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11 charged in multimillion-dollar insurance fraud case involving surgeries on recovering addicts

11 charged in multimillion-dollar insurance fraud case involving surgeries on recovering addicts
Orange District Attorney Tony Rackauckas speaks during a news conference Wednesday while Orange County Supervisors Lisa Bartlett, left, and Michelle Steel look on. (Photo by Luke Money)

The owner and an employee of a Fountain Valley-based treatment facility, along with five doctors and four so-called body brokers, have been arrested and charged in what authorities say was a scheme to fraudulently bill insurance companies millions of dollars for experimental, unnecessary and potentially harmful surgeries on recovering addicts, the Orange County district attorney’s office announced Wednesday.

The charges against the 11 defendants represent the first major prosecution by the district attorney’s Sober Living Home Investigation and Prosecution task force, which was formed this year to investigate potential crimes related to addiction treatment and recovery centers.

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“Exploiting addicts’ vulnerabilities to conduct unnecessary and dangerous surgeries for profit is unconscionable,” District Attorney Tony Rackauckas said during a news conference in Santa Ana. “It’s simply wrong to use human beings as ATM machines.”

Prosecutors allege that two administrators at Fountain Valley-based SoberLife USA — owner Thuy Rucks, 78, of Mission Viejo and Christianne Tiemann, 66, of Trabuco Canyon — hired four people as marketers, or “body brokers,” to pay people up to $1,000 to receive surgical implants of naltrexone, a prescription drug used to manage opioid and alcohol dependence.

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The U.S. Food and Drug Administration has approved use of naltrexone in pill and injectable forms, but the surgical insertion of a “pellet” of the drug has not yet been sanctioned and is considered experimental, according to the district attorney’s office.

According to prosecutors, the marketers — identified as 27-year-old Huntington Beach residents Dylan James Walker and Harrison Anthony Romanowski; John Kahal, 67, of Dana Point and Jordan Tyler Hendrickson, 25, of Studio City — went to sober-living homes and Alcoholics Anonymous meetings and used word of mouth to entice people to have the surgery.

Two doctors — David Michael Scarpino, 53, of Huntington Beach and Nabil Charle Morcos, 66, of Irvine — are accused of misleading patients about the safety and appropriateness of the surgery — which involves cutting open a patient’s back or stomach to implant a naltrexone pellet — and recommending the procedure without proper examinations to determine whether a patient was a suitable candidate for the operation.

Naltrexone is ineffective as a treatment for some addictions, such as to stimulants including methamphetamine, according to the district attorney’s office.

The three other doctors in the case — Michael Henry Wong, 53, of Irvine, Gary Lamont Baker, 54, of Tustin and Fritz John Baumgartner, 61, of Rancho Palos Verdes — are accused of performing the surgeries for profit.

A PowerPoint presentation shows the 11 defendants in the case.
A PowerPoint presentation shows the 11 defendants in the case. (Photo by Luke Money)

Rucks and Tiemann are accused of submitting fraudulent billing to insurance companies of $40,000 per surgery, on average.

All told, prosecutors allege, SoberLife USA billed the insurance providers “over $6.8 million in healthcare claims for this experimental, non-FDA-approved and potentially dangerous surgery,” according to Rackauckas.

“This scheme misleads the desperate and creates a hope of recovery when this implant that they’re using might cause greater harm,” he said.

The defendants are scheduled to be arraigned Thursday. If convicted of their specific charges, they could face maximum sentences ranging from 10 years and eight months to 43 years and eight months in state prison, according to the district attorney’s office.

Rackauckas said investigating insurance fraud allegations can help combat the proliferation of unscrupulous sober-living and addiction treatment operations — an issue that’s become so widespread in recent years that Orange County is sometimes referred to as the “Rehab Riviera.”

Costa Mesa has grappled for years with issues stemming from sober-living homes, which residents say have led to increased crime and noise, worsened parking and traffic woes and harmed their overall quality of life.

Huntington Beach officials this month announced plans to collaborate with the district attorney’s office to find ways to crack down on illegal in-home businesses in residential areas.

“We really have to protect not just our residents but all recovering users too,” said Orange County Supervisor Michelle Steel, whose district includes both cities. “So we need a better law to protect us and protect all other Orange County residents.”

Supervisor Lisa Bartlett, speaking alongside Steel at Wednesday’s news conference, said the county hopes to “craft an ordinance to crack down on body brokers and some of these other illegal activities” so authorities are empowered “to take appropriate action and put these criminals in jail.”

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