News: 2007 Press Release

Orange County District Attorney's Office

Media Contact: Susan Kang Schroeder, Public Affairs Counsel 714-347-8408 /
714-292-2718 (cell)

Media Contact: Farrah Emami, Spokesperson 714-347-8405 / 714-323-4486 (cell)

SANTA ANA - The California Department of Insurance and the Orange County District Attorney's Office have arrested three doctors in the largest medical fraud prosecution in the nation. The doctors are the latest charged defendants in the Unity Outpatient Surgery Center (Unity) scheme and are accused of performing unnecessary surgical procedures and fraudulently billing over $30 million to medical insurance companies. The Franchise Tax Board and the Medical Board of California have provided substantial assistance in this investigation.

The three defendants are Dr. Michael Cheeluen Chan, 61, Cerritos, an obstetrician-gynecologist, Dr. William Wilson Hampton, Jr., 51, Seal Beach, general surgeon, and Dr. Mario Z. Rosenberg, 60, Beverly Hills, a gastroenterologist. Each doctor has been charged with 47 felony counts, including one count of conspiracy to commit insurance fraud, eight counts of paying cappers, 19 counts of insurance fraud, and 19 counts for using cappers to recruit patients from the victim insurance companies. If convicted, they face a maximum sentence of 49 years and four months. Bail for Chan, Hampton, and Rosenberg is set at $1.8 million, $1 million, and $2.3 million respectively. Deputy District Attorney Rick Welsh of the Economic Crimes Unit is prosecuting this case. The arraignment is expected tomorrow, Thursday, May 17, 2007 at 9:00 a.m. in Department C-5 or C-57, Central Justice Center, Santa Ana. "Insurance fraud is a $15 billion epidemic in California," said Insurance Commissioner Steve Poizner.

"Insurance fraud is not a victimless crime; it has a price tag for every Californian that is equivalent to a $500 fraud tax on every man, woman and child. Fighting insurance fraud is one of my top priorities and together with law enforcement and District Attorneys we will fight fraud wherever it exists."

"The Medical Board of California is pleased to have worked so well with the Orange County District Attorney's Office in our mutual endeavor to protect the public," said Candis Cohen, Information Officer of the Medical Board of California.

"We are talking about doctors who were real life body snatchers, doctors putting people on a medical conveyer belt to make a quick buck," said Orange County District Attorney Tony Rackauckas. "Doctors have a respected position in our community, entrusted with our health and well being. We take this fiduciary relationship very seriously, and we hope that these prosecutions serve as a warning to any doctor who may feel tempted to engage in this behavior. If doctors commit these types of crimes, they may be trading in their scrubs for prison jump suits."

Overview

The defendants in the case of Unity in Buena Park are accused of participating in a $96 million billing scheme that recruited 2,000 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 Unity more than $17 million during a 10-month period.

The Unity cappers, or recruiters, targeted employees from businesses in over 32 states and covered by PPO insurance plans, as pre-approval from the insurance company would not be a requirement for surgery. More than 1,600 employers were affected by employees who were involved in this scheme. The cappers arranged transportation for the patients, scheduled the surgeries, and coached 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 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. Chan, Hampton, and Rosenberg are accused of performing 1,037 procedures, resulting in insurance billings for the facilities fees alone that exceeded $30 million. 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. Often they operated on 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; and 4) Doctors not obtaining necessary medical information.

Dr. Michael Chan
In order to operate an outpatient surgery center in California, the owner must be a licensed medical doctor. On paper, Chan was the owner and Medical Director of Unity. In practice, he contracted almost complete control of Unity to non-licensed administrators in exchange for 2 percent of the center's fraudulent profits, and obtained the right to perform all gynecological procedures at Unity.

Chan is accused of performing procedures on 208 patients which resulted in over $9.5 million in insurance billing with over $1.8 million collected for the unnecessary and fraudulent work. Of his patients, 83% were referred by cappers who have already been charged.

Dr. Mario Rosenberg
Rosenberg, on staff at Cedars-Sinai Medical Center and affiliated with Herbalife, primarily performed colonoscopies and esophagogastroduodenoscopy (EGDs). Rosenberg is accused of performing 646 procedures on 554 patients, which resulted in the fraudulent billing to insurance companies of over $9 million, for which Unity was paid over $2.3 million. Of Rosenberg's patients, 84% were referred by cappers who have already been charged.

Dr. William Hampton
Hampton is accused of performing 180 procedures on 178 patients. He primarily performed thoracic sympathectomies, also known as sweaty palms surgeries, which is a highly unusual and dangerous medical procedure. This condition can also be treated with topical creams, medication, and botox. Of the patients that underwent surgery by Hampton, 97% were referred by cappers who have already been charged. Hampton has been indicted by the federal government for his involvement in a Los Angeles surgery center scheme similar to the Unity Outpatient Surgery Center case.

Unity Defendants