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Fraud Fishing, Part 1: Why that corner health clinic might be flush with ill-gotten gains

Fraud Fishing, Part 1: Why that corner health clinic might be flush with ill-gotten gains

Picture of William Heisel

In Santa Ana, Calif., I used to live near a health clinic that ostensibly catered to Spanish-speaking mothers, a noble calling in big city with a large, underserved immigrant population.

Years before, in reporting a story, I had found that the obstetrician who ran the clinic had among the highest delivery rates in the county. "According to a database of county birth certificate information, he was delivering, on average, more than three babies a day, every day of the year.

I had interviewed him, and he had explained to me that, while the numbers seemed implausibly high, he had a crack team of nurses to help him and affiliated doctors to pitch in during the labor before he came in at the end. Before I completed the story, another story intervened, and my interview stayed in a notebook.

When I moved into a place around the corner from the clinic, I started to think about that interview again.

No one ever seemed to be visiting theclinic. Santa Ana has one of the busiest downtowns of any California city. There are customers in every shoe store, bridal shop, taqueria and hair salon all day and most of the night. But this doctor's office was empty every time I walked by. Where were the mothers going in for prenatal visits? Where were the women going in for gynecological exams? Where were all of these nurses and other doctors?

My hunch could have been the beginning of a great investigation into a potential insurance fraud scheme, perhaps part of the $1 out of every $10 that is spent in error by Medicare. Instead, I switched papers, and the hunch languished in a different notebook.

The real frauds continue to be exposed regularly, but usually not by reporters. It typically takes a local district attorney, a federal agency or, most recently, an insurance company to call a shell company's bluff. Last month, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the largest Medicare fraud bust to date, accusing fraudsters of stealing a total of $251 million.

On Monday, Barbara Anderson at the Fresno Bee reported that Allstate Insurance and the state of California were suing "San Joaquin Valley doctors and several chiropractors in a multimillion-dollar lawsuit, alleging they falsely operated chiropractic clinics as medical groups to get insurance payments."

The case was filed in March but is only coming to light now.

Here's how the scheme allegedly worked:

Chiropractors are not allowed to prescribe drugs to patients, and, as a result, are not allowed to bill insurance companies for those drugs. A group of chiropractors, including Dolphus Dwayne Pierce II of Lemoore and John Brent Arakelian of Fresno, allegedly worked with Dr. Tomas Ballesteros Rios of Bakersfield and Dr. Charles Orlando Lewis III of Hanford to create fake medical corporations that appeared to be run by doctors. Through the corporations, the chiropractors would buy and prescribe drugs, billing the insurance companies as if the drugs were being prescribed by physicians for medically diagnosed conditions.

Anderson notes that the accused deny the allegations.

"The allegations against the chiropractors and doctors are untrue, said James H. Wilkins, a Fresno lawyer representing Pierce, Arakelian and Lewis, who operate the San Joaquin Accident & Medical Group Inc. in Fresno. They were recently investigated by the California Medical Board, which "determined they are operating a legal medical corporation," he said."

As for Rios, he pleaded guilty to a felony charge of filing a false income tax return in 2007. It could be that there is a lot of smoke here and no fire. But given how rare it is for an insurance company to join forces with a state to file a fraud case, that's doubtful.

How might Anderson or other reporters have exposed a case like this on their own?

I'll explore that in a few posts starting next week.

Related posts:

Fraud Fishing, Part 2: Health scammers are hiding in plain sight

California governor and medical board should stand accused in patient's death

The Shadow Practice: Disciplined doctor found an exile community in immigrant health care

The Shadow Practice Part 2: New owners can't exorcise ghosts of clinic's past

The Shadow Practice Part 3: Immigrant clinic had deep roots in deception

The Shadow Practice Part 4: Doc begs patients for loans

The Shadow Practice Part 5: Drug pushers running this clinic were far from saints

The Shadow Practice Part 6: Doctors sell their souls, and their licenses, on the cheap

The Shadow Practice, Part 7: Punishment for drug-dealing doctors more severe in Arizona

Doctors Behaving Badly: Ophthalmologist should have kept closer eye on patients

Two reporters catch the same doctor in a very similar act


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