Jury convicts two California residents in $50 million fraud scheme

A jury convicted two Southern California residents last week for orchestrating a $50 million insurance fraud scheme in which they billed various insurance companies for unnecessary procedures, according to a statement from the United States Attorney's Office in the Central District of California.

Theresa Fisher of Tustin and Lindsay Hardgraves of San Pedro were found guilty of a combined seven counts of mail fraud in which they convinced patients that their insurance plans would cover cosmetic surgeries. Instead, patients underwent unnecessary endoscopies, colonoscopies and cystoscopies, which were billed to various insurance companies, including the International Longshore and Warehouse Union and Operating Engineers Union health insurance plans, as well as Aetna and Anthem. After the claims were paid, patients were provided free or discounted cosmetic surgeries, including tummy tucks, breast augmentation and liposuction. The surgical center often disguised and billed those operations as medically necessary procedures such as hernia surgery.

Hardgraves served as the marketer in the scheme, directing patients to a surgery center that was known at various times as Princess Cosmetic Surgery, Vista Surgical Center and Empire Surgical Center. Hardgraves promised free or discounted cosmetic surgery if the patients initially underwent medically unnecessary endoscopies. Fisher served as a consultant at the surgical center, booking patients for procedures and instructing them to "fabricate or exaggerate symptoms so that their medical procedures would be covered by their insurance," according to the statement.

The surgical center billed a total of $71 million in claims and received more than two-thirds of that. Previously, a third co-conspirator pleaded guilty to mail fraud in January. Hardgraves and Fisher face a maximum penalty of 20 years for each count of mail fraud.

This recent case outpaces last year's landmark case in which a Kentucky hospital settled for nearly $41 million for falsely billing for unnecessary heart surgeries. 

Meanwhile, a New York physician pleaded guilty for his role in a $14.2 million scheme in which he fraudulentely billed Medicare for unnecessary procedures such as vitamin infusions and physician and occupational therapy, according to a Department of Justice announcement. The physican agreed to pay more than $5 million in restitution. 

California, along with Florida and Arizona, have emerged as areas in which unnecessary tests and procedures are a concern, particularly among elderly patients, FierceHealthPayer: AntiFraud previously reported. 

For more:
- here's the U.S. Attorney's statement
- read the Department of Justice statement