent surgery by Hampton, 97% were referred by Unity cappers. Hampton was also indicted and convicted by the federal government for his involvement in a scheme similar to the Unity case.

Attorney

Roy 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 attorney client trust account using fraudulently billed payments from insurance companies to keep the surgery center operating.

Accountant

Andrew Harnen, an accountant, bookkeeper and profit shareholder for Unity, 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 in hiding their illegal activities by helping them funnel money to corporations that he helped them to create with the intention of hiding income and avoiding detection of their crimes. Harnen is accused of helping Unity 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.