Doctors busted in $30 million surgery scam

Insurance scheme involved hundreds of patients nationwide

updated 1:12 p.m. ET May 17, 2007

SANTA ANA, Calif. - Three doctors were charged with billing insurers for $30 million of unnecessary surgery performed on hundreds of patients recruited from around the country.

Authorities said the patients received money or low-cost cosmetic procedures for participating in the “rent-a-patient” scam at Unity Outpatient Surgery Center.

More than $5 million of the insurance claims were paid, authorities said.

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Arrested Wednesday were Dr. Michael Chan, an obstetrician; Dr. William Hampton, a surgeon; and Dr. Mario Z. Rosenberg, a gastroenterologist.

Each was charged with 47 felony counts including conspiracy after billing 19 insurance companies for what authorities said were unnecessary colonoscopies and surgeries on 940 patients. Bail ranged from $1 million to $2.3 million.

Each doctor could face nearly 50 years in prison. The California Medical Board was also pursuing suspension of their licenses.

Fourteen other people — five administrators and nine recruiters — have been charged as part of a four-year investigation.

“Doctors need to know if they commit insurance fraud, they may be trading in their scrubs for prison jumpsuits,” District Attorney Tony Rackauckas said.

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Chan, 61, was the owner and medical director at Unity. Authorities said he performed 211 unnecessary procedures on 208 patients, billing $9.5 million in claims, of which $1.8 million was paid to the clinic.

Rosenberg, 60, and Hampton, 51, also performed hundreds of procedures, billing insurers $21 million in claims, of which $3.3 million were paid, prosecutors said.

Their first court appearance was pending. It was not immediately known whether any had retained attorneys.