Insurance Sting Ends in 12 Arrests : Raids: Chiropractors and lawyers are accused of double-billing schemes and paying to receive patient referrals.

Targeting lawyers and chiropractors who “buy” patients and bilk the insurance industry, 150 law officers swarmed across Ventura County in 26 simultaneous raids Thursday morning to end a yearlong insurance-fraud sting.

Just minutes after 9 a.m., officers flashed badges and search warrants at suspects’ homes and offices from Ojai to Agoura Hills. Then they set about seizing hundreds of pages of allegedly bogus workers’ compensation claims, X-rays, computer records and other evidence.

By midafternoon they had arrested 12 people, including one reserve Oxnard police officer who also worked as a chiropractor.

The raids capped a yearlong undercover probe by Ventura County prosecutors and state and national insurance investigators that Ventura County Dist. Atty. Michael D. Bradbury dubbed “Operation What’s Up Doc.”

And they netted suspects accused of two practices that cost the insurance industry billions each year: double- and triple-billing insurers for single treatments, and “buying” patient referrals with fees that are often billed back to the insurance companies--an illegal process known as “capping.”

Two district attorney’s investigators set themselves up in a Thousand Oaks office for much of a year, posing as Oak Tree Medical Marketing--a referral service that offered to steer workers’ compensation claimants to doctors and lawyers for a fee, Bradbury said.

Oak Tree mailed out letters to doctors and lawyers from Joseph R. Carter, its fictitious president.

“Dear Professional,” began the letters, promising “a resource capable of generating a new patient or client base.”

The letter ended, “I look forward to the many exciting opportunities available to professionals interested in establishing a mutually profitable business relationship.”

Doctors and lawyers responded, but once they learned that Oak Tree was charging fees for patients, most were too honest to take the bait.

Several said ‘Oh, yes, but you know that what you’re doing is against the law,’ ” Bradbury said.

However, others signed referral agreements, “bought” patients and even counseled the undercover investigators on how to cover their tracks, he said.

“We gave them the opportunity without crossing any entrapment lines,” Bradbury said.

“The chiropractors and physicians offered money and were prepared to pay money for patients,” said Chief Deputy Dist. Atty. John Geb, who runs his office’s fraud unit. “That’s called capping, and it’s against the law.”

Some suspects paid fees of $300 per patient, while others agreed to kick back 30% of the insurance payments to Oak Tree in exchange for patients, Geb said.

Then, undercover detectives and investigators showed up at chiropractors’ offices for two or three treatments that were often billed to insurers as if they had visited twice as frequently, Geb said.

The Oak Tree partners played the part of prosperous businessmen to the hilt. Clad in expensive suits, they drove a Mercedes and a Porsche supplied by the National Insurance Crime Bureau, Bradbury said.

And they recorded nearly every conversation with the suspects on audio tape--and some on video, he said.

The investigation went smoothly--although at one point a suspect stopped for lunch at a Chinese restaurant in Ventura and spotted one of his “patients” noshing with his undercover colleagues, some of them sporting guns and badges.

Some of the suspects also had the Oak Tree boys followed to make sure they were legitimate, but the mock business remained intact, Bradbury said, and the storefront referral service continued “selling” patients.

Some of the offices raided Thursday were billing hundreds of thousands of dollars annually in fake workers’ compensation claims, said Michael L. Powell of the National Insurance Crime Bureau, a nonprofit investigative group funded by the insurance and rental-car industries.

Doctors and attorneys involved in it “are prostituting their professions,” said Jerry Treadway, of the California Department of Insurance.

In 1991, the California Legislature upgraded capping from a misdemeanor to a felony, Treadway said, because it inevitably leads to fraudulent insurance claims.

“Los Angeles is often called the workers’ comp fraud capital of the world,” Geb said. “And it can’t help but radiate out of Los Angeles” to neighboring areas such as Ventura County, he said.

The investigation is due to go on for another four to six months before charges are filed against the 12 suspects, Bradbury said.

The 12 people arrested Thursday will be arraigned on a variety of fraud and capping charges under the insurance and business and professions codes, and more charges may follow, Bradbury said.

The district attorney’s office identified those arrested as:

* Martin Harary, 50, an Oxnard attorney. When an investigator asked 20% of the final settlement for personal injury cases, Harary allegedly paid for two patients and referred them to an Oxnard chiropractor.

* David Clemens, 48, the chiropractor, allegedly to pay fees of $300 per patient and 30% of the total settlement for personal injury cases. On May 20, an investigator went to his office posing as one of the patients, and Clemens allegedly paid $150 for the referral.

* Dr. Gary Rick, 49, a Ventura psychologist, allegedly signed a contract and paid undercover agents for two patients.

* Tom Fontenot, 43, an Oxnard police reserve officer who worked as a chiropractor in Camarillo, allegedly billed insurers for services he did not render.

* Steven Spunt, 34, Fontenot’s office partner, who allegedly signed a contract agreeing to pay Oak Tree $300 a month for patient referrals.

* Simi Valley chiropractor John Clark, 47, allegedly discussed with an undercover investigator ways of defrauding an insurer. His office manager, Debra Martyn, 30, also was arrested.

* Moorpark chiropractor Michael Hemphill, 47, and his wife, Julie Hemphill, 45, allegedly paid for five patient referrals and filed fraudulent bills with insurance companies.

* Westlake Village law partners Steven Gross, 50, and Rand E. Pinsky, 45, allegedly met with the Oak Tree partners and Julie Hemphill and agreed to pay for client referrals.

* And Agoura Hills attorney Donald Wylie, 46, allegedly filed false claims with the Workers’ Compensation Appeals Board.

And there may be others.

“We have developed a significant number of leads regarding other professionals” involved in capping and fake billing, who were not arrested, Bradbury said.

He offered them amnesty from prosecution if they step forward in the next 30 days and agree to testify about the crime.