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Calif. Clinic Operators Arrested in Alleged Insurance Scam Involving Thousands of Unneeded Surgeries


Calif. Clinic Accused of Surgery Scam
Calif. Clinic Operators Arrested in Alleged Insurance Scam Involving Thousands of Unneeded Surgeries

The Associated Press (Source:

SANTA ANA, Calif. July 21, 2004 — Operators of a Los Angeles-area clinic paid thousands of people to undergo risky, unnecessary surgeries as part of a nationwide insurance fraud scheme, authorities said Wednesday.

Some 5,000 patients were recruited from across the country and flown to California, where they underwent surgeries that were billed at excessive amounts to their insurance companies, Orange County District Attorney Tony Rackauckas said.

The patients, who had insurance that did not require pre-approval, received $300 to $1,000 or credits toward cosmetic surgery for volunteering for sometimes complex procedures, Rackauckas said.

"These are healthy people, risking their good health going under general anesthesia and being prodded, probed and cut into for less than a thousand dollars," he said.

The three operators of the Unity Outpatient Surgery Center in Buena Park, about 20 miles southeast of Los Angeles, were arrested Tuesday at their homes after a two-year investigation.

They were identified as Tam Vu Pham, 39, and his wife, Hoang Ngo, 38, of Fullerton, and Lan Nguyen, 48, of Huntington Beach.

Arraignment was scheduled Aug. 6 on charges including grand theft, insurance fraud and tax evasion. Attorney Roy Dickson, who has represented the clinic now operating as St. Paul Outpatient Surgery Center, did not immediately return calls seeking comment.

Ngo and Tham were being held on $5 million bail and Nguyen was held on $1 million bail, authorities said. If convicted, Pham faces up to 26 years in prison, Ngo up to 38 years and 8 months, and Nguyen up to 26 years and 8 months.

From August 2002 to April 2003, the owners of the Unity clinic billed insurance companies nearly $97 million and collected $14 million in fees using shell corporations with different addresses to disguise their billing, the district attorney said.

At least 1,600 employers are known to have had workers who received the treatments, which included colonoscopies, upper gastrointestinal procedures, surgery to correct sweaty palms, hemorrhoid surgery and treatment for pain management, officials said.

It was unknown if anyone was injured during the procedures.

The allegedly fraudulent claims were made to hundreds of insurance companies, including Blue Cross, Aetna and Cigna, and the patients could now be required to pay for the surgeries, prosecutor Rick Welsh said.

Authorities declined to say whether any doctors who performed the surgeries would be prosecuted, though Rackauckas said furthers arrests were likely.

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