Clinic’s Alleged Child Exploitation Probed

State and local investigators were looking into a possible Medi-Cal fraud scheme Friday that could involve hundreds of children recruited from low-income neighborhoods to give blood samples and take unnecessary tests.

Most of the inquiry was focused on the Paramount Medical Center in Paramount, which has been closed while investigators sift through patient records amid allegations that a physician took advantage of a rapidly growing state family-planning program.

The clinic is suspected of billing the state for corrective shoe inserts that were never provided to patients, giving gynecological exams to girls as young as 9 and telling them to lie about their ages, and paying so-called cappers for every patient rounded up and brought to the clinic, according to a confidential memo obtained Friday by The Times.

“Two vials of blood were often drawn from these girls, and one [girl] was identified to have given blood four times within a two-month period,” said the memo, written by Sachi Hamai, chief of the county health department’s Inspection and Audit Division. The memo was sent to several county supervisors earlier this week.

A search warrant filed in Superior Court identified the operator of the clinic as Dr. Candace Chang. Sheriff’s detectives searched the facility Sept. 14 after receiving a tip in late August that six girls had been offered $10 each if they went to the clinic for medical examinations, the warrant said.

Deputies obtained permission to search after watching cappers go back and forth from the clinic with carloads of children from 9 to 14 years old, the warrant said.

When deputies asked the children what they were doing, they said they were promised up to $10, but sometimes as little as $3 or $5, to get free condoms or free medical exams, the warrant said.

According to the warrant, Chang employed 12 “runners,” who brought patients to the clinic. One, identified in the warrant as James Clayton Manor, told detectives that he got paid $10 for each male he brought to the clinic and $20 for each female. He told the officers he could make up to $500 a day, the warrant said.

The warrant said Chang denied during questioning that she paid the runners for each person, but later said she paid per trip.

Clinics in Long Beach and the San Fernando Valley also were said to be under scrutiny in what investigators indicated was a broad inquiry into exploitation of children. Once the children had their blood drawn or underwent examinations, Medi-Cal would be billed for the tests, which generally cost the state $100 to $300 but can also runup to $1,200, investigators said.

At the clinic in Paramount, neighbors interviewed Friday said vans would disgorge so many children and transients in front of the clinic in the 15000 block of Paramount Boulevard that it became a neighborhood nuisance.

As many as 50 to 60 children would arrive on a given day, some of them pouring out of vans, said Annette Banuelos, who works at a printing store two doors down.

“There were a lot of kids running around here,” Banuelos said. “I rarely saw high-school-age children. They were mostly 5 to 14 years old.”

Transients stood outside filling out applications while the children ran up and down the sidewalk, Banuelos said.

The doors were locked and a “Closed” sign was displayed Friday at the one-story clinic, sandwiched between a karate center and an insurance office.

Fred Leaf, chief of investigations for the county Department of Health Services, said his agency is investigating the matter as part of a task force that includes the county counsel, the sheriff and the district attorney. The Long Beach Police Department also is involved in the inquiry.

Leaf confirmed that the investigation focuses on allegations that the Paramount clinic was using the runners to drive around South-Central Los Angeles--particularly the Jordan Downs public housing complex--and take children ages 9 to 14 to the clinic.

The Carmelitos Housing Project in Long Beach also was believed to be a recruiting area.

Diana Bonta, director of the Long Beach Department of Health and Human Services, said she had alerted investigators at the end of the last school year when two Long Beach students told of selling their blood.

“We’re concerned that children are being put at risk,” Bonta said. “They may make a few bucks and not know that the questionable medical procedures would have ramifications the rest of their lives.”

Leaf, citing the Sept. 14 search warrant for the Paramount clinic and other aspects of the investigation, said that “all records and related equipment” have been confiscated from the facility.

“In looking at the records preliminarily, it appears that this particular clinic may have been involved in some serious billing irregularities as well as the provision of substandard care to patients,” Leaf said. “It was also involved in picking up young children. . . . For a payment of $3 to $10, they would come in and give blood and also submit to any other tests the doctor requests.”

Leaf said investigators are still trying to determine what the blood was being used for, what kinds of tests the children were administered and other details, including whether their blood was being sold.

He said investigators also were looking into possible kidnapping charges. Even though underage children can go into such family planning clinics without parental consent, he said, “the manner in which these children are being recruited . . . does appear to be extremely inappropriate.”

The Board of Supervisors has asked for a formal report on the investigation, to see if there is anything the county can do to shut down such clinics within its boundaries, even though they are regulated by the state and federal governments.

“We need to push the D.A. or whoever we need to to shut these kinds of things down--they are illegal,” said Supervisor Don Knabe, who represents Paramount.

If the allegations are true, he said, “it’s incredible what we have learned thus far that has transpired--the amount of money that’s being made as well as the abuse of the system.”

Leaf also said Friday that homeless adults were taken to the clinic so they could sell their blood and participate in tests.

One concern for investigators is that blood tests on as many as 100 children a day may have identified some health problems that were never treated, since the records indicate that none of the children were given medical care.

“We’re going through them all,” Leaf said of the medical and billing records. “We want to see what tests were rendered and what the results were. Anything that turns up positive, we want to make sure there is adequate follow-up and treatment.”

Leaf said investigators also are looking into the possibility that some “patients” were taken to a store so they could buy shoes as payoffs.

He also said parents who believed that their children had been to the clinic should contact the Paramount sheriff’s station.

A spokeswoman for the state Department of Health Services said the case involves possible abuse of the state’s relatively new Family Planning Access Care and Treatment program.

Since the program began last year, the state’s family planning budget has jumped from $46 million to more than $128 million. The number of clients jumped from 495,000 last year to more than 1 million this year, said health department spokeswoman Lea Brooks.

“The program’s goal is to make family planning services available to low-income individuals,” she said.

The confidential county health department memo said Chang was being investigated for claiming “Medi-Cal reimbursement for shoe [inserts] that are made but never provided to the patients.” The memo said 800 such items were confiscated from the clinic.

Thousands of billing documents were identified, but investigators found no medical charts to go with them, leading them to believe that the state was being billed for services not rendered, the memo said.

Chang and her clinic also appeared to be providing substandard medical treatment, in that they would weigh patients and take their blood but do virtually no medical assessments of them, according to a random review of 17 charts, the memo said.