2 Held in Alleged Insurance Fraud : $57,000 Scheme Involved Blue Cross Workers, State Says

Two people were arrested Friday in an alleged $57,000 insurance fraud scheme that also involved at least five employees of the Woodland Hills office of Blue Cross of California, state authorities said.

The Blue Cross employees, arrested Wednesday, allegedly generated checks over a seven-month period for themselves and friends by entering false claims into the company’s computer system, authorities said.

The two arrested Friday, believed to be friends of the employees, were identified as Cynthia Fowlers, 20, and Michael Clark, 20, both of Pasadena. They were booked on suspicion of grand theft for receiving falsely generated checks, according to Rudy Cunningham, a senior investigator for the fraud unit of the state Department of Insurance.

The Blue Cross employees--four data keyers and one claims examiner--were arrested at the company’s main office on Oxnard Street in Woodland Hills after a two-month investigation by the insurance department. They were identified as: Kevin Collins, 20, and Mark Mitchell, 28, both of Los Angeles; Edward Curtis Jones, 26, of Canoga Park; Teshami Reid-Carter, 20, of Altadena and Karen McLeod, 33, of Hollywood.

Entered Information

The employees’ jobs entailed entering information into Blue Cross’ claim processing computer which, in part, produces medical reimbursement checks. Cunningham said they were all hired last July and records indicated that several had lived at the same address for short periods during the last year.

All seven suspects were booked on suspicion of grand theft and released in lieu of $1,500 bail, except Mitchell, who was booked on an additional charge of possession of a stolen check and released on $500 bail, Cunningham said.

Four employees were placed on “administrative leave” and one resigned, a Blue Cross spokeswoman said.

Since November, the five allegedly had devised a way to override the computer system by creating false claim codes that produced 25 checks for a total of $15,264. Some employees are suspected of using their personal Blue Cross insurance benefit identification codes to create phony claims, Cunningham said.

The checks, which were made out in the employees’ names, were mailed to their homes or to commercial mail drops, Cunningham said.

Other Claims Cited

Another $42,000 in fraudulent claims and checks were processed through the computer, but the checks were never received by the employees, Cunningham said.

This is the sixth time in 15 years that employees have been either arrested or convicted of filing fraudulent claims, said Blue Cross spokesman Larry Rodriggs. Blue Cross processes $24 million in claims statewide every working day.

“The fact that this has not occurred very often shows we really don’t have a problem,” Rodriggs said. “This is unusual because it involved a group of employees.”

About 2,500 people are employed at the Woodland Hills office, 280 of whom work as data keyers, he said.