21 Arraigned in Cross-Border Fraud Scheme

U.S. authorities arraigned 21 people Wednesday--15 of them Tijuana doctors--who were among 23 indicted in an FBI sting of an alleged multimillion-dollar cross-border insurance fraud ring, a U.S. prosecutor said.

Assistant U.S. Atty. Ed Allard said he asked the court to deny bail to the doctors and two others, arguing that their ties to Mexico posed a flight risk. The issue will be decided at upcoming hearings, he said.

San Diego FBI chief William Gore said the sting, which came after a 30-month investigation by undercover FBI agents posing as insurance company representatives, was the first such prosecution of a group of foreign doctors accused of tapping into America’s estimated $80-billion-a-year medical insurance fraud racket.

“We will not allow the U.S.-Mexico border to work as a shield for this type of activity,” Gore said.

Gore said the alleged scheme used a San Diego billing company to file fraudulent bills for emergency medical care for Americans in Mexico.

He said the alleged ring overbilled and disguised cosmetic surgery as emergency operations. Bills were submitted for nonexistent patients and services not performed, Gore said.

Prosecutors say they documented 82 fraudulent claims by the alleged ring worth $800,000, but Gore believes that the total fraud was “clearly into the millions.”

The 15 doctors, all from the Tijuana area, were arrested Tuesday when they came to San Diego to pick up payments, Gore said. Two Mexican doctors remain at large, authorities said.

Gore described Tijuana doctor Joaquin Merlos as a “key figure” in the alleged ring, along with an American, LeRoy Alexander, the director of the San Diego billing company that allegedly handled the fraudulent claims.

They and 15 others face multiple counts of mail fraud conspiracy and mail fraud carrying maximum sentences of five years per count, Allard said.

Allard said the FBI sting followed growing concerns by U.S. insurance companies over a growth in international health care fraud.