Arrests Made in “Rent a Patient” Case

March 12, 2005

Orange County Surgery Center Owners Charged with
Paying Thousands of Healthy Patients to Undergo
Unnecessary Surgeries and Bilking Millions By Fraud

A two-year investigation by the Orange County District Attorney’s Office with the assistance of the California Department of Insurance (CDI) and the Franchise Tax Board has led to the filing of charges against Unity Outpatient Surgery Center in Buena Park today. On June 21, 2004, Unity Outpatient Surgery Center owners Tam Vu Pham, 39, and his wife Hoang Ngo, 38, of Fullerton, along with Lan Nguyen, 48, of Huntington Beach, were charged with 46 felony counts of conspiracy, grand theft, insurance fraud, capping, and tax evasion. They were accused of recruiting thousands of healthy patients from all over the country to have unnecessary surgeries at Unity Outpatient Surgery Center in Buena Park and bilking more than $14 million from insurance companies and employers. If convicted Pham faces a maximum sentence of 26 years, Ngo faces a maximum sentence of 38 years 8 months and Nguyen faces a maximum sentence of 26 years 8 months in state prison.

Unity’s owners paid “cappers” to recruit people from 45 states and the District of Columbia. These “cappers” targeted employees at businesses with PPO insurance because pre-approval from the insurance company is not a requirement. The “cappers” would arrange transportation for the “patients,” schedule the procedures, and instruct the “patients” on what to say. These healthy people would undergo multiple surgeries during a short period of time. For their role in the insurance scam, the “patients” would receive either a cash payment, between $300 and $1,000, or earn credits toward inexpensive cosmetic surgery. The “cappers” were paid a commission for each surgical procedure performed at Unity. The most common procedures performed were colonoscopies, EGDs (upper gastro-intestinal procedure), sweaty palms surgery, hemorrhoid surgery, and pain management procedures.

From August 2002 to April 2003, Unity owners billed insurance companies close to $97 million and collected more than $14 million in fees. Unity is accused of defrauding hundreds of insurance companies and not paying taxes by creating a series of shell corporations with different addresses, tax ID’s and phone numbers, which they used to disguise their identities for billing. At least 1600 employers had employees that were involved in the fraud and more than 5,000 patients are known to have had unnecessary surgeries at Unity Outpatient Surgery Center.

A hotline has been set up for people who may have information on Unity or other surgery centers that are committing insurance fraud. You can reach the Orange County District Attorney’s office at 714-347-8760.

In March 2005, Blue Cross and Blue Shield Plans filed a $30 million lawsuit related to the scheme.

This page was posted on March 12, 2005.