Adult Diaper Scam Halted, Officials Say

Calling it the largest Medi-Cal fraud ever, state and federal agents on Friday arrested one woman and conducted raids in four Southern California counties to break up a scheme that allegedly submitted $40 million in phony state claims for adult diapers and other incontinence supplies.

Barbara Fontaine, a 31-year-old Culver City woman, was arrested and charged with grand theft and money laundering, Atty. Gen. John K. Van de Kamp announced Friday. A suspected illegal immigrant from Cuba, Fontaine was determined to be a flight risk and ordered held on $24-million bail by Los Angeles Superior Court Judge Clarence A. Stromwell, Van de Kamp said.

Searches on Friday of 16 homes and businesses in Los Angeles, Orange, San Bernardino and Kern counties were the latest sortie by investigators who claim that rampant fraud is responsible for huge increases in Medi-Cal reimbursements for the disposable adult diapers, underwear liners, bed pads, liquid washes and skin creams used by incontinent Californians.

The state tab for these supplies has increased more than five times in recent years, from $30 million in 1987 to $170 million in 1989. State auditors blame the dramatic surge on a growing number of businesses that use sales personnel or boiler room operations to solicit Medi-Cal identification codes from elderly patients, and then turn around to use the codes to bill the state for phantom or unnecessary incontinence supplies.

“Some companies have been in business just a few months and, all of a sudden, are billing hundreds of thousands of dollars in claims,” said Carlo Michelotti, a chief auditor in the Department of Health Services.

“And then when you go to review these businesses, you find you’re in someone’s living room or apartment,” he said. “How could that be? You’re doing hundreds of thousands of dollars in business from the living room of your apartment?”

Michelotti said that state auditors have traced Medi-Cal money in recent adult diaper scams to banks in Saudi Arabia, the Grand Cayman Islands, Singapore and Manila.

The adult diaper scam broken up Friday, however, is believed to be the largest Medi-Cal fraud ever, said Van de Kamp’s office, which coordinated the state and federal effort. The businesses and individuals involved in the four-county scheme were either working together or sharing the same Medi-Cal identification codes to run up large billings.

The 53-page affidavit filed by the state before the raids was sealed on Thursday in Los Angeles Superior Court. But David Haxton, the deputy attorney general in charge of the case, said he expects six additional people to be arrested.

The raids Friday were the second series this week. On Tuesday, state and federal agents raided 20 businesses and homes in Beverly Hills, Los Angeles, Torrance, Garden Grove, San Jose, Sacramento and other areas of the state to seize records related to phony diaper billings.