A Pocketbook-Health Hazard

The come-ons sound so promising, so legitimate.

Earn money processing doctors’ bills on your home computer, the newspaper classifieds and Internet ads say. For a mere $300, get software and a list of doctors desperate for your services.

Don’t fall for it, prosecutors warn.

A wave of work-at-home medical billing schemes is hitting Los Angeles and Orange counties, exploiting a growing pool of people who want to use their PCs to generate income, they say.

Police raided the offices of a Placentia-based medical billing outfit last week, seizing records that law enforcement officials allege will show the company defrauded hundreds, possibly thousands, of consumers. In July, authorities charged the owners of a Yorba Linda company with wire and mail fraud, saying they fleeced more than 2,500 consumers out of at least $1.3 million.

More cases may follow.

Officials at the U.S. attorney’s office in Los Angeles say they are investigating at least 15 other local companies that make similar pitches. The Better Business Bureau of the Southland reports that it has received more than 1,200 complaints about telemarketers based in Brea, Redondo Beach, Fullerton and other Southland cities who hawk medical-billing business opportunities.

“It’s the flavor of the month,” said Alan Vanderpool, an investigator with the County of Orange Boiler Room Apprehension Task Force.

The complaints show a distinct pattern: Customers are sold software for $300 or more with the promise that they can make at least $30,000 a year handling insurance claims or bills for doctors with whom the company has contracts.

Federal regulators say medical-billing schemes are proliferating because they appear more realistic than many work-at-home opportunities.

“The medical angle gives it an air of legitimacy,” said Kathryn C. Decker, an attorney in the Federal Trade Commission’s Seattle office. “It sounds like it has more financial potential than things like crafts or envelope stuffing.”

Larger medical practices often do farm out billing and claims to management companies, an American Medical Assn. spokesman said. But because billing codes for Medicaid and Medicare are so complex, medical groups are unlikely to hire anyone without a track record for handling billing, he added.

The FTC has become concerned enough about medical-billing scams to set up a database so that states can share consumer complaints and information.

According to an FBI agent’s affidavit in the Orange County case, Placentia-based Medco, also known as Data-Med, told customers that they would get $5 for each claim they processed and that every doctor under contract with the company processed at least 150 claims per week. Instead, prosecutors said, consumers got a list of doctors in their area and a booklet telling how to solicit them.

The company’s office has closed, and executives could not be reached for comment.

“Ultimately what consumers receive is nothing like what they are promised,” Assistant U.S. Atty. Ellyn Lindsay said. “In fact, there are no doctors who have contracted with these firms, and the victims have no way to set up a business.”

Sandra Ayers of Long Beach said she leaped at the ad from Medical Billing Associates of Yorba Linda, seeing a way to earn money while caring for her diabetic son.

“They made it sound so easy,” she said. “The person on the phone said, ‘You can do it while your son is asleep. There’s no end to the money.’ ”

Ayers said she paid the company $449 last November. She received software, but six months later, MBA still had not sent her a single doctor’s name, she said.

“I felt totally taken,” she said.

Angela Smith of Gardena says MBA supplied her with the names of three doctors who supposedly needed her services but that she got a rude surprise when she called their offices.

“They said they already had someone doing their billing,” said Smith, who said she paid $863 for MBA’s software, marketing program and membership to a billing clearinghouse. “They’d never even heard of MBA.”

An attorney for Medical Billing Associates partner Brian Azouz declined to comment on consumers’ complaints or the mail and wire fraud charges now pending against his client.

Co-owner Fred Carroll was unaware of any wrongdoing at MBA, which also operated under the name Health Care Partners, said his attorney, Harold Rosenthal.

“Certainly Fred never had any intent of participating in a business that tricked people out of their money,” Rosenthal said.

Material collected when boiler room task force agents raided MBA’s office suggests, however, that company workers were skeptical of MBA’s plan.

One telemarketer’s notes, attached to an investigator’s affidavit, summarized the company’s offer this way: “$399.00--s----y software--no doctors--basically you’re f----d.”

“That’s a smoking gun,” Vanderpool said. “How can you do that to people?”

Ayers said she does not expect to recoup what she paid MBA, money her family inherited after her mother-in-law’s death. In the future, she said, she will check out offers more thoroughly before she commits any cash upfront.

“It hurt to let go of it,” she said.

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Top 10 Telemarketing Frauds

Work-at-home scams top the list of telemarketing frauds, based on the number of complaints to the National Fraud Information Center during the first six months of 1999:

1. Work-at-home plans: Kits sold with false promises of earnings.

2. Telephone cramming: Consumers billed for services they never ordered.

3. Advance-fee ‘loans’: Loan offers requiring payment of outrageously high fees in advance for loans that are never made.

4. Prize offers/sweepstakes: Consumers are told they must pay an upfront fee to either collect a prize or increase their chances of winning one.

5. Telephone slamming: Consumers’ phone carriers are switched without the consumers’ knowledge or consent.

6. Magazine sales: Fake sales or renewals of subscriptions to magazines, which are never received.

7. Travel/vacation offers: Offers of “free” trips that have undisclosed costs, or “discount” tours that never materialize.

8. Credit card offers: Phony promises of cards for which payment of fees are required in advance.

9. Investment opportunities: Use of high-pressure sales tactics and outrageous earnings claims to get consumers to invest in phony investment pools.

10. Credit card loss-protection plans: Using scare tactics or misrepresentations to sell “coverage” for protections consumers already have.

Consumers should ask the following before accepting a work-at-home offer:

* What tasks will I be required to perform?

* Who will provide training?

* Who will accept or review my work?

* Who will pay me?

* How often will I be paid?

* When will I get my first paycheck?

* What will the program cost?

* What is the refund policy?

Researched by JANICE JONES DODDS / Los Angeles Times

Sources: National Fraud Information Center, California attorney general’s office

How to Report Fraud

* If you suspect the work-at-home program you bought is not legitimate, ask for a refund. Tell the company you will alert consumer protection officials if you are not satisfied.

* Report the company to your area Better Business Bureau ([909] 825-7280), the Los Angeles County Department of Consumer Affairs ([213] 974-1452) or the California attorney general’s office ([916] 322-3360).