Attorney and Accountant Indicted in Largest Medical Insurance Fraud Case

Santa Ana, Calif. — The California Department of Insurance and the Orange County District Attorney’s Office (OCDA) announced the unsealing of criminal grand jury indictments in the largest medical fraud prosecution in the nation, charging the final two defendants for their role in the Unity Outpatient Surgery Center scheme, in which $154 million was fraudulently billed to medical insurance companies. The Orange County grand jury dedicated 28 days to examining 1,054 exhibits and hearing testimony from 56 witnesses, resulting in the 70-page indictment of two previously uncharged defendants, an attorney and an accountant. The grand jury also indicted 11 previously charged defendants, who were also consolidated into the indictment, including three doctors. The Franchise Tax Board under the Supervision of the State Controller provided substantial assistance in this investigation.

Defendant Roy Chester Dickson, 60, of Yorba Linda, Calif., and Unity’s attorney, was indicted on 106 felony charges including two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of money laundering, one count of perjury, three counts of filing a false tax return, one count of failing to file tax returns, and white collar sentencing enhancements for taking over $2.5 million and $500,000. Dickson is being held on $2 million bail and faces a maximum sentence of 73 years and eight months in prison if convicted.

Defendant Andrew Robert Harnen, 54, of Rosemead, Calif., and Unity’s accountant, was indicted on 118 felony charges including two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of money laundering, nine counts of filing a false tax return, nine counts of failing to file tax returns, and white collar sentencing enhancements for taking over $2.5 million. Harnen is being held on $2 million bail and faces a maximum sentence of 80 years and four months in prison if convicted.

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

All of the indicted defendants are scheduled for continued arraignment at 8:30 a.m. July 10, at the Central Justice Center, in department C-4 in Santa Ana.

"This indictment alleges a medical fraud factory operating an assembly line of unnecessary surgeries," said 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 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,” said 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.”

“Abusing the healthcare system means taking advantage of the most vulnerable members of our society for quick financial gain,” said 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.”

Overview
The newest evidence in the Unity case was presented to the Orange County Grand Jury beginning March 4, and concluded with a sealed indictment on June 13. 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. The first three charged administrators, Tam Vu Pham, Huong Ngo and Lan Nguyen, have pleaded guilty. Pham, the primary perpetrator, was sentenced to 12 years in state prison.

Maria Rosales, Olga Toscano, Sue Nanda, Pancha Keophimone, Thuy Huynh, and Ngoc Huynh are accused as acting as Unity cappers, or recruiters, targeting employees from businesses in 39 states who were covered by PPO insurance plans. Henry Truong, Amanda Tran, and Nicholas Vu have pleaded guilty to multiple felony counts of capping. Administrators Rosalinda Landon and Dee Francis are accused of recruiting doctors and cappers and coordinating the fraudulent surgeries. More than 1,000 employers were affected by employees who were involved in this scheme. The cappers 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” would receive a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

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 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 the 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
4. Doctors not obtaining necessary medical information.

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

Accountant Andrew Harnen
Harnen, 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 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 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. Harnen is accused of helping Unity to 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.

Source: Orange County (Calif.) District Attorney’s Office