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CA Department of Insurance

Insurance Commissioner Jones Announces Conviction of Medical Provider for Insurance Fraud

News: 2011 Press Release

For Release: August 9, 2011
Media Calls Only: 916-492-3566
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Insurance Commissioner Jones Announces Conviction of Medical Provider for Insurance Fraud
Orange County Doctor Pleads Guilty in $154 Million Billing Scheme

Insurance Commissioner Dave Jones today announced that Michael Cheeluen Chan, M.D., 65, of Cerritos has been convicted of committing insurance fraud. Chan entered guilty (nolo contendere) pleas to 40 counts in Orange County Superior Court. He was also ordered to pay $250,000 to the court receiver.

"Medical provider fraud is a top priority for me," said Insurance Commissioner Dave Jones. "Let this conviction stand as a warning to those who think they will not be brought to justice."

A joint investigation conducted by the California Department of Insurance (CDI) Fraud Division, and the Orange County District Attorney's office (OCDA) resulted in Chan's conviction. According to investigators, in 2001 the OCDA received information regarding potential insurance fraud involving outpatient surgery centers operating in the county. In 2004 the OCDA contacted the Orange CDI fraud office requesting assistance and the joint investigation ensued. The Orange CDI fraud office logged over 6,200 staff hours while investigating multiple surgery centers together with investigators from the OCDA.

During the course of their investigation, detectives uncovered a large and complex conspiracy of fraudulent medical billing claims totaling approximately $154 million. The investigation revealed that the medical procedures billed by these medical centers were found to be unwarranted. Procedures including sweaty palm surgery or pain management surgery were apparently performed on healthy people from various employers residing in other states that had been recruited and compensated for the unnecessary procedures.

The case was prosecuted by the OCDA. Sentencing for Chan is to be held in the Orange County Superior Court on September 9, 2011.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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