4 Indicted in $20-Million Medi-Cal Fraud

A Los Angeles federal grand jury indicted four people Wednesday on charges of billing the Medi-Cal program for nearly $20 million worth of bogus blood tests.

“This is the largest case ever involving fraudulent medical bills submitted by a California laboratory,” said Assistant U.S. Atty. Maurice Suh.

Named in the 23-count indictment were Luisa Gonzalez, 55, and Juan Carlos Ciraolo, 59, owners of the now-defunct Los Angeles Bio-Clinical Laboratory in Glendale, and Roberto Calderon, 39, and Alfredo Morales, 37, operators of La Guadalupana Clinic in Hawthorne.

The indictment charges that over a three-year-period, the defendants obtained confidential billing information about patients and doctors enrolled in Medi-Cal, the federally subsidized medical program for poor people.

Los Angeles Bio-Clinical Laboratory then used that information to bill Medi-Cal for tests it performed on blood that was bought from donors recruited off the street, Suh said.

Until it closed in 1997, the lab submitted bills for reimbursement totaling about $40 million; half of the bills were fraudulent, the indictment said.

Records show that Los Angeles Bio-Clinical typically billed for the most expensive blood tests, reimbursable at about $550 an exam.

La Guadalupana, which offered donors cash for their blood, appears to have been the lab’s main supplier, Suh said.

An FBI agent’s affidavit made public Wednesday quoted a former lab courier as telling authorities that he picked up blood from Ciraolo’s garage, where the laboratory owner kept two large refrigerators packed with blood specimens.

The driver also told of making pickups from the San Gabriel clinic operated by Dr. Luis Lombardi. Although not charged in Wednesday’s indictment, Lombardi has agreed to plead guilty in connection with the alleged scam, Suh said.

The FBI affidavit said Lombardi fabricated reports showing that he had examined Medi-Cal patients and then asked Los Angeles Bio-Clinical Laboratory to conduct comprehensive blood tests. He allegedly received a kickback of $30 for each blood test he ordered.

The indictments grew out of an earlier probe by investigators from the California Bureau of Medi-Cal Fraud. While examining the billing practices of another suspect physician and laboratory, the state inspectors discovered that Los Angeles Bio-Clinical Laboratory was billing the state for the same patients.

They also learned that Los Angeles Bio-Clinical was owned by Ciraolo, a maintenance worker at the clinic being investigated.

Ciraolo, who lives in Rancho Palos Verdes, and Gonzalez, of Lawndale, were arrested Nov. 17 and are free on $250,000 bail. They are scheduled to be arraigned Tuesday before a federal magistrate.

In addition to fraud, Ciraolo is charged with filing a false bankruptcy petition.

Morales and Calderon, both of whom resided in Los Angeles, are fugitives.