Plastic Surgery Insurance Fraud Scheme Alleged

The anti-fraud patrol at Prudential Insurance sensed trouble in the half-dozen medical claims from Georgia. The patients were Vietnamese women who worked at the same Atlanta-area manufacturing company, and all had recently been to the same Beverly Hills plastic surgeon.

Why had these women traveled thousands of miles for routine procedures, such as surgical repair of deviated nasal septums, that were readily available in Atlanta or elsewhere?

“These were not things that you needed to go to the Mayo Clinic for,” said Ed Hanselmann, chief fraud investigator for Prudential’s health insurance unit.

What investigators suspected at the time, and now say they have confirmed in interviews with some of the women, was that they never got--or intended to get--the medically needed procedures claimed by their Beverly Hills doctors. Instead, they had come to California to have their tummies tucked, their breasts enlarged, their eyelids and noses redesigned--purely cosmetic procedures not covered by insurance.

But insurers got stuck with the bills because the doctors, who recruited the patients and put them up in local hotels, lied about the nature of the surgery, investigators said.

And the Atlanta contingent has plenty of company.

The FBI and several insurance companies are investigating what they said is a major cosmetic-surgery fraud ring in Southern California involving an alliance of convenience between doctors hungry for money and mostly Southeast Asian and Latino women seeking beauty make-overs that they don’t have to pay for.

“Some of these doctors are pretty blatant,” said a Vietnamese American plastic surgeon familiar with the schemes, who asked not to be named for fear of retribution from colleagues.

Investigators have targeted about 50 Southern California doctors and at least a dozen laser surgery centers from Beverly Hills to Newport Beach to Westminster’s Little Saigon to Riverside County, according to officials at health insurance companies investigating the problem. Some of the doctors are working out of several different clinics, insurance investigators said.

Investigators believe the scheme already has involved several hundred patients, and possibly far more. Nearly all are women and roughly 70% are Vietnamese Americans undergoing cosmetic surgery.

It is not the first time this type of abuse has surfaced. In 1995, two Southern California plastic surgeons and the owner of a Westminster beauty shop were convicted of insurance fraud in a plastic-surgery scheme that targeted Vietnamese American patients.

But investigators said the current scams are more elaborate and brazen, and involve more doctors, than any earlier incidents.

Insurance officials said patients are being enticed by doctors who have targeted ethnic groups through foreign-language advertisements that promise free air fare, food and lodging for out-of-towners.

Some popular Vietnamese-language magazines--like some English-language magazines--carry large numbers of ads for laser and plastic surgery clinics.

The ads feature before-and-after photos of patients and include the photos and pager numbers of nonphysician “helpers,” who investigators said are brokers who arrange transportation and set up doctor’s appointments for patients.

The brokers, working out of nail salons and beauty parlors, are typically “young, attractive females who tell patients that they have had similar procedures with positive results,” said Hanselmann, who heads Prudential’s national anti-fraud unit. “The broker tells the prospective patient that if they want similar outcomes, [the broker] will make arrangements with a surgery center.”

The Vietnamese American surgeon said he has had overtures from several patients and at least one doctor attempting to gain his cooperation in cheating insurers.

“Patients might say, ‘Last year, I had my breasts done in Beverly Hills and I didn’t pay anything. Why should I pay you when I could go someplace for free?’

“It’s like the patient is insulting you in front of your face,” this doctor said. “Like, why don’t you commit fraud or go steal money?”

This surgeon tells of one doctor who promised “lots of patient referrals”--but there was a catch. The surgeon would have to falsify his billings to make purely cosmetic procedures appear to be medically needed ones.

“It’s sad,” the surgeon said. “It makes me very upset. I may not be the richest plastic surgeon in the community, but I’m willing to wait” for success.

No charges have yet been brought in the investigation. But last month, FBI and U.S. Postal Inspection Service agents raided the offices of the Beverly Hills Outpatient Surgery Center, seeking evidence of suspected mail and insurance fraud. The agents served search warrants but no arrests have been made, said Kiara Andrich, an FBI spokeswoman.

FBI officials said their probe is broader in scope than the one Beverly Hills clinic. Neither they nor federal prosecutors would elaborate on their investigation of the Beverly Hills facility. Court documents have been filed under seal.

One of the clinic’s English-language ads touts its breast augmentation services, featuring before-and-after photos of a bikini-clad woman. “Just a Phone Call Away for a New You,” the ad reads.

Asked about the raid, Dr. Peter M. Golden, an anesthesiologist who is medical director of the Beverly Hills clinic, issued a statement through his attorney, Ronald J. Nessim: “We do not believe that any false statements were made.”

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Insurance investigators said the victims of such alleged scams are mainly the public, which pays higher medical insurance premiums to cover the losses sustained by insurers. While a few of the patients getting “free” cosmetic surgery may be innocent dupes of dishonest doctors, most know they’re doing something wrong, investigators said.

“Most patients,” said Louis Lovado, chief of Blue Shield of California’s anti-fraud arm, “are well aware that cosmetic surgery is not a covered benefit.”

The bulk of the patients are from California, but investigators said the advertisements have drawn others from Georgia, Minnesota, New Jersey, Pennsylvania and Texas.

“They bring patients through in two or three hours, then send them to a cheap hotel room to recover,” said Scott Rezendes, another Blue Shield investigator. Some patients told of getting home-cooked Vietnamese food delivered to their hotel rooms by clinic assistants, one investigator said.

After the patients get their noses or breasts reshaped, the doctors allegedly submit bogus bills that make it appear that medically needed services were done. The alleged fraud scheme is made easier because many insurers do not require doctors to get pre-authorization for surgeries performed in outpatient clinics--unlike hospital admissions, which usually require such approval.

“These doctors found a hole in the system,” Rezendes said.

Some patients have a cosmetic procedure known as blepharoplasty, popular among Asian and Asian American women, which transforms single eyelid creases into double creases. The doctors then represent the procedures as medically necessary to correct severely drooping eyelids that impair vision, Lovado said.

In other cases, women are getting tummy tucks--a procedure costing roughly $3,500--that doctors allegedly bill as $20,000 hernia repairs. Women have also gotten cosmetic breast implants at no charge when their doctors falsely stated that the patients had undergone reconstructive surgery after a mastectomy, insurance investigators said.

The typical patient undergoes two or more cosmetic procedures over several days, with bills that can top $40,000, investigators said.

Investigators suspect that some procedures are being performed not by highly qualified plastic surgeons but by doctors with inadequate training and experience. They also suspect that some of the simpler procedures may actually be performed by nonphysicians.

“The quality of care can be horrible,” Rezendes said.

Medical complications from cosmetic surgery can be serious--patients have died from badly performed liposuction, though not in connection with the area involved in this investigation.

Investigators described some of the Southern California surgery centers as high-volume, “mill-type” operations.

Officials at California’s Blue Shield, a San Francisco-based insurer, have identified about 100 plastic-surgery claims as probably fraudulent. Prudential reports about 140 such claims.

Blue Shield and Prudential--the only companies willing to discuss their cases on the record--estimated their losses from bogus plastic surgery bills at several million dollars. The total would be much higher if it included losses by other insurers.

The General Accounting Office has roughly estimated losses from health care fraud at $100 billion annually. While there are no reliable estimates of the extent of plastic-surgery fraud, insurers and law enforcement agencies believe it may be a magnet for scams.

Plastic surgery “is a booming area of medical practice and, historically, when you have a booming field, you have a cottage industry for medical fraud,” said William Mahon, executive director of the National Health Care Anti-Fraud Assn. “The fraud tends to follow the money.”

It is well known that California, and Beverly Hills in particular, is the plastic surgery capital of the nation. So it is perhaps not surprising that the state has also become a national center for plastic surgery fraud. Legitimate or fraudulent surgery, it is big business.

California accounted for 22% of 697,000 plastic and cosmetic surgeries performed in the United States in 1996. That included 22,743 breast augmentations--about four times as many as New York--18,713 eyelid alterations, 25,112 liposuctions and 5,743 tummy tucks, according to the American Society of Plastic and Reconstructive Surgeons.

Although the schemes have targeted some Korean, Filipino and other ethnic groups, insurers said roughly 70% of the cases they know about involve patients of Vietnamese descent. Latinos make up the second largest group of patients. The doctors involved are mostly whites, investigators said.

Cosmetic surgery is popular among Asian and Asian American women, who most often seek procedures to reshape eyes, noses and chins or to enlarge their breasts.

“Often these procedures are sought by Asian women to make them look more Western,” said Dr. Henry Kawamoto, a plastic and reconstructive surgeon at UCLA who is not involved in the investigations.

But Kawamoto and other plastic surgeons note that some Asian women who undergo eyelid surgery--the plastic surgery most commonly sought by that ethnic group--feel they look sleepy or tired, and want to change that.

“It’s not always an attempt to change their ethnicity,” said Dr. Peter N. Nguyen, a plastic and reconstructive surgeon who practices in the heart of Little Saigon and who is also not involved in the investigations.

Times staff writer Thao Hua in Orange County contributed to this story.