A grand jury spent 28 days examining 1,054 exhibits and hearing testimony from 56 witnesses, resulting in the 70-page indictment of two previously uncharged defendants, a lawyer and an accountant.
"The attorney and the accountant are the arteries that pumped the blood into the different appendages of the criminal body called Unity. We believe it is appropriate to end the charging phase of the case with these two defendants," says Orange County District Attorney Tony Rackauckas. "The $154 million fraud committed by operating on thousands of so-called patients is the equivalent to taking $50 from the pockets of every resident in Orange County."
Roy Chester Dickson, Unity’s lawyer, 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. Mr. 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 patient-recruiting, or capping, activities.
Mr. Dickson is also accused of using his attorney/client trust account to keep Unity open and operating after the OCDA searched it in April 2003, 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 after 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 ASC operating.
Andrew Robert Harnen, 54, 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, or recruiters, 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.
Mr. Harnen is further 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. He is also alleged to have used his own corporation to pay cappers and distribute profits to shareholders; to have assisted four co-defendants in filing fraudulent tax returns; and to have failed to report more than $6 million over a three-year period by not filing or filing false tax returns.
Including Mr. Dickson and Mr. Harnen, 19 defendants have been charged in the Unity case. Of the originally charged 17 defendants, six have pleaded guilty and have been sentenced. This indictment consolidates and joins the remaining 11 defendants, a group that includes three doctors. Deputy District Attorneys George McFetridge and Rick Welsh of the Healthcare Insurance Fraud Unit are prosecuting this case. All indicted defendants are scheduled for continued arraignment July 10.
"This indictment alleges a medical fraud factory operating an assembly line of unnecessary surgeries," says Insurance Commissioner Steve Poizner. "We will continue working collaboratively with our local partners to attack these types of ruthless, wickedly complex schemes that tear at our communities and take money out of our pocket books."
The defendants in the Unity case are accused of participating in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people around the country to receive unnecessary surgeries in exchange for cash payments between $300 and $1,000 or discounted or free cosmetic surgeries. The recruitment of patients is illegal in California. Insurance companies paid out more than $20 million during a nine-month period. More than 1,000 employers were affected by employees who were involved in this scheme. Nine cappers are accused of arranging transportation for the patients, scheduling the surgeries and coaching the healthy "patients" on what to say.
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 often performed the same procedures on co-workers or members of the same household on the same day. They are accused of performing 1,037 procedures, many on Saturdays and Sundays, that resulted in insurance billings exceeding $30 million; Unity received over $5.1 million in payment.
"Abusing the healthcare system means taking advantage of the most vulnerable members of our society for quick financial gain," says State Controller and Franchise Tax Board Chair John Chiang. "Every act involves a cost to the State?s treasury and our society in the form of lost tax dollars that could be used to provide healthcare and educate our children, repair our roads, and fund public safety."
