Compton Lab Owners, 2 Workers Admit Defrauding Medi-Cal Out of $600,000

The owners and two employees of a Compton medical laboratory have pleaded guilty to defrauding the state’s Medi-Cal program of $600,000 in a scheme that involved several hundred accomplices, authorities said.

The group allegedly submitted thousands of fraudulent claims for laboratory services to Medi-Cal by getting eligibility cards for accomplices, who posed as Medi-Cal recipients, investigators from the state attorney general’s office said.

They then submitted the claims to Medi-Cal for payment even though the cardholders had not been examined or referred for lab services by a physician, as required by law, investigators said.

“They made out false lab requisitions and used doctors’ names,” said Deputy Atty. Gen. Michael Sipe, who is in charge of the prosecution.

Harley Wayne Bell, 62, of Long Beach and Kenneth Koh, 39, of Cerritos, owners of Bell Laboratory and X-Ray Services Inc., pleaded guilty Tuesday in Los Angeles Municipal Court to one count of conspiracy to commit Medi-Cal fraud. They face up to three years in prison and $10,000 fines when they are sentenced in October.

Bell’s daughter, Sherry Morgan, 29, of Norwalk and the lab’s marketing director, Lionel Broussard, 41, of Hawthorne pleaded guilty to the same charge.

Sipe said the scheme involved about 5,000 fraudulent medical claims submitted by people the lab recruited.

Officials began investigating the lab in December, 1984, after receiving a tip, Sipe said. In January, investigators raided the lab and homes in Carson, Los Angeles, Hawthorne, Norwalk and Inglewood, where they seized thousands of medical claims, $38,000 in cash and checks, two loaded handguns and a loaded shotgun, he said.

“We estimate that they committed $600,000 in fraud between December, 1984, and January, 1986,” Sipe said.

The four who pleaded guilty have agreed to put $120,000 in the attorney general’s trust fund within 30 days as a start toward restitution, he said.

Sipe said Broussard recruited Frances Bennett, 47, of Carson, who paid people $25 and took them to the lab for tests under various names. Bennett allegedly brought three other people into the scheme: Sharon (Dot) Jackson, 38; her son, Michael Jackson, 20, and Lester (Fish) Ward, 42, all of Inglewood.

Michael Jackson was arrested Tuesday, but his mother, Bennett and Ward are fugitives, Sipe said.

Bell and Koh operated a legitimate laboratory until Broussard recruited Bennett and “the proportion of fraudulent claims grew to about half the business,” Sipe said. The lab was closed in May.

Misuse of a Medi-Cal card by its holder is a misdemeanor, Sipe said, but no decision has been made on whether any of the hundreds of accomplices will be charged.

“A number of them are expected to be witnesses,” he said.