Doctor accused in alleged insurance scam to be rearrested

A doctor arrested this week for his alleged role in a $30-million insurance scam was ordered back into custody Thursday after he was mistakenly released from the Orange County Jail on $2.3-million bail.

Mario Z. Rosenberg, a Beverly Hills gastroenterologist, must show that the money used to post bail was obtained lawfully, said Orange County Superior Court Judge Luis A. Rodriguez. He ordered the Sheriff’s Department to rearrest Rosenberg. Jail officials attributed his release to confusion about whether he qualified for bail.

The arrest warrants for Rosenberg and co-defendants Dr. Michael C. Chan and Dr. William W. Hampton required a hearing to determine the source of funds used to secure bail before they could be released, Deputy Dist. Atty. Rick Welsh said. Rosenberg posted bail before a hearing could be scheduled.

Authorities want to ensure the bail money does not come from the alleged insurance fraud.

Attorney Peter Morris, who represents Rosenberg, was not available for comment, a secretary said.

The three doctors were arrested Wednesday in an alleged “rent-a-patient” scam that prosecutors said led to about $30 million in questionable billings to insurance companies. The insurers paid the doctors $5.1 million. The physicians are accused of performing more than 1,000 unneeded procedures on 940 patients. Each is facing 47 felony counts, including conspiracy and insurance fraud punishable by nearly 50 years in prison.

Rodriguez rescheduled the arraignments of Chan and Hampton for May 29 and denied defense requests to lower bail. Bail for Chan, an obstetrician from Cerritos, was set at $1.8 million. Bail for Hampton, a surgeon from Seal Beach, was set at $1 million.

Rosenberg’s arraignment will be set after he is arrested.

Donald Etra, who represents Hampton, said the charges against his client stemmed from procedures he performed five years ago. Hampton knew he was the subject of an investigation and spoke to investigators, Etra said.

“The money he earned is not related to any alleged illegal activity,” Etra said.

Attorney Benjamin N. Gluck, who represents Chan, said his client had never been accused of misconduct in his practice.

Welsh told the judge the doctors recruited patients from 32 states for the unnecessary procedures.

The alleged scheme used recruiters to persuade people to have colonoscopies and surgery for sweaty palms, which involves collapsing a lung and clipping a nerve. In return, the patients were rewarded with cash, vacations and cosmetic surgery, prosecutors said.

hgreza@latimes.com