A chiropractor charged with recruiting hundreds of employees at Cedars-Sinai Medical Center to participate in a $350,000 insurance fraud scheme surrendered to authorities Thursday.
The state Department of Insurance charged that between 1978 and 1982, Theodore Wyatt submitted hundreds of bills to Blue Cross of California for treatment of the employees. Evidence indicated, however, that most of the "patients" were not being treated by the chiropractor at his Western Avenue office, said chief investigator Ronald Warthen.
Instead, they were being recruited in a scheme to defraud Blue Cross and were being paid with money Wyatt obtained by cheating the insurance company, Warthen said.
During one 16-day period, Wyatt "treated" 230 hospital workers, and during one 11-month period, he billed Blue Cross for 5,031 bogus office visits, the investigator said.
Five "patients" allegedly treated by Wyatt in his office, were, in fact, hospitalized at the time of their alleged "treatments," Warthen said.
Warthen said Wyatt, a former Cedars-Sinai employee, additionally paid one hospital worker $50 for every new employee brought into the scheme. The chiropractor would typically keep 60% of the insurance money and divide the remaining 40% among the employees, Warthen said.
None of the workers Wyatt allegedly recruited were physicians or nurses. Most were non-professional workers such as cooks and janitors.
Wyatt surrendered in Municipal Court and later pleaded innocent to 11 counts of insurance fraud, 9 counts of grand theft and 6 counts of tax evasion. He was allowed to remain free without posting bail and ordered to return to court April 16 for the scheduling of a preliminary hearing.
Warthen said that the investigation into the case is continuing and some of the hospital employees who participated in the scheme will be granted immunity to testify against Wyatt.